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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________
FORM10-Q

______________
(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

March 31, 2020

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period fromto

Commission File Number333-222231

___________________________
nuveen

Nuveen Global Cities REIT, Inc.

(Exact name of Registrant as specified in its Charter)

___________________________
Maryland
(State or other jurisdiction of
incorporation or organization)
82-1419222
(I.R.S. Employer
Identification No.)
Maryland82-1419222

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

730 Third Avenue, 3rd Floor

New York, NY

10017
(Address of principal executive offices)
10017
(Zip Code)

Registrant’s telephone number, including area code: (212)490-9000

_____________________________
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      No  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of RegulationS-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes      No  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, anon-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule12b-2 of the Exchange Act.

Large accelerated filerAccelerated filer
Non-accelerated filerSmaller reporting company
Non-accelerated filerSmaller reporting company
Emerging growth company

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.  

Indicate by check mark whether the Registrant is a shell company (as defined in Rule12b-2 of the Exchange Act).    YES      NO  

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading

Symbol(s)

Name of each exchange

on which registered

NoneN/AN/A

As of November 12, 2019,May 14, 2020, there were 1,080,5871,431,462 outstanding shares of Class T common stock, 493,6802,700,998 outstanding shares of Class S common stock, 1,126,034 outstanding shares of Class D common stock, 1,842,7273,413,654 outstanding shares of Class I common stock, 29,730,608 outstanding shares of Class N common stock, and no outstanding sharesstock.



Table of Class S common stock.

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ITEM 1. FINANCIAL STATEMENTS

Nuveen Global Cities REIT, Inc.

Consolidated Balance Sheets

(in thousands, except share and per share data)

   September 30,
2019 (unaudited)
  December 31,
2018
 

Assets

   

Investments in real estate, net

  $325,383  $294,374 

Investments in international affiliated funds

   36,759   28,594 

Investments in real estate-related securities, at fair value

   35,946   29,228 

Investment in commercial mortgage loan, at fair value

   12,314   —   

Intangible assets, net

   20,165   16,367 

Cash and cash equivalents

   7,725   5,643 

Restricted cash

   4,529   56 

Other assets

   5,049   2,584 
  

 

 

  

 

 

 

Total assets

  $447,870  $376,846 
  

 

 

  

 

 

 

Liabilities and Equity

   

Credit facility

  $118,277  $70,000 

Accounts payable, accrued expenses, and other liabilities

   6,378   5,070 

Intangible liabilities, net

   5,390   5,759 

Due to affiliates

   5,299   4,602 

Subscriptions received in advance

   4,529   55 

Distributions payable

   4,173   2,484 
  

 

 

  

 

 

 

Total liabilities

   144,046   87,970 
  

 

 

  

 

 

 

Equity

   

Series A Preferred Stock

   129   —   

Common stock - Class T shares, $0.01 par value per share, 500,000,000 shares authorized, 429,471 and no shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

   4   —  (a) 

Common stock - Class D shares, $0.01 par value per share, 500,000,000 shares authorized, 426,344 and 25,839 issued and outstanding at September 30, 2019 and December 31, 2018, respectively

   4   —  (b) 

Common stock - Class I shares, $0.01 par value per share, 500,000,000 shares authorized, 1,470,148 and 186,474 shares issued and outstanding at September 30, 2019 and December 31, 2018, respectively

   15   2 

Common stock - Class N shares, $0.01 par value per share, 100,000,000 shares authorized, 29,730,608 shares issued and outstanding at September 30, 2019 and December 31, 2018

   297   297 

Additionalpaid-in capital

   319,405   298,419 

Accumulated deficit and cumulative distributions

   (14,860  (9,884

Accumulated other comprehensive (loss) income

   (1,170  42 
  

 

 

  

 

 

 

Total equity

   303,824   288,876 
  

 

 

  

 

 

 

Total liabilities and equity

  $447,870  $376,846 
  

 

 

  

 

 

 

(a)

The Class T Shares amount is not presented due to rounding; see Note 14.

(b)

The Class D Shares amount is not presented due to rounding; see Note 14.

March 31, 2020 (unaudited)December 31, 2019
Assets
Investments in real estate, net$370,540  $373,088  
Investments in international affiliated funds45,047  37,734  
Investments in real estate-related securities, at fair value30,047  35,240  
Investment in commercial mortgage loan, at fair value12,831  12,733  
Intangible assets, net27,883  28,769  
Cash and cash equivalents10,044  5,584  
Restricted cash2,781  10,087  
Other assets5,347  4,262  
Total assets$504,520  $507,497  
Liabilities and Equity
Credit facility$85,277  $107,777  
Mortgage payable, net47,520  47,502  
Intangible liabilities, net8,709  8,907  
Due to affiliates7,895  6,059  
Accounts payable, accrued expenses, and other liabilities6,509  5,798  
Subscriptions received in advance2,781  10,087  
Distributions payable1,924  5,102  
Total liabilities160,615  191,232  
Equity
Series A Preferred Stock129  125  
Common stock - Class T shares, $0.01 par value per share, 500,000,000 shares authorized, 2,358,700 and 1,377,256 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively24  14  
Common stock - Class S shares, $0.01 par value per share, 500,000,000 shares authorized, 1,255,756 and 70,151 issued and outstanding at March 31, 2020 and December 31, 2019, respectively13   
Common stock - Class D shares, $0.01 par value per share, 500,000,000 shares authorized, 1,115,645 and 572,675 issued and outstanding at March 31, 2020 and December 31, 2019, respectively10   
Common stock - Class I shares, $0.01 par value per share, 500,000,000 shares authorized, 3,200,941 and 1,965,962 shares issued and outstanding at March 31, 2020 and December 31, 2019, respectively32  20  
Common stock - Class N shares, $0.01 par value per share, 100,000,000 shares authorized, 29,730,608 shares issued and outstanding at March 31, 2020 and December 31, 2019297  297  
Additional paid-in capital376,382  336,147  
Accumulated deficit and cumulative distributions(32,140) (19,974) 
Accumulated other comprehensive loss(842) (370) 
Total equity343,905  316,265  
Total liabilities and equity$504,520  $507,497  
The accompanying notes are an integral part of these consolidated financial statements.
1

Table of contents

Nuveen Global Cities REIT, Inc.
Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
Three Months Ended
March 31,
20202019
Revenues
Rental revenue$9,458  $6,745  
Income from commercial mortgage loan245  21  
Total revenues9,703  6,766  
Expenses
Rental property operating2,962  2,286  
General and administrative1,034  958  
Advisory fee due to affiliate727  467  
Depreciation and amortization4,144  3,387  
Total expenses8,867  7,098  
Other income (expense)
Realized and unrealized (loss) income from real estate-related securities(7,667) 4,986  
Income (loss) from equity investment in unconsolidated international affiliated funds1,690  (165) 
Unrealized loss on commercial mortgage loan(331) —  
Interest income35  11  
Interest expense(1,189) (752) 
Total other (expense) income(7,462) 4,080  
Net (loss) income(6,626) 3,748  
Net income attributable to Series A preferred stock  
Net (loss) income attributable to common stockholders$(6,630) $3,744  
Net (loss) income per share of common stock - basic and diluted$(0.18) $0.12  
Weighted-average shares of common stock outstanding, basic and diluted36,062,045  29,994,015  
The accompanying notes are an integral part of these consolidated financial statements.

2

Nuveen Global Cities REIT, Inc.

Consolidated Statements of OperationsComprehensive Income (Loss) (Unaudited)

(in thousands, except share and per share data)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
  2019  2018  2019  2018 

Revenues

    

Rental revenue

 $7,939  $4,536  $22,313  $10,373 

Income from commercial mortgage loan

  259   —     1,119   —   
 

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

  8,198   4,536   23,432   10,373 

Expenses

    

Rental property operating

  2,543   1,695   7,169   3,799 

General and administrative

  811   623   2,842   3,545 

Advisory fee due to affiliate

  527   397   1,490   1,038 

Depreciation and amortization

  3,351   2,855   10,530   6,484 
 

 

 

  

 

 

  

 

 

  

 

 

 

Total expenses

  7,232   5,570   22,031   14,866 

Other income (expense)

    

Realized and unrealized income from real estate-related securities

  2,561   153   7,666   2,323 

(Loss) income from equity investment in unconsolidated international affiliated funds

  (85  20   (85  20 

Interest income

  31   12   82   73 

Interest expense

  (1,262  —     (3,352  —   
 

 

 

  

 

 

  

 

 

  

 

 

 

Total other income (expense)

  1,245   185   4,311   2,416 
 

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

  2,211   (849  5,712   (2,077
 

 

 

  

 

 

  

 

 

  

 

 

 

Net income attributable to Series A preferred stock

  4   —     11   —   
 

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to common stockholders

 $2,207  $(849 $5,701  $(2,077
 

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) per share of common stock - basic and diluted

 $0.07  $(0.04 $0.19  $(0.10
 

 

 

  

 

 

  

 

 

  

 

 

 

Weighted-average shares of common stock outstanding, basic and diluted

  31,361,717   23,552,069   30,597,512   20,891,594 
 

 

 

  

 

 

  

 

 

  

 

 

 

thousands)

Three Months Ended
March 31,
20202019
Net (loss) income$(6,626) $3,748  
Other comprehensive loss:
Foreign currency translation adjustment(472) (392) 
Comprehensive (loss) income(7,098) 3,356  
Comprehensive income attributable to Series A preferred stock  
Comprehensive (loss) income attributable to common stockholders$(7,102) $3,352  
The accompanying notes are an integral part of these consolidated financial statements.

3

Nuveen Global Cities REIT, Inc.

Consolidated Statements of Comprehensive Income (Loss) (Unaudited)

(Changes in thousands)

  Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
      2019          2018          2019          2018     

Net income (loss)

 $2,211  $(849 $5,712  $(2,077

Other comprehensive (loss) income:

    

Unrealized (loss) from currency translation

  (1,070  (18  (1,212  (18
 

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive income (loss)

  1,141   (867  4,500   (2,095
 

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive income attributable to Series A preferred stock

  4   —     11   —   
 

 

 

  

 

 

  

 

 

  

 

 

 

Comprehensive income (loss) attributable to common stockholders

 $1,137  $(867 $4,489  $(2,095
 

 

 

  

 

 

  

 

 

  

 

 

 

Equity

(Unaudited) (in thousands, except share data)

Three Months Ended March 31, 2020
Series A
Preferred
Stock
Par ValueAdditional
Paid-in
Capital
Accumulated
Deficit and
Cumulative
Distributions
Accumulated
Other
Comprehensive
Loss
Total
Equity
Common Stock Class TCommon Stock Class SCommon Stock Class DCommon
Stock
Class I
Common
Stock
Class N
Balance at December 31, 2019125  14   520297$336,147  $(19,974) $(370) $316,265  
Issuance of 2,123,497 shares of common stock (net of $166 of offering costs)—  10  12   12  —  39,929  —  —  39,968  
Distribution reinvestments—  —  (a)—  (a)—  (a)—  (a)—  295  —  —  295  
Amortization of restricted stock grants—  —  —  —  —  —  11  —  —  11  
Common stock repurchased—  —  —  —  —  —  —  —  —  —  
Net income (loss) —  —  —  —  —  —  (6,630) —  (6,626) 
Distributions on common stock—  —  —  —  —  —  —  (5,536) —  (5,536) 
Foreign currency translation adjustment—  —  —  —  —  —  —  —  (472) (472) 
Balance at March 31, 2020$129  $24  $13  $10  $32  $297  $376,382  $(32,140) $(842) $343,905  
(a)The Class T, Class S, Class D, and Class I distribution reinvestment amounts are not presented due to rounding; see Note 14.

Three Months Ended March 31, 2019
Series A
Preferred
Stock
Par Value
Additional
Paid-in
Capital
Accumulated
Deficit and
Cumulative
Distributions
Accumulated
Other
Comprehensive Income
(Loss)
Total
Equity
Common
Stock
Class T
Common
Stock
Class D
Common
Stock
Class I
Common
Stock
Class N
Balance at December 31, 2018$—  $—  $—  $ $297  $298,419  $(9,884) $42  $288,876  
Issuance of 93,740 shares of common stock (net of $69 of offering costs)—  —  (a) —  (a) —  (a) —  775  —  —  775  
Distribution reinvestments—  —  —  (b) —  (b) —  10  —  —  10  
Amortization of restricted stock grants—  —  —  —  —  11  —  —  11  
Net income —  —  —  —  —  3,744  —  3,748  
Distributions on common stock—  (2) (3) (15) (2,646) —  —  —  (2,666) 
Issuance of 125 shares of Series A preferred stock125  —  —  —  —  —  —  —  125  
Foreign currency translation adjustment—  —  —  —  —  —  —  (392) (392) 
Balance at March 31, 2019$129  $(2) $(3) $(13) $(2,349) $299,215  $(6,140) $(350) $290,487  
(a)The Class D, Class T, and Class I Shares amount is not presented due to rounding; see Note 14.
(b)The Class D and Class I Distribution reinvestment amount is not presented due to rounding; see Note 14.

The accompanying notes are an integral part of these consolidated financial statements.

4

Nuveen Global Cities REIT, Inc.

Consolidated Statements of Changes Cash Flows (Unaudited)
(in Equity

(Unaudited) (in thousands, except share data)

Three Months Ended September 30, 2019

 
  Series A
Preferred
Stock
  Par Value  Additional
Paid-in
Capital
  Accumulated
Deficit and
Cumulative
Distributions
  Accumulated
Other
Comprehensive
Income
  Total
Equity
 
  Common
Stock
Class T
  Common
Stock
Class D
  Common
Stock
Class I
  Common
Stock
Class N
 

Balance at June 30, 2019

 $125  $2  $1  $6  $297  $304,720  $(12,894 $(100 $292,157 

Issuance of 1,459,507 shares of common stock (net of $212 of offering costs)

  —     2   3   9   —     14,730   —     —     14,744 

Distribution reinvestment

  —     —  (a)   —  (a)   —  (a)   —     42   —     —     42 

Common stock repurchased

  —     —     —     —     —     (104  —     —     (104

Amortization of restricted stock grants

  —     —     —     —     —     17   —     —     17 

Net income

  4   —     —     —     —     —     2,207   —     2,211 

Distributions declared on common stock

  —     —     —     —     —     —     (4,173  —     (4,173

Foreign currency translation adjustment

  —     —     —     —     —     —     —     (1,070  (1,070
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2019

 $129  $4  $4  $15  $297  $ 319,405  $(14,860 $(1,170 $303,824 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(a)

The Class T, Class D, and Class I distribution reinvestment amounts are not presented due to rounding; see Note 14.

Three Months Ended September 30, 2018

 
     Par Value  Additional
Paid-in
Capital
  Accumulated
Deficit and
Cumulative
Distributions
  Accumulated
Other
Comprehensive
Income
  Total
Equity
 
  Series A
Preferred
Stock
  Common
Stock
Class T
  Common
Stock
Class D
  Common
Stock
Class I
  Common
Stock
Class N
 

Balance at June 30, 2018

 $—    $—    $—    $1  $225  $222,443  $(1,556 $—    $221,113 

Issuance of 13,935,702 shares of common stock (net of $257 of offering costs)

  —     —     —  (a)   —     15   15,277   —     —     15,292 

Amortization of restricted stock grants

  —     —     —     —     —     17   —     —     17 

Net loss

  —     —     —     —     —     —     (849  —     (849

Distributions declared on common stock

  —     —     —     —     —     —     (1,905  —     (1,905

Foreign currency translation adjustment

  —     —     —     —     —     —     —     (18  (18
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2018

 $—    $—    $—    $1  $240  $ 237,737  $(4,310 $(18 $233,650 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(a)

The Class D Shares amount is not presented due to rounding; see Note 14.

thousands)

Nine Months Ended September 30, 2019

 
     Par Value  Additional
Paid-in
Capital
  Accumulated
Deficit and
Cumulative
Distributions
  Accumulated
Other
Comprehensive
Income
  Total
Equity
 
  Series A
Preferred
Stock
  Common
Stock
Class T
  Common
Stock
Class D
  Common
Stock
Class I
  Common
Stock
Class N
 

Balance at December 31, 2018

 $—    $—    $—    $2  $297  $298,419  $(9,884 $42  $288,876 

Issuance of 2,123,497 shares of common stock (net of $613 of offering costs)

  —     4   4   13   —     20,975   —     —     20,996 

Distribution reinvestment

  —     —  (a)   —  (a)   —  (a)   —     64   —     —     64 

Common stock repurchased

       (104    (104

Amortization of restricted stock grants

  —     —     —     —     —     51   —     —     51 

Net income

  11   —     —     —     —     —     5,701   —     5,712 

Distributions declared on common stock

  —     —     —     —     —     —     (10,677  —     (10,677

Issuance of Series A preferred stock

  125   —     —     —     —     —     —     —     125 

Distribution to Series A preferred stock

  (7  —     —     —     —     —     —     —     (7

Foreign currency translation adjustment

  —     —     —     —     —     —     —     (1,212  (1,212
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2019

 $129  $4  $4  $15  $297  $ 319,405  $(14,860 $(1,170 $303,824 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(a)

The Class T, Class D, and Class I distribution reinvestment amounts are not presented due to rounding; see Note 14.

Nine Months Ended September 30, 2018

 
     Par Value  Additional
Paid-in
Capital
  Accumulated
Deficit and
Cumulative
Distributions
  Accumulated
Other
Comprehensive
Income
  Total
Equity
 
  Series A
Preferred
Stock
  Common
Stock
Class T
  Common
Stock
Class D
  Common
Stock
Class I
  Common
Stock
Class N
 

Balance at December 31, 2017

 $—    $—    $—    $—    $124  $ 124,126  $(328 $—    $123,922 

Issuance of 24,061,114 shares of common stock (net of $3,477 of offering costs)

  —     —     —  (a)   1   116   113,566   —     —     113,683 

Amortization of restricted stock grants

  —     —     —     —     —     45   —     —     45 

Net loss

  —     —     —     —     —     —     (2,077  —     (2,077

Distribution declared on common stock

  —     —     —     —     —     —     (1,905  —     (1,905

Foreign currency translation adjustment

  —     —     —     —     —     —     —     (18  (18
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Balance at September 30, 2018

 $—    $—    $—    $1  $240  $237,737  $(4,310 $(18 $233,650 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

(a)

The Class D Shares amount is not presented due to rounding; see Note 14.

Three Months Ended
March 31,
20202019
Cash flows from operating activities:
Net (loss) income$(6,626) $3,748  
Adjustments to reconcile net (loss) income to net cash provided by operating activities:
Depreciation and amortization4,144  3,387  
Unrealized loss (gain) on changes in fair value of real estate-related securities6,498  (4,769) 
Realized loss on sale of real estate-related securities1,459  76  
(Income) loss from equity investment in unconsolidated international affiliated funds(1,690) 165  
Income distribution from equity investment in unconsolidated international affiliated funds282  —  
Unrealized loss on changes in fair value of commercial mortgage loan331  —  
Straight line rent adjustment(665) (410) 
Amortization of below-market lease intangibles(184) (87) 
Amortization of above-market lease intangibles —  
Amortization of loan closing costs127  99  
Amortization of restricted stock grants11  11  
Change in assets and liabilities:
Escrow for commercial mortgage loan—  1,096  
Increase in other assets(522) (421) 
Increase in due to affiliates—  120  
Increase (decrease) in accounts payable, accrued expenses, and other liabilities853  (434) 
Net cash provided by operating activities4,022  2,581  
Cash flows from investing activities:
Origination and fundings of commercial mortgage loan(429) (45,202) 
Funding for investment in international affiliated funds(6,377) —  
Capital improvements to real estate(876) (62) 
Purchase of real estate-related securities(11,783) (2,907) 
Proceeds from sale of real estate-related securities9,019  2,876  
Net cash used in investing activities(10,446) (45,295) 
Cash flows from financing activities:
Proceeds from issuance of common stock42,242  969  
Offering costs paid(144) —  
Borrowings from credit facility20,000  45,000  
Repayments on credit facility(42,500) —  
Proceeds from issuance of Series A preferred stock—  110  
Subscriptions received in advance(7,306) 2,467  
Distributions to common stockholders(8,714) (2,484) 
Net cash provided by financing activities3,578  46,062  
Net (decrease) increase in cash and cash equivalents and restricted cash during the period(2,846) 3,348  
Cash and cash equivalents and restricted cash, beginning of period15,671  5,699  
Cash and cash equivalents and restricted cash, end of period$12,825  $9,047  

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Reconciliation of cash and cash equivalents and restricted cash to the Consolidated Balance Sheets, end of period:
Cash and cash equivalents$10,044  $5,485  
Restricted cash2,781  3,562  
Total cash and cash equivalents and restricted cash$12,825  $9,047  
Supplemental disclosures:
Interest paid$1,233  $534  
Series A preferred stock costs$—  $15  
Non-cash investing activities:
Accrued capital expenditures$(149) $10  
Non-cash financing activities:
Accrued distributions$3,178  $2,666  
Accrued stockholder servicing fees$1,836  $74  
Distribution reinvestments$285  $10  
Accrued offering costs$19  $—  
Accrued offering costs due to affiliate$—  $3,557  
The accompanying notes are an integral part of these consolidated financial statements.

6

Nuveen Global Cities REIT, Inc.

Consolidated Statements of Cash Flows (Unaudited)

(in thousands)

   Nine Months Ended
September 30,
 
   2019  2018 

Cash flows from operating activities:

   

Net income (loss)

  $5,712  $(2,077

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

   

Depreciation and amortization

   10,530   6,484 

Unrealized gain on changes in fair value of real estate-related securities

   (4,859  (1,459

Realized gain on sale of real estate-related securities

   (1,969  (360

Loss (income) from equity investment in unconsolidated international affiliated funds

   85   (20

Income distribution from equity investment in unconsolidated international affiliated funds

   207   —   

Straight line rent adjustment

   (952  (714

Amortization of below-market lease intangibles

   (370  (46

Amortization of above-market lease intangibles

   13   —   

Amortization of loan closing costs

   306   —   

Amortization of restricted stock grants

   51   45 

Change in assets and liabilities:

   

(Increase) in other assets

   (1,382  (788

Increase in due to affiliates

   697   1,091 

Increase in accounts payable, accrued expenses, and other liabilities

   762   1,036 
  

 

 

  

 

 

 

Net cash provided by operating activities

   8,831   3,192 
  

 

 

  

 

 

 

Cash flows from investing activities:

   

Acquisitions of real estate

   (44,095  (81,056

Origination and fundings of commercial mortgage loan

   (46,619  —   

Proceeds from sale of commercial mortgage loan

   34,264   —   

Funding for investment in international affiliated funds

   (9,890  (3,036

Capital improvements to real estate

   (708  (115

Deposits on real estate property

   —     (3,750

Pre-acquisition costs

   —     (35

Purchase of real estate-related securities

   (22,043  (26,268

Proceeds from sale of real estate-related securities

   22,151   6,284 
  

 

 

  

 

 

 

Net cash used in investing activities

   (66,940  (107,976
  

 

 

  

 

 

 

Cash flows from financing activities:

   

Proceeds from issuance of common stock

   22,366   117,160 

Repurchase of common stock

   (104  —   

Offering costs paid

   (613  —   

Borrowings from credit facility

   86,277   —   

Repayments on credit facility

   (38,000  —   

Deposit on mortgage note

   (528  —   

Payment of deferred financing costs

   (393  —   

Proceeds from issuance of Series A preferred stock

   125   —   

Distributions to Series A preferred stock

   (7  —   

Subscriptions received in advance

   4,529   550 

Distributions to common stockholders

   (8,988  —   
  

 

 

  

 

 

 

Net cash provided by financing activities

   64,664   117,710 
  

 

 

  

 

 

 

Net increase in cash and cash equivalents and restricted cash during the period

   6,555   12,926 

Cash and cash equivalents and restricted cash, beginning of period

   5,699   3,681 
  

 

 

  

 

 

 

Cash and cash equivalents and restricted cash, end of period

  $12,254  $16,607 
  

 

 

  

 

 

 

sheets, end of period:

   

Cash and cash equivalents

  $7,725  $16,034 

Restricted cash

   4,529   573 
  

 

 

  

 

 

 

Total cash and cash equivalents and restricted cash

  $12,254  $16,607 
  

 

 

  

 

 

 

Supplemental disclosures:

   

Interest paid

  $2,947  $—   
  

 

 

  

 

 

 

Series A preferred stock costs

  $15  $—   
  

 

 

  

 

 

 

Non-cash investing activities:

   

Assumption of other liabilities in conjunction with acquisitions of real estate

  $327  $661 
  

 

 

  

 

 

 

Accrued capital expenditures

  $219  $14 
  

 

 

  

 

 

 

Non-cash financing activities:

   

Accrued distributions

  $4,173  $1,905 
  

 

 

  

 

 

 

Accrued stockholder servicing fees

  $651  $23 
  

 

 

  

 

 

 

Distribution reinvestments

  $64  $—   
  

 

 

  

 

 

 

Accrued offering costs due to affiliate

  $4,101  $3,454 
  

 

 

  

 

 

 

The accompanying notes are an integral part of these

Notes to consolidated financial statements.

statements (Unaudited)

Nuveen Global Cities REIT, Inc.

Notes to Consolidated Financial Statements (Unaudited)

Note 1. Organization and Business Purpose

Nuveen Global Cities REIT, Inc. (the “Company”) was formed on May 1, 2017 as a Maryland corporation and qualifieselected to be taxed as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with its taxable year ending December 31, 2018. The Company’s sponsor is Nuveen, LLC (the “Sponsor”), a wholly owned subsidiary of Teachers Insurance and Annuity Association of America (“TIAA”). The Company is the sole general partner of Nuveen Global Cities REIT OP, LP, a Delaware limited partnership (“Nuveen OP”). Nuveen OP has issued a limited partner interest to Nuveen Global Cities REIT LP, LLC (the “Limited Partner”), a wholly owned subsidiary of the Company. The Company was organized to invest primarily in stabilized income-oriented commercial real estate in the United States and that a substantial but lesser portion of the Company’s portfolio will include real properties located in Canada, Europe and the Asia-Pacific region.

Substantially all of the Company’s business will be conducted through Nuveen OP. The Company and Nuveen OP are externally managed by Nuveen Real Estate Global Cities Advisors, LLC (the “Advisor”), an indirect, wholly owned subsidiary of the Sponsor.

Sponsor and an investment advisory affiliate of Nuveen Real Estate ("NRE").

Pursuant to a Registration Statement on FormS-11 (fileNo. 333-222231, the “Registration Statement”), the Company has registered with the Securities and Exchange Commission (the “SEC”) an offering of up to $5$5.0 billion in shares of common stock, consisting of up to $4$4.0 billion in shares in its primary offering and up to $1$1.0 billion in shares pursuant to its distribution reinvestment plan (the “Offering”). The Registration Statement was declared effective on January 31, 2018. The Company is publicly offering any combination of four4 classes of shares of its common stock, Class T shares, Class S shares, Class D shares and Class I shares, with a dollar value up to the maximum offering amount. The publicly offered share classes have different upfront selling commissions and ongoing stockholder servicing fees. The purchase price per share for each class of common stock in the Offering varies and will generally equal the Company’s prior month’s net asset value (“NAV”) per share, as calculated monthly, plus applicable upfront selling commissions and dealer manager fees.

Note 2. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying unaudited Consolidated Financial Statementsconsolidated financial statements include the accounts of the Company and its subsidiaries, and in the opinion of management, include all necessary adjustments, consisting of only normal and recurring items, necessary for a fair statement of the Company’s Consolidated Financial Statementsconsolidated financial statements as of September 30, 2019March 31, 2020 and for the three and nine months ended September 30, 2019March 31, 2020 and 2018 are unaudited and include all adjustments necessary to present a fair statement of results for the interim periods presented.2019. Results of operations for the interim periods are not necessarily indicative of results for the entire year. These financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the applicable rules and regulations of the SEC. Accordingly, they do not include all information and footnotes required by GAAP for complete financial statements. Certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed from this report pursuant to the rules of the SEC. The accompanying unaudited consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements prepared in accordance with GAAP, and the related notes thereto, that are included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 20182019 as filed with the SEC. Theyear-end balance sheet was derived from those audited financial statements.
All intercompany balances and transactions have been eliminated in consolidation. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumption that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the balance sheet. Actual results could differ from those estimates.


Investments in Real Estate

In accordance with the guidance for business combinations, the Company determines whether the acquisition of a property qualifies as a business combination, which requires that the assets acquired and liabilities assumed constitute a business. If the property acquired is not a business, the Company accounts for the transaction as an asset acquisition.

All property acquisitions to date have been accounted for as asset acquisitions.

Whether the acquisition of a property acquired is considered a business combination or asset acquisition, the Company recognizes the identifiable assets acquired, the liabilities assumed, and anynon-controlling interest in the acquired entity. In addition, for transactions that arewill be considered business combinations, the Company evaluateswill evaluate the existence of goodwill or
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a gain from a bargain purchase. The Company expenseswould expense acquisition-related costs associated with business combinations as they are incurred. The Company capitalizes acquisition-related costs associated with asset acquisition.

acquisitions.

Upon acquisition of a property, the Company assesses the fair value of acquired tangible and intangible assets (including land, buildings, tenant improvements, above-market and below-market leases, acquiredin-place leases, other identified intangible assets and assumed liabilities) and allocates the purchase price to the acquired assets and assumed liabilities. The Company assesses and considers fair value based on estimated cash flow projections that utilize discount and/or capitalization rates that it deems appropriate, as well as other available market information. Estimates of future cash flows are based on a number of factors including the historical operating results, known and anticipated trends, and market and economic conditions.

The fair value of the tangible assets of an acquired property considers the value of the property as if it were vacant. The Company also considers an allocation of purchase price of other acquired intangibles, including acquiredin-place leases that may have a customer relationship intangible value, including but not limited to the nature and extent of the existing relationship with the tenants, the tenants’ credit quality and expectations of lease renewals. Based on its acquisitions to date, the Company’s allocation to customer relationship intangible assets has not been material.

The Company records acquired above-market and below-market leases at their fair values (using a discount rate which reflects the risks associated with the leases acquired) equal to the difference between (1) the contractual amounts to be paid pursuant to eachin-place lease and (2) management’s estimate of fair market lease rates for each correspondingin-place lease, measured over a period equal to the remaining term of the lease for above- market leases and the initial term plus the term of any below-market fixed rate renewal options for below-market leases. Other intangible assets acquired include amounts forin-place lease values that are based on the Company’s evaluation of the specific characteristics of each tenant’s lease. Factors to be considered include estimates of carrying costs during hypothetical expectedlease-up periods considering current market conditions, and costs to execute similar leases. In estimating carrying costs, the Company includes real estate taxes, insurance and other operating expenses and estimates of lost rentals at market rates during the expectedlease-up periods, depending on local market conditions. In estimating costs to execute similar leases, the Company considers leasing commissions, legal and other related expenses.

Intangible assets and intangible liabilities are recorded as separate components on the Company's Consolidated Balance Sheets. The amortization of acquired above-market leases and below-market leases is recorded as an adjustment to rental revenueRental Revenue on the Company’s Consolidated Statements of Operations. The amortization ofin-place leases is recorded as an adjustment to depreciationDepreciation and amortization expenseAmortization on the Company's Consolidated Statements of Operations.

The cost of buildings and improvements includes the purchase price of the Company’s properties and any acquisition-related costs,adjustments, along with any subsequent improvements to such properties. The Company’s investmentsInvestments in real estateReal Estate are stated at cost and are generally depreciated on a straight-line basis over the estimated useful lives of the assets as follows:

Description

Depreciable Life

Building and building improvements

40 years
Building, land and site improvements15-40 years

Land improvements

15 years

Furniture, fixtures and equipment

3-7 years

Lease intangibles

Over lease term

Significant improvements to properties are capitalized. When assets are sold or retired, their costs and related accumulated depreciation or amortization are removed from the accounts with the resulting gains or losses reflected in net income or loss for the period.

Repairs and maintenance are expensed to operations as incurred and are included in rental property operating expenseRental Property Operating on the Company’s Consolidated Statements of Operations.

The Company’s management reviews its real estate properties for impairment each quarter or when there is an event or change in circumstances that indicates an impaired value. If the carrying amount of the real estate investment is no longer recoverable and exceeds the fair value of such investment, an impairment loss is recognized. The impairment loss is recognized based on the excess of the carrying amount of the asset over its fair value, or fair value, less cost to sell if classified as held for sale. If the Company’s strategy changes or market conditions otherwise dictate an earlier sale date, an impairment loss may be recognized and such loss could be material to the Company’s results. If the Company determines that an impairment has occurred, the affected assets must be reduced to their fair value or fair value, less cost to sell if classified as held for sale. During the period presented, no such impairment occurred.

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Investments in Real Estate-Related Securities

The Company has elected the fair market value option for accounting for real estate-related securities and changes in fair value are recorded in the current period earnings. Dividend income is recorded when declared. Thedeclared and the resulting dividend income, andalong with gains and losses are recorded as a component of realizedRealized and unrealized incomeUnrealized Income from real estate-related securitiesReal Estate-Related Securities on the Company’s Consolidated Statements of Operations.

Investments in International Affiliated Funds

The Company reports its investment in European Cities Partnership SCSp (“ECF”) and Asia Pacific Cities Fund FCP (“APCF”), investment funds managed by an affiliate of TIAA, (the “International Affiliated Funds”), under the equity method of accounting. The equity method income (loss) from the investments in the International Affiliated Funds represent the Company’s allocable share of each fund’s net income for the three and nine months ended September 30, 2019 and is reported as income (loss) from equity investment in unconsolidated international affiliated funds on the Company’s Consolidated Statement of Operations.

Investment in International Affiliated Funds includes the Company’s allocable share of the International Affiliated Funds’ net income,or loss, which includes income and expense, realized gains and losses, and unrealized appreciation or depreciation as determined from the financial statements of ECF and APCF (which carry investments at fair value in accordance with the applicable GAAP) when received byand is reported as Income (Loss) from Equity Investment in Unconsolidated International Affiliated Funds on the Company. Company’s Consolidated Statement of Operations.

All contributions to or distributions from the investment in the International Affiliated Funds is accrued when notice is received and recorded as a receivable from or payable to the International Affiliated Funds on the Company’sCompany's Consolidated Balance Sheets.

Investment in Commercial Mortgage Loan at Fair Value

The Company originated its first commercial mortgage loan in March 2019 and elected the fair value option. In accordance with the adoption of the fair value option allowed under ASC 825, Financial Instruments, and at the election of the Company, the commercial mortgage loan is stated at fair value and iswas initially valued at the face amount of the loan funding. Subsequently, the commercial mortgage loan is valued at least quarterly by an independent third-party valuation firm with additional oversight being performed by the Advisor’s internal valuation department. The value is based on market factors, such as market interest rates and spreads for comparable loans, 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 borrower.

The income from commercial mortgage loan represents interest income and deferred origination fee income, which is amortized over the term of the loan and is reported as income from commercial mortgage loan on the Company’s Consolidated Statements of Operations. The initial and subsequent changes to the deferred origination fee is recorded in investments in commercial mortgage loan, at fair value on the Company’s Consolidated Balance Sheets.

In the event of a partial or whole sale of the commercial mortgage loan, the Company derecognizes the corresponding asset and removes the related deferred origination fee with the resulting income reflected in income from commercial mortgage loan on its Consolidated Statements of Operations. Feesfees paid as part of the partial or whole sale are recognized as expense in generalGeneral and administrativeAdministrative expenses on the Company’s Consolidated Statements of Operations.

Deferred Financing Costs

The Company's deferred charges include financing and leasing costs. Financing costs include legal, structuring, and other loan costs incurred by the Company for its financing arrangements. Deferred financing costs include certain costsrelated to obtain the credit facility and are included in other assetsrecorded as a component of Other Assets on the Company’s Consolidated Balance Sheets. These costs consist of external fees and costs incurred to obtain the Company’s credit facility. Such costs have been deferredSheets and are being amortized on a straight-line basis over the term of the credit facility and included within interest expense.facility. Unamortized costs are charged to expensesinterest expense upon early repayment or significant modification of the credit facility. Fullyfacility and fully amortized deferred financing costs are removed from the books upon the maturity of the credit facility.

Deferred financing costs related to the Company’s mortgage payable are recorded as an offset to the related liability and amortized over the term of the financing instrument. Deferred leasing costs incurred in connection with new leases, which consist primarily of brokerage and legal fees, are recorded as a component of Investments in Real Estate, Net on the Company’s Consolidated Balance Sheets and amortized over the life of the related lease.

Fair Value Measurement

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Accounting guidance also establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The standard describes three levels of inputs that may be used to measure fair value:

Level 1—quoted prices are available in active markets for identical investments as of the measurement date. The Company does not adjust the quoted price for these investments.

Level 2—quoted prices are available in markets that are not active or model inputs are based on inputs that are either directly or indirectly observable as of the measurement date.

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Level 3—pricing inputs are unobservable and include instances where there is minimal, if any, market activity for the investment.

These inputs require significant judgment or estimation by management or third parties when determining fair value and generally represent anything that does not meet the criteria of Levels 1 and 2. Due to the inherent uncertainty of these estimates, these values may differ materially from the values that would have been used had a ready market for these investments existed.

The carrying amounts of financial instruments such as other assets, accounts payable, accrued expenses and other liabilities approximate their fair values due to the short-term maturities and market rates of interest of these instruments.

As of September 30, 2019,March 31, 2020, the Company’s $35.9$30.0 million of investmentsInvestments in realReal estate-related securities consisted of shares of common stock of publicly-traded REITs and were classified as Level 1. These investments are recorded at fair value based on the closing price of the common stock as reported by national securities exchanges.

As of September 30, 2019,March 31, 2020, and subsequent to the sale of the senior portion of the commercialCommercial mortgage loan, the Company’s $12.3$12.8 million of investment in commercial mortgage loan consisted of a mezzanine loan the Company originated and was classified as Level 3. The commercial mortgage loan is carried at fair value based on significant unobservable inputs.

The following is a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) for the three months ended March 31, 2020 ($ in thousands):
Investment in Commercial Mortgage Loan
Balance as of December 31, 2019$12,733 
Additional Fundings429 
Net Unrealized Loss(331)
Balance as of March 31, 2020$12,831 
The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements comprising the investment in commercial mortgage loan as of March 31, 2020:
TypeAsset ClassValuation Technique(s)Unobservable InputsMarket Equivalent Rate
Commercial Mortgage LoanIndustrialCash Equivalency MethodDiscount Rate
LIBOR(1) + 7.05%
(1)LIBOR as of March 31, 2020 was 0.9%
As of March 31, 2020 and December 31, 2019, the carrying value of the Company's credit facility approximates fair value. As of March 31, 2020 and December 31, 2019, the fair value of the Company's mortgage payable was $47.0 million and the carrying value of the Company's mortgage payable approximated fair value, respectively. Fair value of the Company's indebtedness is estimated by modeling the cash flows required by the Company's debt agreements and discounting them back to present value using the appropriate discount rate. Additionally, the Company considers current market rates and conditions by evaluating similar borrowing agreements with comparable loan-to-value ratios and credit profiles. The inputs used in determining the fair value of the Company's indebtedness are considered Level 3.
Revenue Recognition

The Company’s sources of revenue arising from leasing arrangements and the related revenue recognition policies are as follows:

Rental revenue—revenueconsists primarily of base rent arising from tenant operating leases at the Company’s office, industrial, multifamily, retail and retailother properties. Rental revenue is recognized on a straight-line basis over the life of the lease, including any rent steps or abatement provisions. The Company begins to recognize revenue when a tenant takes possession of the leased space. The Company includes its tenant reimbursement income in rental revenue that consist of amounts due from tenants for costs related to common area maintenance, real estate taxes and other recoverable costs includes in lease agreements.

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Income from commercial mortgage loan—Commercial Mortgage Loanconsists of income from interest earned and recognized as operating income based upon the principal amount outstanding and the contracted interest rate along with origination fees. Loan origination fees, commitment fees and direct loan origination costs are offset and the net amount is deferred and amortized over the term of the related loan as an adjustment to yield using the effective interest method. The accrual of interest income on mortgage loans is discontinued when in management’s opinion, the borrower may be unable to meet payments as they become due (“nonaccrual mortgage loans”), unless the loan is well-secured and is in the process of collection. Interest income on nonaccrual mortgage loans is subsequently recognized only to the extent cash payment are received until the loans are returned to accrual status. As of September 30, 2019,March 31, 2020, the Company did not have any mortgage loans on nonaccrual status.

Leases
The Company derives revenue pursuant to lease agreements. At the inception of a contract, the Company assesses whether a contract is, or contains, a lease. A contract is, or contains, a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. At the lease inception, the Company determines whether each lease is a sales-type, direct financing or operating lease. Such classification is based on whether:
The lessee gains control of the underlying asset and the lessor therefore relinquishes control to the lessee under certain criteria (sales-type or direct-financing); or
All other leases that do not meet the criteria as sales-type or direct financing leases (operating).

The Company's leases are classified as operating leases in accordance with relevant accounting guidelines, and the related revenue is recognized on a straight-line basis.
Cash and Cash Equivalents

Cash and cash equivalents represents cash held in banks, cash on hand and liquid investments with original maturities of three months or less at the time of purchase. The Company may have bank balances in excess of federally insured amounts; however, the Company deposits its cash with high credit-quality institutions to minimize credit risk.

Restricted Cash

As of September 30, 2019,March 31, 2020, restricted cash consists of $4.5$2.8 million of cash received for subscriptions prior to the date in which the subscriptions are effective, which is held in a bank account controlled by the Company’s transfer agent, but in the name of the Company.

Income Taxes

The Company iselected to be taxed as a REIT under Sections 856 through 860 of the Internal Revenue Code (“the Code”) commencing with its taxable year ending December 31, 2018.2018 and intends to continue to qualify as a REIT. In qualifying for taxation as a REIT, the Company generally is not subject to federal corporate income tax to the extent it distributes annually at least 90% of its taxable income to its stockholders. REITs are subject to a number of other organizational and operational requirements. Even in qualifying for taxation as a REIT, the Company may be subject to certain state and local taxes on its income and property, and federal income and excise taxes on its undistributed income. The Company may elect to treat certain of its corporate subsidiaries as taxable REIT subsidiaries (“TRSs”). In general, a TRS may perform additional services for the Company’s tenants and generally may engage in any real estate ornon-real estate-related business other than management or operation of a lodging facility or a health care facility. A domestic TRS is subject to U.S. federal corporate federal income tax. The Cayman Islands TRSs are not subject to federal corporate federal income tax or Cayman Islands taxes. As of September 30, 2019,March 31, 2020, the Company has three3 active TRSs: the Company uses two Cayman Islands TRSs to hold its investments in the International Affiliated Funds and used one domestic TRS to hold itsthe senior loanportion of the commercial mortgage loan, investment, which has since been sold. The Company recorded a federal tax provision of $7,000 for the three and nine months ended September 30, 2019.

Tax legislation commonly referred to as the Tax Cuts & Jobs Act (the “TCJA”) was enacted on December 22, 2017. Among other things, the TCJA reduces the U.S. federal corporate income tax rate from 35% to 21% and createscreated new taxes on certain foreign-sourced earnings. Federal legislation intended to ameliorate the economic impact of the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the "CARES Act"), was enacted on March 27, 2020, which, among other things, makes technical corrections to, or modifies on a temporary basis, certain of the provisions of the TCJA.
Management has evaluated the effects of TCJA, as modified by the CARES Act and concluded that the TCJA will not materially impact its Consolidated Financial Statements.consolidated financial statements. The Company also estimates that the new taxes on foreign-sourced earnings imposed under the TCJA are not likely to apply to its foreign investments.

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On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740, Income Taxes. Though the Company believes that the impacts of the TCJA will be immaterial to its financial results, the Company continues to analyze certain aspects of the TCJA, therefore its estimates may change as additional information becomes available. Many of the provisions of the TCJA will require guidance through the issuance of Treasury regulations in order to assess their effect. There may be a substantial delay before such regulations are promulgated, increasing the uncertainty as to the ultimate effect of the statutory amendments on the Company. It is also likely that there will be technical corrections legislation proposed with respect to the TCJA this year, the effect of which cannot be predicted and may be adverse to the Company or its stockholders.

Organization and Offering Expenses

Organization costs are expensed as incurred and recorded as a component of general and administrative expenses on the Company’s Consolidated Statements of Operations and offering costs are charged to equity as such amounts are incurred.

The Advisor has agreed to advance organization and offering expenses on behalf of the Company (including legal, accounting, and other expenses attributable to the organization, but excluding upfront selling commissions, dealer manager fees and stockholder servicing fees) through the fourth full fiscal quarter after the Company’s acquisition of its first property. The Company will reimburse the Advisor for all such advanced expenses it incurred in 60 equal monthly installments commencing on the earlier of the date the Company’sCompany's NAV reaches $1$1.0 billion or January 31, 2023.

As of September 30, 2019,March 31, 2020, the Advisor and its affiliates had incurred organization and offering expenses on the Company’s behalf of $4.6 million, consisting of offering costs of $3.5 million and organization costs of $1.1 million. Such costs became the Company’s liability on January 31, 2018, the date on which the Offering was declared effective. These organization and offering costs are recorded as due to affiliates on the Company’s Consolidated Balance Sheets as of September 30, 2019March 31, 2020 and December 31, 2018.

2019.

Offering costs are currently charged to equity as such amounts are incurred. For the three months ended March 31, 2020 and 2019, the Company incurred $0.2 million and $0.1 million, respectively in offering costs to equity.

Foreign Currency

The financial position and results of operations of ECF is measured using the local currency (Euro) as the functional currency and are translated into U.S. dollars for purposes of recording the related activity under the equity method of accounting. Net income (loss), which includes the Company’s allocable share of the International Affiliated Funds income and expense, realized gains and losses and unrealized appreciation or depreciation, has been translated at average exchange rates prevailing during the period. Assets and liabilities have been translated at the rates of exchange on the balance sheet date. The resulting translation gain and loss adjustments are recorded directly as a separate component of accumulated other comprehensive income, unless there is a sale or complete liquidation of the underlying foreign investments. Foreign currency translation adjustments resulted in other comprehensive losses of $1.1approximately $0.5 million and $1.2$0.4 million, respectively, for the three and nine months ended September 30,March 31, 2020 and March 31, 2019.

The financial position and results of operations of APCF is measured in U.S. dollars for purposes of recording the related activity under the equity method of accounting. There is no direct foreign currency exposure to the Company for its investment in APCF.

Earnings per Share

Basic net income/(loss) per share of common stock is determined by dividing net income/(loss) attributable to common stockholders by the weighted average number of common shares outstanding during the period. All classes of common stock are allocated net income/(loss) at the same rate per share.

Recent Accounting Pronouncements

Pending Adoption:

In August 2018,December 2019, the Financial Accounting Standards Board (“FASB”("FASB") issued Accounting Standards Update ("ASU") 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, (“ASU”ASU 2019-12”). The guidance removes certain exceptions to the general principles of ASC 740 in order to reduce the cost and complexity of its application. The guidance is effective for annual and interim periods beginning after December 15, 2020. Management is assessing the impact of the guidance and does not expect the guidance to materially impact the Company.

12

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another reference rate expected to be discontinued. The guidance is effective for all entities as of March 12, 2020 through December 31, 2022. Management is assessing the impact and does not expect the guidance to materially impact the Company.

Recently Adopted:
In August 2018, the (“FASB”) issued ASU 2018-13, “Fair Fair Value Measurement: Disclosure Framework—Changes to the Disclosure Requirements for Fair Value Measurements”Measurements (“ASU2019-13” 2018-13”). ASU2018-13 modifies the disclosures required for fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019. The Company doesadopted ASU 2018-13 and concluded that the adoption did not expect the guidance to materiallyhave a material impact the Consolidated Financial Statements.

on its consolidated financial statements.

In June 2016, the FASB issued ASU2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, (“ASU2016-13”). The guidance which changes the impairment model for most financial assets. The new model uses a forward-looking expected loss method, which will generally result in earlier recognition of allowances for losses. ASU2016-13The guidance is not applicable to fair-valued receivables or operating lease receivables. The guidance is effective for annual and interim periods beginning after December 15, 2019, and early adoption is permitted for annual and interim periods beginning after December 15, 2018. In November 2018, the FASB issued ASU2018-19, Codification Improvements to Topic 326, Financial Instruments—Credit Losses (“ASU2018-19”) to clarify certain aspects of ASU2016-13, including that operating lease receivables recorded by lessors are explicitly excluded from the scope of ASU2016-13.2019. The Company must applyadopted ASU 2016-13 and concluded that the amendments in this update throughadoption did not have a cumulative-effect adjustmentmaterial impact to retained earnings as of the beginning of the first reporting period in which the guidance is effective. The Company does not expect the guidance to materially impact the Consolidated Financial Statements.

Recently Adopted:

its consolidated financial statements.


In February 2016, the FASB issued Accounting Standards UpdateASU 2016-02, Leases (Topic 842) (“ASU2016-02”) which supersedes Topic 840, Leases. This ASULeases and applies to all entities that enter into leases. Lessees are required to report assets and liabilities that arise from leases. Lessor accounting has largely remained unchanged; however, certain refinements were made to conform with revenue recognition guidance in ASU2014-09, Revenue from Contracts with Customers (Topic 606), specifically related to the allocation and recognition of contract consideration earned from lease andnon-lease revenue components. ASU2016-02 contains certain practical expedients, which the Company has elected.

The Company has elected the transition package of practical expedients permitted within the new standard. This practical expedient permits the Company to carryforward the historical lease classification and not to reassess initial direct costs for any existing leases.

In addition, the Company has elected the practical expedient that allows lessors to avoid separating lease andnon-lease components within a contract if certain criteria are met. The lessor’s practical expedient election is limited to circumstances in which (i) the timing and pattern of revenue recognition are the same for thenon-lease component and the related lease component and (ii) the combined single lease component would be classified as an operating lease. This practical expedient allows the Company the ability to combine the lease andnon-lease components if the underlying asset meets the two criteria above.

In February 2019, the FASB issued ASU2019-01, Leases (Topic 842) Codification Improvements (“ASU2019-01”). ASU2019-01 addresses two lessor implementation issues and clarifies an exemption for lessors and

lessees from a certain interim disclosure requirement associated with adopting the new lease accounting standard. One exemption applicable to the Company would ASU2019-01 exempt the Company from having to provide certain interim disclosures in the fiscal year in which a company adopts the new lease accounting standard. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Company early adopted ASU2019-01 and concluded that the adoption did not have a material impact on its Consolidated Financial Statements.

consolidated financial statements.

Note 3. Investments in Real Estate

Investments in real estate, netReal Estate, Net consisted of the following (in($ in thousands):

   September 30, 2019   December 31, 2018 

Building and building improvements

  $283,369   $249,552 

Land and land improvements

   50,591    46,609 

Furniture, fixtures and equipment

   3,435    3,249 
  

 

 

   

 

 

 

Total

   337,395    299,410 

Accumulated depreciation

   (12,012   (5,036
  

 

 

   

 

 

 

Investments in real estate, net

  $325,383   $294,374 
  

 

 

   

 

 

 

March 31, 2020December 31, 2019
Building and building improvements$323,486  $323,162  
Land and land improvements61,098  61,098  
Furniture, fixtures and equipment3,548  3,474  
Total388,132  387,734  
Accumulated depreciation(17,592) (14,646) 
Investments in real estate, net$370,540  $373,088  
Depreciation expense was $2.5$2.9 million and $7.0 million, respectively, for the three and nine months ended September 30, 2019.

DuringMarch 31, 2020.

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The Company did not have any property acquisitions during the ninethree months ended September 30, 2019, the Company acquired an interest in an office property and accounted for it as an asset acquisition.March 31, 2020. During the year ended December 31, 2018,2019, the Company acquired interests in four3 real property investments, which were comprised of one office, multifamily, industrial, and other, which is representative of a retailmedical office property. These property andacquisitions were accounted for them as asset acquisitions.

The following table provides further details of the property acquired during the nine months ended September 30, 2019 (in thousands):

Property Name

  Ownership
Interest
  Number of
Properties
   Acquisition Location   Sector   Acquisition
Date
   Purchase
Price
 

East Sego Lily

   100  1    Salt Lake City, UT    Office    May 2019   $44,422 

The following table summarizes the purchase price allocation for the property acquired during the nine months ended September 30, 2019 (in thousands):

   East Sego Lily 

Building and building improvements

  $33,396 

Land and land improvements

   3,964 

In-place lease intangibles

   5,077 

Other intangibles

   1,985 
  

 

 

 

Total purchase price

  $44,422 
  

 

 

 

Note 4. Investments in Real Estate-Related Securities

As of September 30, 2019March 31, 2020 and December 31, 2018,2019, the Company’s investments in real estate-related securities consisted of shares of common stock of publicly-traded REITs. As described in Note 2, the Company records its investments in real estate-related securities at fair value on its Consolidated Balance Sheets.

The following table summarizes the components of realizedRealized and unrealized incomeUnrealized (Loss) Income from real estate-related securitiesReal Estate-Related Securities during the three and nine months ended September 30,March 31, 2020 and March 31, 2019 and September 30, 2018 (in($ in thousands):

   Three Months Ended September 30,   Nine Months Ended September 30, 
             2019                       2018                       2019                       2018           

Unrealized gains (losses)

  $2,047   $(393  $4,859   $1,459 

Realized gains

   219    353    1,970    360 

Dividend income

   295    193    837    504 
  

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $2,561   $153   $7,666   $2,323 
  

 

 

   

 

 

   

 

 

   

 

 

 
Three Months Ended March 31,
20202019
Unrealized (losses) gains$(6,498) $4,769  
Realized losses(1,459) (76) 
Dividend income290  293  
Total$(7,667) $4,986  

Note 5. Investment in International Affiliated Funds

Investment in ECF:

ECF was formed in March 2016 as anopen-end, Euro-denominated fund that seeks to build a diversified portfolio of high quality and stabilized commercial real estate with good fundamentals (i.e., core real estate) located in or around certain investment cities in Europe selected for their resilience, potential for long-term structural performance and ability to deliver an attractive and stable distribution yield.

On December 22, 2017, the Company entered into a subscription agreement to invest €25.0approximately $27.8 million (€25.0 million) into ECF. As of September 30, 2019,March 31, 2020, the Company has funded €25.0 million ($27.2 million) into ECF and has fully satisfied its commitment to the fund.

commitment.

As described in Note 2, the Company records its investment in ECF using the equity method on its Consolidated Balance Sheets. While the Company has strategies to manage the foreign exchange risk associated with its investment made in Euros, there can be no assurance that these strategies will be successful or that foreign exchange fluctuations will not negatively impact the Company’s financial performance and results of operations in a material manner.

For

The following table summarizes the components of Income from Equity Investment in Unconsolidated International Affiliated Funds from ECF for the three and nine months ended September 30,March 31, 2020 and March 31, 2019 the Company recorded approximately $6,100 and $211,000($ in net income, respectively, based on its allocable share from ECF that is reflected on the Company’s Consolidated Statements of Operations.

thousands):

Three Months Ended March 31,
20202019
Operating income$428  $185  
Unrealized gains (losses)738(22) 
Net income$1,166  $163  

Investment in APCF:

APCF was launched in November 2018 as anopen-end, U.S. dollar denominated fund that seeks durable income and capital appreciation from a balanced and diversified portfolio of real estate investments in a defined list of investment cities in the Asia-Pacific region.

On November 9, 2018, the Company entered into a subscription agreement to invest $10$10.0 million into APCF. Subsequently, on September 11, 2019, the Company increased its commitment by $20$20.0 million. As of September 30, 2019,March 31, 2020, the Company has funded $10
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$16.4 million of its total commitment of $30 million.$30.0 million commitment. As described in Note 2, the Company records its investment in APCF using the equity method on its Consolidated Balance Sheets.

For

The following table summarizes the components of Income from Equity Investment in Unconsolidated International Affiliated Funds from APCF for the three and nine months ended September 30,March 31, 2020 and March 31, 2019 the Company recorded approximately $92,000 and $295,000, respectively,($ in net loss based on its allocable share from APCF that is reflected on the Company’s Consolidated Statements of Operations.

thousands):
Three Months Ended March 31,
20202019
Operating income (loss)$249  $(25) 
Unrealized gains (losses)275(302) 
Net income (loss)$524  $(327) 

Note 6. Investment in Commercial Mortgage Loan

During the nine months ended September 30,

On March 28, 2019, the Company originated a seniorloan to finance the acquisition and a mezzanine loan forrenovation of an industrial property in Maspeth, New York for $46.0 million. The company funded the loan on a 60% loan to cost basis amounting to $46.0 million. On June 6, 2019, the Company sold the senior portion of the loan for $34.3 million to an unaffiliated party and retained the mezzanine loan,subordinate mortgage, receiving proceeds of $34.0 million, which is net of disposition fees.

The fair value of the mezzanine loansubordinate mortgage was $12.4$12.8 million and $12.7 million as of September 30, 2019.March 31, 2020 and December 31, 2019, respectively. The Company recognized interest income and amortization of origination fees from its investment in commercial mortgage loan of approximately $0.3$0.2 million and $1.1$0 million for the three and nine months ending September 30, 2019.

As of September 30,March 31, 2020 and March 31, 2019, the Company has an unamortized origination fee of $0.1 million related to the mezzanine loan reflected in investment in commercial mortgage loan on its Consolidated Balance Sheets.

respectively.

Loan terms for the mezzanine loansubordinate mortgage as of September 30, 2019March 31, 2020 are summarized below (in($ in thousands):

Investment
Name

 

Asset Type

 

Location

 

Interest Rate

 

Origination
Date

 

Maturity Date

 

Periodic
Payment
Terms

 Commitment
Amount
 Unfunded
Amount
 Principal
Receivable
 Fair Value

55 Grand Ave

 

Mezzanine Loan

 

Masbeth, NY

 

Libor + 570 bps

 

March 28, 2019

 

March 29, 2022

 

Interest Only

 $14,375 $1,972 $12,403 $12,403

Investment
Name
Asset TypeLocationInterest RateOrigination
Date
Maturity DatePeriodic
Payment
Terms
Commitment
Amount
Unfunded
Amount
Principal
Receivable
Fair Value
55 Grand AveMezzanine LoanMasbeth, NYLibor + 570 bpsMarch 28, 2019March 29, 2022Interest Only$14,375$1,213$13,162$12,831
The estimated fair value of the commercial mortgage loan is based on models developed by an independent valuation advisor with additional oversight being performed by the Advisor’s internal valuation department that primarily use market based or independently sourced market data, including interest rate yield curves and market spreads. Valuation adjustments may be made to reflect credit quality, liquidity, and other observable and unobservable data that are applied consistently over time.

For the three months ended March 31, 2020 and March 31, 2019, the Company recognized an unrealized loss on its commercial mortgage loan of $0.3 million and $0 million, respectively.

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Note 7. Intangibles

The gross carrying amount and accumulated amortization of the Company’s intangible assets and liabilities consisted of the following (in($ in thousands):

   September 30,
2019
   December 31,
2018
 

Intangible assets:

    

In-place lease intangibles

  $19,733   $14,679 

Above-market lease intangibles

   154    154 

Other intangibles

   8,736    6,557 
  

 

 

   

 

 

 

Total Intangible assets

   28,623    21,390 

Accumulated amortization:

    

In-place lease intangibles

   (6,977   (4,396

Above-market lease intangibles

   (16   (3

Other intangibles

   (1,465   (624
  

 

 

   

 

 

 

Total accumulated amortization

   (8,458   (5,023
  

 

 

   

 

 

 

Intangible assets, net

  $20,165   $16,367 
  

 

 

   

 

 

 

Intangible liabilities:

    

Below-market lease intangibles

  $(5,772  $(5,876

Accumulated amortization

   382    117 
  

 

 

   

 

 

 

Intangible liabilities, net

  $(5,390  $(5,759
  

 

 

   

 

 

 

March 31,
2020
December 31,
2019
Intangible assets:
In-place lease intangibles$26,359  $26,408  
Above-market lease intangibles154  154  
Other intangibles11,964  11,677  
Total Intangible assets38,477  38,239  
Accumulated amortization:
In-place lease intangibles(8,354) (7,623) 
Above-market lease intangibles(25) (21) 
Other intangibles(2,215) (1,826) 
Total accumulated amortization(10,594) (9,470) 
Intangible assets, net$27,883  $28,769  
Intangible liabilities:
Below-market lease intangibles$(9,414) $(9,414) 
Accumulated amortization705  507  
Intangible liabilities, net$(8,709) $(8,907) 
Amortization expense relating to intangible assets was $0.9$1.1 million and $3.5 million, respectively, for the three and nine months ended September 30, 2019.March 31, 2020. Income from the amortization of intangible liabilities was approximately $0.1$0.2 million and $0.4 million, respectively, for the three and nine months ended September 30, 2019.

March 31, 2020.

The estimated future amortization on the Company’s intangibles for each of the next five years and thereafter is as follows (in($ in thousands):

   In-place Lease
Intangibles
   Other
Intangibles
   Below-market
Lease Intangibles
 

Remaining 2019

  $551   $323   $(71

2020

   2,187    1,226    (332

2021

   1,940    1,050    (322

2022

   1,658    938    (307

2023

   1,328    767    (306

Thereafter

   5,092    3,105    (4,052
  

 

 

   

 

 

   

 

 

 
  $12,756   $7,409   $(5,390
  

 

 

   

 

 

   

 

 

 

In-place Lease
Intangibles
Above-market Lease IntangiblesOther
Intangibles
Below-market
Lease Intangibles
2020 (remaining)$2,100  $13  $1,152  $(550) 
20212,596  17  1,395  (724) 
20222,316  17  1,303  (695) 
20232,016  17  1,168  (681) 
20241,893  17  1,093  (677) 
Thereafter7,084  48  3,638  (5,382) 
$18,005  $129  $9,749  $(8,709) 
The weighted-average amortization periods for the acquiredin-place lease intangibles, above-market lease intangibles, other intangibles and below-market lease intangibles of the properties acquired were 7, 7, 8 and 1914 years, respectively.

Note 8. Credit Facility

and Mortgage Payable

Credit Facility
On October 24, 2018, the Company entered into a credit agreement (“Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent and lead arranger. The Credit Agreement provides for aggregate commitments of up to $60$60.0 million for unsecured revolving loans, with an accordion

feature that may increase the aggregate commitments to up to $500 million.$500.0 million (the "Credit Facility") . Loans outstanding under the credit facilityCredit Facility bear interest, at Nuveen OP’s option, at either an adjusted base rate or an adjusted30-day London Interbank Offered Rate (“LIBOR”) rate, in each case, plus an applicable margin. The applicable margin ranges from 1.30% to 1.90% for borrowings at the adjusted LIBOR rate, in each case, based on the total leverage ratio of Nuveen OP and its subsidiaries. Loans under the Credit Agreement will mature three years from October 24, 2018, with an option to extend twice for an additional year pursuant to the terms of the Credit Agreement. On December 17, 2018 the Company amended the Credit Agreement to increase the credit facility from $60 million to $150 million in aggregate commitments, with all other terms remaining the same. Onand June 11, 2019, the Company amended the Credit Agreement to

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increase the line of credit from $150Credit facility to $150.0 million to $210and $210.0 million in aggregate commitments, respectively, with all other terms remaining the same.

In July 2017, the Financial Conduct Authority (the authority that regulates LIBOR) announced it intends to stop compelling banks to submit rates for the calculation of LIBOR after 2021. The Alternative Reference Rates Committee ("ARRC") has proposed that the Secured Overnight Financing Rate ("SOFR") is the rate that represents best practice as the alternative to USD-LIBOR for use in derivatives and other financial contracts that are currently indexed to USD-LIBOR. The consequence of these developments cannot be entirely predicted but could include an increase in the cost of our variable rate indebtedness.
The following is a summary of the Credit Facility ($ in thousands):
Principal Balance Outstanding
IndebtednessInterest RateMaturity DateMaximum Facility SizeMarch 31, 2020December 31, 2019
Credit facility
L+applicable margin(1)
October 24, 2021$210,000  $85,277  $107,777  
(1) The applicable margin ranges from 1.30% to 1.90% for borrowings at the adjusted LIBOR rate, in each case, based on the total leverage ratio of Nuveen OP and its subsidiaries.
As of September 30, 2019,March 31, 2020, the Company had $118.3$85.3 million in borrowings and $0.3 million inhad outstanding accrued interest outstanding under the Credit Agreement.of $0.2 million. For the three and nine months ended September 30,March 31, 2020 and March 31, 2019, the Company incurred $1.1 million and $3.1$0.7 million, respectively, in interest expense related to the credit facility. Additionally, interest expense on the Consolidated Statements of Operations includes amortization of loan closing costs of $0.2 million and $0.3 million, for the three and nine months ended September 30, 2019, respectively.

expense.

As of September 30, 2019,March 31, 2020, the Company is in compliance with all loan covenants.

Mortgage Payable
On November 8, 2019, NR Main Street at Kingwood LLC, a wholly owned subsidiary of the Company, entered into a loan agreement (“Mortgage Payable”) with Nationwide Life Insurance Company (“Lender”). The Mortgage Payable provides a secured loan of $48.0 million, interest only, for seven years with a fixed rate of 3.15% per annum and matures in December 2026 with unpaid principal balance on the Mortgage Payable due and payable in full on the maturity date.
The following is a summary of the Mortgage Payable secured by the Company's retail property ($ in thousands):
Principal Balance Outstanding
IndebtednessInterest RateMaturity DateMaximum Facility SizeMarch 31, 2020December 31, 2019
Mortgage payable3.15%December 1, 2026$48,000  $48,000  $—  $48,000  
Deferred financing costs, net(480) (499) 
Mortgage payable, net$47,520  $47,501  
As of March 31, 2020, the Company had $48.0 million in borrowings and $0.1 million in accrued interest outstanding under the Mortgage Payable. For the three months ended March 31, 2020, the Company incurred $0.4 million in Interest Expense.
The following table presents the future principal payments due under the Credit Facility and Mortgage Payable as of March 31, 2020 ($ in thousands):
Amount
YearCredit FacilityMortgage Payable
2020 (remaining)$—  $—  
202185,277  —  
2022—  —  
2023—  —  
2024—  —  
Thereafter—  48,000  
Total$85,277  $48,000  
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Note 9. Other Assets and Other Liabilities

The following table summarizes the components of other assets (inOther Assets ($ in thousands):

   2019   2018 

Straight-line rent receivable

  $2,071   $1,119 

Deferred financing costs, net

   888    771 

Tenant receivables

   795    353 

Prepaid expenses

   691    288 

Other

   604    53 
  

 

 

   

 

 

 

Total

  $5,049   $2,584 
  

 

 

   

 

 

 

March 31, 2020December 31, 2019
Straight-line rent receivable$3,000  $2,336  
Receivables1,062  736  
Deferred financing costs on credit facility, net671  779  
Prepaid expenses521  329  
Other93  82  
Total$5,347  $4,262  
The following table summarizes the components of accounts payable, accrued expenses,Accounts Payable, Accrued Expenses, and other liabilities (inOther Liabilities ($ in thousands):

   September 30, 2019   December 31, 2018 

Real estate taxes payable

  $2,552   $2,099 

Accounts payable and accrued expenses

   2,080    1,420 

Tenant security deposits

   759    587 

Prepaid rental income

   419    386 

Accrued interest expense

   293    164 

Other

   275    414 
  

 

 

   

 

 

 

Total

  $6,378   $5,070 
  

 

 

   

 

 

 
March 31, 2020December 31, 2019
Real estate taxes payable$2,177  $1,742  
Accounts payable and accrued expenses1,720  1,700  
Tenant security deposits1,053  1,044  
Prepaid rental income909  608  
Accrued interest expense290  334  
Other360  370  
Total$6,509  $5,798  

Note 10. Related Party Transactions

Fees Due to Related Party

Pursuant to the advisory agreement between the Company, Nuveen OP, and the Advisor, the Advisor is responsible for sourcing, evaluating and monitoring the Company’s investment opportunities and making decisions related to the acquisition, management, financing and disposition of the Company’s assets, in accordance with the Company’s investment objectives, guidelines, policies and limitations, subject to oversight by the Company’s board of directors.

The Advisor, will receive fees and compensation, payable monthly in arrears, in connection with the offering and ongoing management of the assets and operations of the Company, as follows:

   Class T
Shares
  Class S
Shares
  Class D
Shares
  Class I
Shares
  Class N
Shares
 

Advisory Fee as a % of NAV

   1.25  1.25  1.25  1.25  0.65

As of September 30, 2019,

Class T SharesClass S SharesClass D SharesClass I SharesClass N Shares
Advisory Fee (% of NAV)1.25%1.25%1.25%1.25%0.65%
For the three months ended March 31, 2020, the Company has accrued managementadvisory fees of approximately $0.2 million, which has been included in accounts payable, accrued expenses,Accounts Payable, Accrued Expenses, and other liabilitiesOther Liabilities on the Company’s Consolidated Balance Sheets.

For the three months ended March 31, 2020 and March 31, 2019, the Company has incurred advisory fee expense of $0.7 million and $0.5 million, respectively.

The Company may retain certain of the Advisor’s affiliates for necessary services relating to the Company’s investments or its operations, including construction, special servicing, leasing, development, property oversight and other property management services, as well as services related to mortgage servicing, group purchasing, healthcare, consulting/brokerage, capital markets/credit origination, loan servicing, property, title and other types of insurance, management consulting and other similar operational matters. Any such arrangements will be at market terms and rates. As of September 30, 2019,March 31, 2020, the Company has not retained an affiliate of the Advisor for any such services.

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In addition, Nuveen Securities, LLC (the “Dealer Manager”) serves as the dealer manager for the Offering. The Dealer Manager is a registered broker-dealer affiliated with the Advisor. The Company’s obligations under the Dealer Manager Agreement to pay stockholder servicing fees with respect to the Class T, Class S and Class D shares distributed in the Offering shall survive until such shares are no longer outstanding (including because such sharesor converted into Class I shares).shares. As of September 30, 2019,March 31, 2020, the Company has accrued approximately $0.7$3.2 million of stockholder servicing fees with respect to the outstanding Class T, Class S and Class D common shares.

The following table presents the upfront selling commissions and dealer manager fees for each class of shares sold in the Offering, and the stockholder servicing fee per annum based on the aggregate outstanding NAV:
Class T SharesClass S SharesClass D SharesClass I Shares
Maximum Upfront Selling Commissions (% of Transaction Price)up to 3.0%up to 3.5%
Maximum Upfront Dealer Manager Fees (% of Transaction Price)0.50%
Stockholder Servicing Fee (% of NAV)
0.85%(1)
0.85%0.25%
(1) Consists of an advisor stockholder servicing fee of 0.65% per annum and a dealer stockholder servicing fee of 0.20% per annum (or other amounts, provided that the sum equals 0.85%), of the aggregate NAV of each class of shares:

   Maximum Upfront
Selling Commissions as a
% of Transaction Price
  Maximum Upfront
Dealer Manager Fees as a
% of Transaction Price
  Stockholder Servicing
Fee as a % of NAV
 

Class T shares

   up to 3.0  0.50  0.85%(1) 

Class S shares

   up to 3.5  None   0.85

Class D shares

   None   None   0.25

Class I shares

   None   None   None 

(1)

Consists of an advisor stockholder servicing fee of 0.65% per annum and a dealer stockholder servicing fee of 0.20% per annum (or other amounts, provided that the sum equals 0.85%), of the aggregate NAV of outstanding Class T shares.

outstanding Class T shares.

The Company will cease paying the stockholder servicing fee with respect to any Class T share, Class S share or Class D share held in a stockholder’s account at the end of the month in which the Dealer Manager, in conjunction with the transfer agent, determines that total upfront selling commissions, dealer manager fees and stockholder servicing fees paid with respect to the shares held within such account would exceed, in the aggregate, 8.75% of the sum of the gross proceeds from the sale of such shares and the aggregate gross proceeds of any shares issued under the distribution reinvestment plan with respect thereto (or, solely with respect to the Class T shares, a lower limit set forth in an agreement between the Dealer Manager and the applicable participating broker-dealer in effect on the date that such shares were sold). At the end of such month, each Class T share, Class S share and Class D share held in a stockholder’s account will convert into a number of Class I shares (including any fractional shares) with an equivalent aggregate NAV as such share. The Company accrues the cost of the stockholder servicing fee as an offering cost at the time each Class T, Class S and Class D share is sold during the primary offering. There is not a stockholder servicing fee with respect to Class I shares.

If not already converted into Class I shares upon a determination that total upfront selling commissions, dealer manager fees and stockholder servicing fees paid with respect to such shares would exceed the applicable limit as described above, each Class T share, Class S share, Class D share and Class N share held in a stockholder’s account will automatically and without any action on the part of the holder thereof convert into a number of Class I shares (including any fractional shares) with an equivalent NAV as such share on the earliest of (i) a listing of Class I shares, (ii) the Company’s merger or consolidation with or into another entity or the sale or other disposition of all or substantially all of the Company’s assets, in each case in a transaction in which stockholders receive cash and/or listed securities or (iii) after termination of the primary portion of the offering in which such Class T shares, Class S shares and Class D shares were sold, the end of the month in which the Company, with the assistance of the dealer manager, determines that all underwriting compensation from all sources in connection with the Offering, including upfront selling commissions, the stockholder servicing fee and other underwriting compensation, is equal to 10% of the gross proceeds of the primary portion of the Offering. In addition, immediately before any liquidation, dissolution or winding up, each Class T share, Class S share, Class D share and Class N shares will automatically convert into a number of Class I shares (including any fractional shares) with an equivalent NAV as such share.

As part of TIAA’s agreement to purchase $300 million in Class N shares described below, the Advisor has agreed that, in the event that certain capital raising thresholds are not achieved in the Offering, the Advisor will reimburse TIAA a portion of the advisory fees and organization and offering expenses charged with respect to the Class N shares purchased by TIAA.

Due to Affiliates

The following table summarizes the components of Due to Affiliates (in($ in thousands):

   September 30,
2019
   December 31,
2018
 

Accrued stockholder servicing fees

  $651   $23 

Advanced organization and offering

   4,648    4,579 
  

 

 

   

 

 

 

Total

  $5,299   $4,602 
  

 

 

   

 

 

 

March 31,
2020
December 31,
2019
Accrued stockholder servicing fees(1)
$3,247  $1,411  
Advanced organization and offering4,648  4,648  
Total$7,895  $6,059  
(1)The Company accrues the full amount of future stockholder servicing fees payable to the Dealer Manager for Class T, Class S and Class D shares up to the 8.75% of gross proceeds limit at the time such shares are sold. As of September 30, 2019,March 31, 2020, the Company accrued approximately $651,000$3.2 million of stockholder servicing fees payable to the Dealer Manager related to
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Class T and Class D shares sold. The Dealer Manager has entered into agreements with the selected dealers distributing the Company’s shares in the Offering, which provide, amount other things, for there-allowance of the full amount of the selling commissions and the dealer manager fee and all or a portion of stockholder servicing fees received by the Dealer Manager to such selected dealers. The Company will no longer incur the stockholder servicing fee after September 2054March 2055 in connection with those Class T and Class D shares currently outstanding; the fees may end sooner if the total underwriting compensation paid in respect of the Offering reaches 10.0% of the gross offering proceeds or if the Company completes a liquidity event. The Company will incur stockholder servicing fees in connection with future issuances of Class D shares for a35-year period from the date of issuance and seven years for Class T shares and Class S shares from date of issuance.

Note 11. Economic Dependency

The Company depends on the Advisor and its affiliates for certain services that are essential to it, including the sale of the Company’s shares of common stock, acquisition and disposition decisions, and certain other responsibilities. In the event that the Advisor and its affiliates are unable to provide such services, the Company would be required to find alternative service providers.


Note 12. CommitmentsRisks and Contingencies

The outbreak of the novel coronavirus (“COVID-19”) and subsequent global pandemic began significantly impacting the U.S. and global financial markets and economies during the quarter ended March 31, 2020. The worldwide spread of COVID-19 has created significant uncertainty in the global economy. At this time the Company reasonably expect tenants will request certain rent relief and lease modifications from this unprecedented event; however, such requests haven’t been significant as of March 31, 2020 for the Company's direct real estate investments. The Company's investment in the International Affiliated Funds may be similarly and negatively impacted by COVID-19 in the foreign countries where their investments are located. The duration and extent of COVID-19 over the long-term cannot be reasonably estimated at this time. The ultimate impact of COVID-19 and the extent to which COVID-19 impacts the Company will depend on future developments.
From time to time, the Company may be involved in various claims and legal actions arising in the ordinary course of business. As of September 30, 2019,March 31, 2020, the Company was not involved in any material legal proceedings. In the normal course of business the Advisor, on behalf of the Company, enters into contracts that contain a variety of representations and warranties and which provide general indemnifications. The Company’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Company that have not yet occurred. However, based on experience, the Advisor expects the risk of loss to be remote.

Note 13. Tenant Leases

The Company’s real estate properties are leased to tenants under operating lease agreements which expire on various dates. Certain leases have the option to extend or terminate at the tenant’s discretion, with termination options resulting in additional fees due to the Company.
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 haveRental income for the option to extend or terminate at the tenant’s discretion, with termination options resulting in additional fees due to the Company. three months ended March 31, 2020 was $9.5 million.
Aggregate minimum annual rentals for wholly-owned real estate investments owned by the Company through thenon-cancelable lease term, excluding short-term multifamily investments are as follows (in($ in thousands):

Year

  Minimum Rent 

Remaining 2019

  $4,185 

2020

   16,759 

2021

   16,045 

2022

   15,179 

2023

   13,695 

Thereafter

   65,260 
  

 

 

 

Total

  $131,123 
  

 

 

 

YearMarch 31, 2020
2020 (remaining)$15,186  
202119,716  
202219,386  
202318,019  
202416,932  
Thereafter79,006  
Total$168,245  
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.

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Note 14. Equity

Authorized Capital

On January 24, 2018, the Company filed Articles of Amendment and Restatement (the “charter”) with the State Department of Assessments and Taxation of Maryland pursuant to which the Company’s undesignated common stock became Class N shares of common stock and the Class T, Class S, Class D and Class I shares offered in the Offering were authorized.

As of September 30, 2019,March 31, 2020, the Company had authority to issue a total of of 2,200,000,000 shares of capital stock. Of the total shares of stock authorized, 2,100,000,000 shares are classified as common stock with a par value of $0.01 per share, 500,000,000 of which are classified as Class T shares, 500,000,000 of which are classified as Class S shares, 500,000,000 of which are classified as Class D shares, 500,000,000 of which are classified as Class I shares, 100,000,000 of which are classified as Class N shares, and 100,000,000 are classified as preferred stock with a par value of $0.01 per share, 125 of which are classified as Series A Preferred Stock (defined below).

In addition, the Company’s board of directors may amend the charter from time to time, without stockholder approval, to increase or decrease the aggregate number of shares of stock or the number of shares of stock of any class or series that the Company has authority to issue, or to issue additional classes of stock which may be subject to various class-specific fees.

Preferred Stock

On January 2, 2019, the Company filed Articles Supplementary to the charter, which set forth the rights, preferences and privileges of the Company’s 12.0% Series A cumulativenon-voting preferred stock (“Series A Preferred Stock”). On January 4, 2019, the Company sold 125 shares of its Series A Preferred Stock at a purchase price of $1,000 per share in a private placement exempt from registration. The offering of Series A Preferred Stock was effected for the purpose of the Company having at least 100 stockholders to satisfy one of the qualifications required in order to qualify as a REIT under the Code.

Common Stock

As of September 30, 2019,March 31, 2020, the Company has issued and outstanding 429,4712,358,700 shares of Class T common stock, 426,3441,255,756 shares of Class S common stock, 1,115,645 shares of Class D common stock, 1,470,1483,200,941 shares of Class I common stock, and 29,730,608 shares of Class N common stock. As of September 30, 2019, the Company has not sold any Class S shares.

During the ninethree months ended September 30, 2019,March 31, 2020, the Company sold the following shares of common stock (in thousands):

   Nine Months Ended September 30, 2019 
   Class T  Class D   Class I  Class N   Total 

December 31, 2018

   —     26    186   29,731    29,943 

Common Stock Issued

   429   399    1,283   —      2,111 

Distribution Reinvestment

   —  (a)   1    4   —      5 

Vested Stock

   —     —      7   —      7 

Common Stock Repurchased

   —     —      (10  —      (10
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

 

September 30, 2019

   429   426    1,470   29,731    32,056 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

 

(a)

The Class T Shares amount is not presented due to rounding.

Class TClass SClass DClass IClass NTotal
December 31, 20191,377  70  573  1,966  29,731  33,717  
Common Stock Issued970  1,185  536  1,220  —  3,911  
Distribution Reinvestment12     —  29  
Vested Stock—  —  —   —   
March 31, 20202,359  1,256  1,116  3,201  29,731  37,663  
TIAA has purchased $300$300.0 million of the Company’s Class N shares of common stock through its wholly owned subsidiary. Per the terms of the agreement between the Company and TIAA, all shares held by TIAA are not eligible to be repurchased until January 31, 2023; provided that TIAA must continue to maintain ownership of the $200,000 initial investment in the Company’s shares for so long as the Advisor or its affiliate serves as the Company’s advisor.

Restricted Stock Grants

The Company’s independent directors are compensated with an annual retainer, of which 25% is paid in the form of an annual grant of restricted stock based on the most recent transaction price. The restricted stock generally vests one year from the date of grant, which, in connection with the directors’ first annual grant, occurred onin February 1, 2019. The Company accrued approximately $17,000 and $51,000, respectively,$11,250 of expense for the three and nine months ended September 30, 2019,March 31, 2020, in connection with restricted stock portion of director compensation, which is included in accounts payable, accrued expensesAccounts Payable, Accrued Expenses and other liabilitiesOther Liabilities on the Consolidated Balance Sheets.

Distribution Reinvestment Plan

The Company has adopted a distribution reinvestment plan whereby holders of Class T, Class S, Class D and Class I shares (other than investors in certain states or who are clients of a participating broker-dealer that does not permit automatic
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enrollment in the distribution reinvestment plan) have their cash distributions automatically reinvested in additional shares of common stock unless they elect to receive their distributions in cash. Holders of Class N shares are not eligible to participate in the distribution reinvestment plan and receive their distributions

in cash. Investors who are clients of a participating broker-dealer that does not permit automatic enrollment in the distribution reinvestment plan or are residents of those states that do not allow automatic enrollment receive their distributions in cash unless they elect to have their cash distributions reinvested in additional shares of the Company’s common stock. The per share purchase price for shares purchased pursuant to the distribution reinvestment plan iswill be equal to the transaction price at the time the distribution is payable, which iswill generally be equal to the Company’s prior month’s NAV per share for that share class. Stockholders do not pay upfront selling commissions or dealer manager fees when purchasing shares pursuant to the distribution reinvestment plan. The stockholder servicing fees with respect to shares of the Company’s Class T shares, Class S shares and Class D shares are calculated based on the NAV for those shares and may reduce the NAV or, alternatively, the distributions payable with respect to shares of each such class, including shares issued in respect of distributions on such shares under the distribution reinvestment plan.

Distributions

The Company generally intends to distribute substantially all of its taxable income, which does not necessarily equal net income as calculated in accordance with GAAP, to its stockholders each year to comply with the REIT provisions of the Code. Beginning September 30, 2018, the Company established a monthly record date for a quarterly distribution to stockholders on record as of the last day of each applicable month typically payable within 3025 days following quarter end. On January 17, 2020, the Company’s board of directors amended the Company’s distribution policy to reflect that the Company intends to pay distributions monthly rather than quarterly going forward, subject to the discretion of the board of directors.
Based on the monthly record dates established by the board of directors, the Company accrues for distribution on a monthly basis. The Company accrued $1.9 million for March 2020 in Distribution Payable on the Consolidated Balance Sheets.
For the three months ended March 31, 2020, the Company declared and paid distributions in the amount of $8.7 million.
Each class of common stock receives the same gross distribution per share. The net distribution varies for each class based on the applicable advisory fee and stockholder servicing fee, which is deducted from the monthly distribution per share.

During the nine months ended September 30, 2019, the Company’s board of directors declared distributions on all outstanding shares of common stock as of the close of business on the record dates of October 31, 2018, November 30, 2018 and December 31, 2018, all outstanding shares of common stock as of the close of business on the record dates of January 31, 2019, February 28, 2019, and March 31, 2019, and all outstanding shares of common stock as of the close of business on the record dates of April 30, 2019, May 31, 2019, and June 30, 2019. These distributions were paid on January 29, 2019, April 29, 2019, and July 29, 2019, respectively.

The following table details the aggregate distribution paid on January 29, 2019:

   Class D   Class I   Class N 

Net Distribution

  $0.07   $0.07   $0.08 

Total Distributions Declared

   1,760    13,640    2,468,230 

The following table detailsdeclared for each of our share classes for the distribution paid on April 29, 2019:

   Class T   Class D   Class I   Class N 

Net Distribution

  $0.04   $0.05   $0.07   $0.09 

Total Distributions Declared

   2,066    2,563    15,116    2,646,139 

The following table details the distribution paid on July 29, 2019:

   Class T   Class D   Class I   Class N 

Net Distribution

 ��$0.08   $0.10   $0.10   $0.13 

Total Distributions Declared

   15,065    10,790    57,554    3,754,662 
three months ended March 31, 2020:

Based on the monthly record dates established by the board of directors, the Company accrues for distribution on a monthly basis. As of September 30, 2019 the Company had an accrued distribution payable balance of $4.2 million on its Consolidated Balance Sheets related to July, August, and September 2019. The following table details the distributions accrued as of September 2019:

   Class T   Class D   Class I   Class N 

Net Distribution Accrued

  $0.07   $0.06   $0.09   $0.13 

Total Distributions Accrued

   29,434    25,997    132,168    3,984,987 

Class T Common StockClass S Common StockClass D Common StockClass I Common StockClass N Common Stock
Gross distribution per share of common stock$0.1737  $0.1737  $0.1737  $0.1737  $0.1737  
Advisory fee per share of common stock(0.0296) (0.0296) (0.0298) (0.0299) (0.0158) 
Stockholder servicing fee per share of common stock(0.0226) (0.0225) (0.0067) —  —  
Net distribution per share of common stock$0.1215  $0.1216  $0.1372  $0.1438  $0.1579  

Share Repurchases

The Company has adopted a share repurchase plan, whereby on a monthly basis, stockholders may request that the Company repurchase all or any portion of their shares. The Company may choose to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any particular month, in its discretion, subject to any limitations in the share repurchase plan. The total amount of aggregate repurchases of Class T, Class S, Class D, and Class I shares iswill be limited to 2% of the aggregate NAV per month and 5% of the aggregate NAV per calendar quarter. In addition, if during any consecutive24-month period, the Company does not have at least one month in which the Company fully satisfies 100% of properly submitted repurchase requests or accepts all properly submitted tenders in a self-tender offer for the Company’s shares, the Company will not make any new investments (excluding short-term cash management investments under 30 days in duration) and will use all available investable assets to satisfy repurchase requests (subject to the limitations under this program) until all outstanding repurchase requests have been satisfied.

Shares arewould be repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any early repurchase deduction. Shares that have not been outstanding for at least one year arewould be repurchased at 95% of the transaction price. Due to the illiquid nature of investments in real estate, the Company may not have sufficient liquid resources to fund repurchase requests and has established limitations on the amount of funds the Company may use for repurchases during any calendar month and quarter. Further, the Company’s board of directors may modify, suspend or terminate the share repurchase plan.

During

The Company did 0t repurchase any shares during the three and nine months ended September 30, 2019, the Company repurchased 9,843March 31, 2020.
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Table of Class I shares at a price of $10.59 per share.

contents

Note 15. Segment Reporting

The Company currently operates in seven8 reportable segments: multifamily,industrial properties, multi-family properties, retail properties, office industrial, and retail properties, other properties (which consists of a medical office building), real estate-related securities, International Affiliated Funds, and commercial mortgage loan. These are operating segments that are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision-makers in deciding how to allocate resources and in assessing performance. The Company’s chief executive officer, chief financial officer and head of portfolio management have been identified as the chief operating decision-makers. The Company’s chief operating decision-makers direct the allocation of resources to operating segments based on the profitability and cash flows of each respective segment. The Company believes that Segment Net Operating Income is the performance metric that captures the unique operating characteristics of each segment.

The following table sets forth the total assets by segment as of September 30, 2019March 31, 2020 and December 31, 2018 (in2019 ($ in thousands):

   September 30, 2019   December 31, 2018 

Multifamily

  $94,822   $97,448 

Industrial

   87,561    89,963 

Office

   77,732    34,134 

Retail

   89,393    90,881 

Real Estate-Related Securities

   35,946    29,228 

International Affiliated Funds

   36,991    28,594 

Commercial Mortgage Loan

   12,466    —   

Other (Corporate)

   12,959    6,598 
  

 

 

   

 

 

 

Total assets

  $447,870   $376,846 
  

 

 

   

 

 

 

March 31,
2020
December 31,
2019
Industrial$106,225  $106,417  
Multifamily93,402  $94,039  
Retail87,480  $88,217  
Office75,862  $76,603  
Other39,601  $39,634  
International Affiliated Funds45,047  $37,734  
Real Estate-Related Securities30,047  $35,240  
Commercial Mortgage Loan12,886  $12,733  
Other (Corporate)13,970  $16,880  
Total assets$504,520  $507,497  
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The following table sets forth the financial results by segment for the three months ended March 31, 2020 and nine months ended September 30, 2019 and 2018 (in($ in thousands):

   Three Months Ended
September 30,
  2019 v 2018  Nine Months Ended
September 30,
  2019 v 2018 
   2019  2018  $  %  2019  2018  $  % 

Rental revenues

         

Multifamily

  $2,378  $2,336  $42   2 $6,921  $4,999  $1,922   38

Office

   1,832   679   1,153   170  4,136   796   3,340   420

Industrial

   2,169   1,521   648   43  6,081   4,578   1,503   33

Retail

   1,560   —     1,560   100  5,175   —     5,175   100
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total rental revenues

   7,939   4,536   3,403   75  22,313   10,373   11,940   115
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Rental property operating expenses

         

Multifamily

   1,129   1,122   7   1  3,295   2,329   966   41

Office

   428   117   311   266  1,061   144   917   637

Industrial

   667   456   211   46  1,857   1,326   531   40

Retail

   319   —     319   100  956   —     956   100
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total rental property operating expenses

   2,543   1,695   848   50  7,169   3,799   3,370   89
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Depreciation and amortization

         

Multifamily

   (754  (1,652  898   -54  (3,129  (3,393  264   -8

Office

   (858  (278  (580  209  (1,804  (327  (1,477  452

Industrial

   (953  (925  (28  3  (3,127  (2,764  (363  13

Retail

   (786  —     (786  100  (2,470  —     (2,470  100
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total depreciation and amortization

   (3,351  (2,855  (496  17  (10,530  (6,484  (4,046  62
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Interest income from commercial mortgage loan

   259   —    $259   100  1,119   —    $1,119   100

Realized and unrealized income from real estate-related securities

   2,561   153   2,408   1574  7,666   2,323   5,343   230

(Loss) income from equity investment in unconsolidated international affiliated funds

   (85  20   (105  -525  (85  20   (105  -525

General and administrative expenses

   (811  (623  (188  30  (2,842  (3,545  703   -20

Advisory fee due to affiliate

   (527  (397  (130  33  (1,490  (1,038  (452  44

Interest income

   31   12   19   158  82   73   9   12

Interest expense

   (1,262  —     (1,262  100  (3,352  —     (3,352  100
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

   2,211   (849  3,060   -360  5,712   (2,077  7,789   -375

Net income attributable to Series A preferred

   4   —     4   100  11   —     11   100
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to common stockholders

  $2,207  $(849 $3,056   -360 $5,701  $(2,077 $7,778   -375
  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Three Months Ended March 31,2020 v 2019
20202019$%
Rental revenues
Multifamily$2,357  $1,931  $426  22 %
Office2,342  2,360  (18) (1)%
Industrial1,654  1,644  10  %
Retail1,979  810  1,169  144 %
Other1,126  —  1,126  100 %
Total rental revenues9,458  6,745  2,713  40 %
Rental property operating expenses
Multifamily695  575  120  21 %
Office1,145  1,085  60  %
Industrial319  371  (52) (14)%
Retail516  255  261  102 %
Other287  —  287  100 %
Total rental property operating expenses2,962  2,286  676  30 %
Depreciation and amortization
Multifamily(1,194) (1,117) (77) %
Office(761) (1,201) 440  (37)%
Industrial(845) (789) (56) %
Retail(867) (280) (587) 210 %
Other(477) —  (477) 100 %
Total depreciation and amortization(4,144) (3,387) (757) 22 %
Income from commercial mortgage loan245  21  224  1,067 %
Unrealized loss from commercial mortgage loan(331) —  (331) 100 %
Realized and unrealized (loss) income from real estate-related securities(7,667) 4,986  (12,653) (254)%
Income (loss) from equity investment in unconsolidated international affiliated funds1,690  (165) 1,855  (1,124)%
General and administrative expenses(1,034) (958) (76) %
Advisory fee due to affiliate(727) (467) (260) 56 %
Interest income35  11  24  218 %
Interest expense(1,189) (752) (437) 58 %
Net (loss) income(6,626) 3,748  (10,374) (277)%
Net income attributable to Series A preferred  —  — %
Net (loss) income attributable to common stockholders$(6,630) $3,744  $(10,374) (277)%

Note 16. Subsequent Events

The Company’s

Distributions
Our board of directors declared distributions amounting to $1.9 million on all outstanding shares of common stock as of the close of business on the record datesdate of JulyMarch 31, 2019, August 31, 20192020 and September 30, 2019. Thethe Company paid these distributions amounting to $4.2 million on OctoberApril 28, 2019.

2020.

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Status of the Offering
On OctoberApril 1, 2019,2020 the Company sold approximately $4.5$2.8 million of common stock (181,609(177,115 Class T shares, 44,52841,153 Class S shares, 7,219 Class D shares and 193,82035,580 Class I shares) at a purchase price of $10.60$10.64 for Class T, $10.69$10.61 for Class S, $10.73 for Class D, and $10.68$10.75 for Class I.

On October 25, 2019, the Company completed the acquisition of the property known as Globe Street Industrial from an unaffiliated third party for a total cost of $19.9 million, including purchase price adjustments and transaction costs. Globe Street industrial is a light industrial warehouse totaling 251,630 square feet located in the Inland Empire of California. The Property is 100% leased to a single tenant with a remaining lease term of 6 years.

On NovemberMay 1, 2019,2020 the Company sold approximately $7.1$5.0 million of common stock (469,507(165,178 Class T shares, 22,808134,545 Class S shares, 3,193 Class D shares and 178,759167,611 Class I shares) at a purchase price of $10.58$10.53 for Class T, $10.65$10.51 for Class S, $10.62 for Class D, and $10.67$10.64 for Class I.

On November 6, 2019, the Company’s board of directors approved the renewal of the advisory agreement for an additional year from January 31,May 1, 2020, to January 31, 2021. All other terms of the advisory agreement remain the same.

On November 8, 2019, NR Main Street at Kingwood LLC, a wholly owned subsidiary of the Company entered intorepurchased 2,232 of Class S shares at a loan agreement (“Loan Agreement”) with nationwide life insurance company (“Lender”). The Loan Agreement provides a secured loanprice of $48.0 million, interest only, for 7 years with a fixed rate$10.51 per share.



25

Table of 3.15% per annum. The loan matures in December 2026 (“Maturity Date”) with unpaid principal balance on the loan due and payable in full on the Maturity Date.

contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

References herein to “Company,” “we,” “us,” or “our” refer to Nuveen Global Cities REIT, Inc. and its subsidiaries unless the context specifically requires otherwise.

The following discussion should be read in conjunction with the unaudited consolidated financial statements and notes thereto appearing elsewhere in this Quarterly Report on Form10-Q. In addition to historical data, this discussion contains forward-looking statements about our business, operations and financial performance based on current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those in this discussion as a result of various factors, including but not limited to those discussed under “Item 1A. Risk Factors” in our Annual Report on Form10-K for the year ended December 31, 20182019 and elsewhere in this Quarterly Report on Form10-Q.

Forward-Looking Statements

This Quarterly Report on Form10-Q contains forward-looking statements about our business, operations and financial performance, including, in particular, statements about our plans, strategies and objectives. You can generally identify forward-looking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks, uncertainties and assumptions. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control. Although we believe the assumptions underlying the forward-looking statements, and the forward-looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements as a result of various factors, including but not limited to those discussed under “Risk Factors” in Annual Report on Form10-K for the year ended December 31, 2018,2019, and elsewhere in this Quarterly Report on Form10-Q. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date this Quarterly Report on Form10-Q is filed with the Securities and Exchange Commission (the “SEC”). Except as required by law, we do not undertake to update or revise any forward-looking statements contained in this Quarterly Report on Form10-Q.

While management believes the assumptions underlying any of 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 risks associated with the following:
COVID-19 Risks. In response to the novel coronavirus pandemic (commonly known as “COVID-19”), governmental authorities throughout the world, including the United States, have taken significant measures to inhibit the spread of the disease, such as prohibiting people from congregating in heavily populated areas, instituting localized quarantines, restricting nonessential travel, issuing “stay-at-home” orders, closing schools, and most notably, restricting the types of businesses that may continue to operate. The restrictions have had an adverse impact on economic and market conditions across the world. It is possible that public health officials and governmental authorities in the markets in which we have investments may impose additional restrictions in an effort to further slow the spread of the COVID-19 pandemic or may relax or revoke existing restrictions too quickly, which could, in either case, exacerbate the severity of adverse impacts on the economy. Moreover, the market volatility and economic uncertainty surrounding the COVID-19 pandemic may negatively impact our liquid investments, such as those in REIT securities, and our investments in the International Affiliated Funds. These and other consequences of the COVID-19 pandemic are expected to have an adverse effect on the Company’s business and results of operations.
Overview

Nuveen Global Cities REIT, Inc. is a Maryland corporation formed on May 1, 2017 and qualifies as a real estate investment trust (“REIT”) for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2018. We were formed to invest in properties in or around certain global cities selected for their resilience, long-term structural performance and ability to deliver an attractive and stable distribution yield. We expect that a majority of our real estate investments will be located in the United States and that a substantial but lesser portion of our portfolio will include real properties located in Canada, Europe and the Asia-Pacific region. We will seek to complement our real property investments by investing a smaller portion of our portfolio in real estate-related assets. We are externally managed by our advisor, Nuveen Real Estate Global
26

Table of contents
Cities Advisors, LLC (“Nuveen Real Estate Global Cities Advisors” or the “Advisor”), an investment advisory affiliate of Nuveen Real Estate. Nuveen Real Estate is the real estate investment management division of our sponsor, Nuveen, LLC (together with its affiliates, “Nuveen” or the “Sponsor”). Nuveen is the asset management arm and wholly owned subsidiary of Teachers Insurance and Annuity Association of America (“TIAA”).

Initial Public Offering

On January 31, 2018, our Registration Statement on FormS-11 was declared effective by the SEC. We have registered with the SEC an offering of up to $5 billion in shares of common stock (the “Offering”), consisting of up to $4 billion in shares in our primary offering and up to $1 billion in shares pursuant to our distribution reinvestment plan. We intend to publicly sell any combination of four classes of shares of our common stock, Class T shares, Class S shares, Class D shares and Class I shares, with a dollar value up to the maximum offering amount. The publicly offered share classes have different upfront selling commissions and ongoing stockholder servicing fees. The purchase price per share for each class of common stock in the Offering will vary and will generally equal our prior month’s net asset value (“NAV”) per share, as calculated monthly, plus applicable upfront selling commissions and dealer manager fees.

TIAA Investment
TIAA invested $200,000 through the purchase of 20,000 shares of common stock at $10.00 per share as our initial capitalization. Subsequent to our initial capitalization, TIAA purchased $300$300.0 million in shares (less the $200,000 initial capitalization amount) and has fully funded its commitment to purchase $300$300.0 million of our Class N common stock.

Q1 2020 Highlights
Operating results:
Raised $42.5 million of net proceeds during the three months ended March 31, 2020.
Declared and paid Q4 2019, January 2020 and February 2020 distributions totaling $8.7 million during the three months ended March 31, 2020.
Aggregate quarterly and trailing 12 months total net return of -0.20% and 7.44%.
Investments:
Funded an additional $6.4 million towards the $30.0 million commitment to APCF with a remaining unfunded commitment of $13.6 million.
Made investments in real estate-related securities with 87 holdings as of March 31, 2020 and a total cost basis of $34.4 million.
Financings:
Used proceeds from issuance of common stock to pay down the credit facility by $42.5 million.
Investment Objectives

Our investment objectives are to:

provide regular, stable cash distributions;

target institutional quality, stabilized commercial real estate to achieve an attractive distribution yield;

preserve and protect stockholders’ invested capital;

realize appreciation from proactive investment management and asset management; and

seek diversification by investing across leading global cities and across real estate sectors including office, industrial, multifamily, retail and retail.

other.

We cannot assure you that we will achieve our investment objectives.

Summary

27

Portfolio

The following chart outlines the allocation of our investments based on fair value as of March 31, 2020:
nuveen-20200331_g1.jpg
The following charts further describe the diversification of our investments in real properties based on fair value as of March 31, 2020:
nuveen-20200331_g2.jpgnuveen-20200331_g3.jpg
(*) Based upon the market value of the properties.
28

Table of contents
Investments in Real Estate
The following charts provide information on the nature and geographical locations of our real properties as of September 30, 2019:

Sector and

Property/Portfolio Name

 Number of
Properties
  Location  Acquisition Date  Ownership
Interest
  Acquisition Price
(in thousands)
  Sq Feet (in
thousands)
/ # of units
  Occupancy 

Multifamily:

       

Kirkland Crossing

  1   Aurora, IL   Dec, 2017   100 $54,218   266 units   93

Tacara Steiner Ranch

  1   Austin, TX   June, 2018   100  47,909   246 units   91
 

 

 

     

 

 

  

 

 

  

 

 

 

Total Multifamily

  2      102,127   512 units   92
 

 

 

     

 

 

  

 

 

  

 

 

 

Industrial:

       

West Phoenix Industrial

  1   Phoenix, AZ   Dec, 2017   100  16,785   265 sq ft.   100

Denver Industrial

  3   
Golden &
Denver, CO
 
 
  Dec, 2017   100  51,135   486 sq ft.   100

Henderson Interchange

  1   Henderson, NV   Dec, 2018   100  25,074   197 sq ft.   100
 

 

 

     

 

 

  

 

 

  

 

 

 

Total Industrial

  5      92,994   948 sq ft.   100
 

 

 

     

 

 

  

 

 

  

 

 

 

Retail:

       

Main Street at Kingwood

  1   Houston, TX   Oct, 2018   100  85,696   199 sq ft.   97
 

 

 

     

 

 

  

 

 

  

 

 

 

Total Retail

  1      85,696   199 sq ft.   97
     

 

 

  

 

 

  

 

 

 

Office:

       

Defoor Hills

  1   Atlanta, GA   June, 2018   100  33,808   91 sq ft.   100

East Sego Lily

  1   
Salt Lake City,
UT
 
 
  May, 2019   100  44,422   149 sq ft.   100
 

 

 

     

 

 

  

 

 

  

 

 

 

Total Office

  2      78,230   240 sq ft.   100
 

 

 

     

 

 

  

 

 

  

 

 

 

Total Investment Properties

  10     $359,047   
 

 

 

     

 

 

   

Property Type*

LOGO

Geography*

LOGO

(*) Based upon the market value of the properties.

March 31, 2020:

Sector and
Property/Portfolio Name
Number of
Properties
LocationAcquisition DateOwnership
Interest
Acquisition Price
(in thousands)
Sq Feet (in
thousands)
/ # of units
Occupancy
Multifamily:
Kirkland Crossing1Aurora, ILDec, 2017100%$54,218  266units93 %
Tacara Steiner Ranch1Austin, TXJune, 2018100%47,909  246units95 %
Total Multifamily2102,127  512units94 %
Industrial:
West Phoenix Industrial1Phoenix, AZDec, 2017100%16,785  265sq ft.100 %
Denver Industrial3Golden & Denver, CODec, 2017100%51,135  486sq ft.100 %
Henderson Interchange1Henderson, NVDec, 2018100%25,074  197sq ft.100 %
Globe Street Industrial1Moreno Valley, CAOct, 2019100%19,445  252sq ft.100 %
Total Industrial6112,439  1200sq ft.100 %
Retail:
Main Street at Kingwood1Houston, TXOct, 2018100%85,696  199sq ft.98 %
Total Retail185,696  199sq ft.98 %
Office:
Defoor Hills1Atlanta, GAJune, 2018100%33,808  91sq ft.100 %
East Sego Lily1Salt Lake City, UTMay, 2019100%44,422  149sq ft.100 %
Total Office278,230  240sq ft.100 %
Other:
9725 Datapoint1San Antonio, TXDec, 2019100%36,526  205sq ft.100 %
Total Other136,526  205sq ft.100 %
Total Investment Properties12$415,018  

The following schedule details the expiring leases at our industrial, retail, office and officeother properties by annualized base rent and square footage as of September 30, 2019March 31, 2020 ($ and square feet data in thousands). The table below excludes our multifamily properties as substantially all leases at such properties expire within 12 months.

Year

  Number of
Expiring
Leases
   Annualized
Base Rent(1)
   % of Total
Annualized Base
Rent Expiring
  Square Feet   % of Total
Square Feet
Expiring
 

Remaining 2019

   —     $—      0  —      0

2020

   3    1,003    6  232    17

2021

   8    740    4  114    8

2022

   16    2,125    13  276    20

2023

   6    650    4  56    4

2024

   9    1,736    10  170    12

2025

   7    1,834    11  73    5

2026

   2    797    5  105    8

2027

   11    2,963    18  90    7

2028

   5    823    5  64    5

Thereafter

   9    4,002    24  201    14
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

 

Total

   76   $16,673    100  1,381    100
  

 

 

   

 

 

   

 

 

  

 

 

   

 

 

 

(1)

The annualized September 30, 2019 base rent per leased square foot of the applicable year excluding tenant recoveries, straight-line rent and above-market and below-market lease amortization.

YearNumber of
Expiring
Leases
Annualized Base Rent(1)
% of Total
Annualized Base
Rent Expiring
Square Feet% of Total
Square Feet
Expiring
2020 (Remaining) 944  %220  12 %
2021 747  %114  %
202215  2,103  11 %275  15 %
2023 652  %56  %
2024 1,868  10 %170  %
202511  3,052  16 %342  19 %
2026 819  %105  %
202711  2,969  15 %90  %
2028 825  %64  %
Thereafter12  5,571  28 %406  22 %
Total81  $19,550  100 %1,842  100 %
(1)The annualized March 31, 2020 base rent per leased square foot of the applicable year excluding tenant recoveries, straight-line rent and above-market and below-market lease amortization.
29

Investments in Real Estate-Related Securities

We have elected the fair market value option for accounting for

As part of our investment strategy we invest in real estate-related securities and changes in fair value are recorded in the current period earnings. Dividend income is recorded when declared. The resulting dividend income and gains and losses are recorded as a component of realized and unrealized income from real estate-related securities on the Consolidated Statements of Operations.

During the three and nine months ended September 30, 2019, we acquired $2.4 million and $22.0 million, respectively,including shares of common stock of publicly-traded REITs. We sold $2.6real estate investment trusts. As of March 31, 2020, we have 87 holdings and have invested $34.4 million and $22.1in securities that are valued at $30.0 million respectively, in real estate-related securities duringon the three and nine months ended September 30, 2019.balance sheet. The fair value of our real estate-related investments was approximately $35.9 million and $29.2 million, respectively, as of September 30, 2019 and December 31, 2018.

losses can be attributed to the adverse market conditions related to the COVID-19 pandemic.

Investments in International Affiliated Funds

We report our investments

Investment in the European Cities Partnership SCSp (“ECF”)ECF:
ECF was formed in March 2016 as an open-end, Euro-denominated fund that seeks to build a diversified portfolio of high quality and Asia Pacific Cities Fund FCP (“APCF”)stabilized commercial real estate with good fundamentals (i.e., core real estate) located in or around certain investment funds managed bycities in Europe selected for their resilience, potential for long-term structural performance and ability to deliver an affiliate of TIAA (the “International Affiliated Funds”), under the equity method of accounting. The equity method income from the investments in the International Affiliated Funds represent our allocable share of each fund’s net income for the threeattractive and nine months ended September 30, 2019 and is reported as income (loss) from equity investment in unconsolidated international affiliated funds on our Consolidated Statements of Operations.

Net income or loss includes our allocable sharestable distribution yield. As of the International Affiliated Fundslatest available information, ECF has total equity commitments of $1.3 billion and has called $1.2 billion of these commitments. ECF has 12 assets with a gross asset value of $2.0 billion and has a loan to value ration of 34.2%. The ECF portfolio is well diversified and has a balanced country exposure with 31% in UK, 19% in Netherlands, 17% in Finland, 16% in Spain, 12% in Italy and 5% in France resulting in an annualized since inception income and expense, realized gains and losses and unrealized appreciation or depreciation as determined fromreturn of 4.3%

On December 22, 2017, the financial statementsCompany entered into a subscription agreement to invest approximately $27.8 million (€25.0 million) into ECF. As of ECF and APCF (which carry investments at fair value in accordance withMarch 31, 2020, the applicable accounting principles generally accepted in the United States of America (“GAAP”)) when received by us. All contributions to or distributions from the investment in the International Affiliated Funds is accrued when notice is received and recorded as a receivable from or payable to the International Affiliated Funds on the Consolidated Balance Sheets.

Company has fully satisfied its commitment.

For the three and nine months ended September 30,March 31, 2020 and March 31, 2019, wethe Company recorded approximately $6,100 and $211,000 inthe following components of net income respectively, based on ourits allocable share from ECF ($ in thousands):

Three Months Ended March 31,
20202019
Operating income$428  $185  
Unrealized gains (losses)738(22) 
Net income$1,166  $163  
Investment in APCF:
APCF was launched in November 2018 as an open-end, U.S. dollar denominated fund that is reflected on our Consolidated Statementsseeks durable income and capital appreciation from a balanced and diversified portfolio of Operations.real estate investments in a defined list of investment cities in the Asia-Pacific region. As of the latest available information, APCF has total equity commitments of $422 million and has called $242 million of these commitments. APCF has 3 assets with a gross asset value of $376 million and has a loan to value ratio of
39%. As APCF ramps up, it currently has 16% exposure in Australia, 72% in Japan and 12% in South Korea resulting in an
annualized since inception income return of 3.0%.
On November 9, 2018, the Company entered into a subscription agreement to invest $10.0 million into APCF. Subsequently, on September 30,11, 2019, the Company’s investment in ECF was $27.2Company increased its commitment by $20.0 million.

As of March 31, 2020, the Company has funded $16.4 million of its total $30.0 million commitment.

For the three and nine months ended September 30,March 31, 2020 and March 31, 2019, wethe Company recorded approximately $92,000 and $295,000, respectively, inthe following components of net lossincome based on ourits allocable share from APCF that is reflected on our Consolidated Statements($ in thousands):
Three Months Ended March 31,
20202019
Operating income (loss)$249  $(25) 
Unrealized gains (losses)275(302) 
Net income (loss)$524  $(327) 



30

Table of Operations. As of September 30, 2019, the Company’s investment in APCF was $9.6 million.

contents

Investment in Commercial Mortgage Loan

We have elected the fair value option for accounting for its investment in commercial mortgage loan. In accordance with the adoption of the fair value option allowed under ASC 825, Financial Instruments, and at our election, any financial instruments are reported at fair value. The Income from commercial mortgage loan represents interest income and deferred origination fee income, which is amortized over the term of the loan and is reported as Income from commercial mortgage loan on the Company’s Consolidated Statement of Operations. The initial and subsequent changes to deferred origination fee is recorded in Investments in commercial mortgage loan, at fair value on our Consolidated Balance Sheets.

We originated our first commercial mortgage loan on March 28, 2019 forto finance the acquisition and renovation of an industrial property located in Maspeth, New York. The initial term of the loan was three years with twoone-year extension options. Based on the terms of the loan, we funded the loan on a 60% loan to cost basis amounting to $46.0 million. The borrower has the option to upsizeup-size the loan in two phases up to 80% loan to cost basis with a corresponding reduction in the interest rate. The borrowerrate and can request the upsizeup-size once an anchor lease for the property is signed and other requirements have been fulfilled.

On June 6, 2019, we sold the senior portion of the loan for $34.3 million to an unaffiliated party and retained the mezzanine loan,subordinate mortgage, receiving proceeds of $34.0 million, which is net of disposition fees.

The fair value of the mezzanine loansubordinate mortgage was $12.4$12.8 million as of September 30, 2019. WeMarch 31, 2020, resulting in unrealized losses of $0.3 million for the three months ended March 31, 2020. In addition, the Company recognized interest income and origination fee from its investment in commercial mortgage loan of approximately $0.3 million and $1.1$0.2 million for the three and nine months ending September 30, 2019.

month ended March 31, 2020. The unrealized loss can be attributable to widening credit spreads during the quarter in response to the market instability introduced by the COVID-19 pandemic.

Loan terms for the mezzanine loan as of September 30, 2019March 31, 2020 are summarized below (in($ in thousands):

Investment
Name

 

Asset

Type

 

Location

 

Interest

Rate

 

Origination
Date

 

Maturity

Date

 

Periodic
Payment
Terms

 Commitment
Amount
  Unfunded
Amount
  Principal
Receivable
  Fair
Value
 

55 Grand Ave

 Mezzanine Loan Masbeth, NY Libor + 570 bps March 28, 2019 March 29, 2022 Interest Only $14,375  $1,972  $12,403  $12,403 

Investment
Name
Asset
Type
LocationInterest
Rate
Origination
Date
Maturity
Date
Periodic
Payment
Terms
Commitment
Amount
Unfunded
Amount
Principal
Receivable
Fair
Value
55 Grand AveMezzanine LoanMasbeth, NYLibor + 570 bpsMarch 28, 2019March 29, 2022Interest Only$14,375$1,213$13,162$12,831

Factors Impacting Our Operating Results

Our results of operations are affected by a number of factors and depend on the rental revenue we receive from the properties that we acquire, the timing of lease expirations, general market conditions, operating expenses, the competitive environment for real estate assets and income from our investments in real estate-related securities and the International Affiliated Funds.

The outbreak of the novel coronavirus (“COVID-19”) and subsequent global pandemic began significantly impacting the U.S. and global financial markets and economies during the quarter ended March 31, 2020. The worldwide spread of COVID-19 has created significant uncertainty in the global economy. At this time we reasonably expect tenants will request certain rent relief and lease modifications from this unprecedented event; however, such requests haven’t been significant as of March 31, 2020 for our direct real estate. Our investments in the International Affiliated Funds may be similarly and negatively impacted by COVID-19 in the foreign countries where their investments are located. The duration and extent of COVID-19 over the long-term cannot be reasonably estimated at this time. The ultimate impact of COVID-19 and the extent to which COVID-19 impacts the Company will depend on future developments.
Rental Revenues

We receive income primarily from rental revenue generated by the properties that we acquire. The amount of rental revenue depends upon a number of factors, including: our ability to enter into leases with increasing or market value rents for the properties that we acquire; and rent collection, which primarily relates to each future tenant’s financial condition and ability to make rent payments to us on time.

Competitive Environment

We face competition from a diverse mix of market participants, including but not limited to, other companies with similar business models, independent investors, hedge funds and other real estate investors. Competition from others may diminish our opportunities to acquire a desired property on favorable terms or at all. In addition, this competition may put pressure on us to reduce the rental rates below those that we expect to charge for the properties that we acquire, which would adversely affect our financial results.

Operating Expenses

Our operating expenses include general and administrative expenses, including legal, accounting, and other expenses related to corporate governance, public reporting and compliance with the various provisions of U.S. securities laws. As we have with the leases associated with our initial industrial, retail, office and other properties, we generally expect to structure our industrial leases so that the tenant is responsible for taxes, maintenance, insurance, and structural repairs with respect to the premises throughout the lease term. Increases or decreases in such operating expenses will impact our overall financial performance.

performance.

31

OurQualification as a REIT

We qualifyelected to be taxed as a REIT for U.S. federal income tax purposes commencing with the taxable year ended December 31, 2018. Shares of our common stock are subject to restrictions on ownership and transfer that are intended, among other purposes, to assist us in qualifying and maintaining our qualification as a REIT. In order for us to qualify as a REIT under the Internal Revenue Code (the “Code”), we are required to, among other things, distribute as dividends at least 90% of our REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains, to our stockholders and meet certain tests regarding the nature of our income and assets. In order to satisfy a requirement that no five or fewer individuals own (or be treated as owning) more than 50% of our stock, subject to certain exceptions, no person or entity may own, or be deemed to own, by virtue of the applicable constructive ownership provisions of the Code, more than 9.8% (in value or number of shares, whichever is more restrictive) of the aggregate of our outstanding shares of stock or more than 9.8% (in value or number of shares, whichever is more restrictive) of our outstanding common stock.

Tax legislation commonly referred to as the Tax Cuts & Jobs Act (the “TCJA”) was enacted on December 22, 2017. Among other things, the TCJA reducesreduced the U.S. federal corporate income tax rate from 35% to 21% and createscreated new taxes on certain foreign-sourced earnings. Although management is still evaluatingFederal legislation intended to ameliorate the economic impact of the COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act )the "CARES Act"), was enacted on March 27, 2020, which, among other things, makes technical corrections to, or modifies on a temporary basis, certain of the provisions of the TCJA. Management has evaluated the effects of TCJA, as modified by the TCJA, we do not believeCARES Act and concluded that the TCJA will not materially impact our Consolidated Financial Statements. Weits consolidated financial statements. The Company also estimateestimates that the new taxes on foreign-sourced earnings imposed under the TCJA are not likely to apply to ourits foreign investments.

Federal legislation intended to ameliorate the economic impact of the

COVID-19 pandemic, the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), was enacted on March 27,
2020, which makes technical corrections to, or modifies on a temporary basis, certain of the provisions of the TCJA.
Management has evaluated the effects of the TCJA, as modified by the CARES Act, and concluded that the TCJA will not
materially impact its consolidated financial statements. We also estimate that the taxes on foreign-sourced earnings imposed
under the TCJA are not likely to apply to its foreign investments.
On December 22, 2017, the SEC staff issued Staff Accounting Bulletin No. 118 (“SAB 118”), which provides guidance on accounting for the tax effects of the TCJA. SAB 118 provides a measurement period that should not extend beyond one year from the TCJA enactment date for companies to complete the accounting under ASC 740, Income Taxes. Although we believe that the impacts of the TCJA will be immaterial to our financial results, we continue to analyze certain aspects of the TCJA, therefore our estimates may change as additional information becomes available. Many of the provisions of the TCJA will require guidance through the issuance of Treasury regulations in order to assess their effect. There may be a substantial delay before such are promulgated, increasing the uncertainty as to the ultimate effect of the statutory amendments on us. It is also likely that there will be technical corrections legislation proposed with respect to the TCJA this year, the effect of which cannot be predicted and may be adverse to us or our stockholders.

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Results of Operations

The following table sets forth the results of our operations for the three and nine months ended September 30,March 31, 2020 and 2019 ($ in thousands):
Three Months Ended March 31,
202020192020 vs 2019
Revenues
Rental revenue$9,458  $6,745  $2,713  
Income from commercial mortgage loan245  21  224  
Total revenues9,703  6,766  2,937  
Expenses
Rental property operating2,962  2,286  676  
General and administrative1,034  958  76  
Advisory fee due to affiliate727  467  260  
Depreciation and amortization4,144  3,387  757  
Total Expenses8,867  7,098  1,769  
Other income (expense)
Realized and unrealized (loss) income from real estate-related securities(7,667) 4,986  (12,653) 
Income (loss) from equity investment in unconsolidated international affiliated funds1,690  (165) 1,881  
Unrealized loss on commercial mortgage loan(331) —  (331) 
Interest income35  11  (2) 
Interest expense(1,189) (752) (437) 
Net (loss) income(6,626) 3,748  10,374  
Net income attributable to Series A preferred stock  —  
Net (loss) income attributable to common stockholders$(6,630) $(3,740) $10,374  
Rental Revenue, Rental Property Operating Expenses, Depreciation and Amortization
Due to acquisitions of real estate we have made since we commenced principal operations in December 2017, our revenues and operating expenses for the three months ended March 31, 2020 are not comparable. However, certain properties in our portfolio were owned for both the full three months ended March 31, 2020 and March 31, 2019 and 2018 (in thousands):

  Three Months
Ended
September 30,
2019
  Three Months
Ended
September 30,
2018
  2019 vs
2018
  Nine Months
Ended
September 30,
2019
  Nine Months
Ended
September 30,
2018
  2019 vs
2018
 

Revenues

      

Rental revenue

 $7,939  $4,536  $3,403  $22,313  $10,373  $11,940 

Income from commercial mortgage loan

  259   —     259   1,119   —     1,119 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total revenues

  8,198   4,536   3,662   23,432   10,373   13,059 

Expenses

      

Rental property operating

  2,543   1,695   848   7,169   3,799   3,370 

General and administrative

  811   623   188   2,842   3,545   (703

Advisory fee due to affiliate

  527   397   130   1,490   1,038   452 

Depreciation and amortization

  3,351   2,855   496   10,530   6,484   4,046 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Total Expenses

  7,232   5,570   1,662   22,031   14,866   7,165 

Other income (expense)

      

Realized and unrealized income from real estate-related securities

  2,561   153   2,408   7,666   2,323   5,343 

Income (loss) from equity investment in unconsolidated international affiliated funds

  (85  20   (105  (85  20   (105

Interest income

  31   12   19   82   73   9 

Interest expense

  (1,262  —     (1,262  (3,352  —     (3,352
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss)

  2,211   (849  3,060   5,712   (2,077  7,789 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income attributable to Series A preferred stock

  4   —     4   11   —     11 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Net income (loss) attributable to common stockholders

 $2,207  $(849 $3,056  $5,701  $(2,077 $7,778 
 

 

 

  

 

 

  

 

 

  

 

 

  

 

 

  

 

 

 

Due to acquisitions of real estate and real estate-related securities and loan originations we have made since we commenced principal operations in December 2017, our results of operations for the three and nine months ended September 30, 2019 and 2018 are not comparable. However, certain properties in our portfolio were owned for both the three and nine months ended September 30, 2019 and 2018 and are discussed further below.

General and Administrative Expenses

are further discussed below.

Income from Commercial Mortgage Loan
During the three months ended September 30,March 31, 2020, we earned a full quarter of interest income and origination fees from our commercial mortgage loan compared to partial quarter income activity for the three months ending March 31, 2019, as the commercial mortgage loan was originated in March 2019.
General and Administrative Expenses
During the three months ended March 31, 2020, general and administrative expenses increased by $0.2 million compared to the corresponding period in 2018primarily due to additional expensesprofessional fees incurred as a result of the growth inof our portfolio. portfolio as compared to the three months ending March 31, 2019.
Advisory Fee Due to Affiliate
During the ninethree months ended September 30, 2019, general and administrative expenses decreasedMarch 31, 2020, the advisory fee due increased by $0.7$0.3 million compared to the corresponding periodthree months ending March 31, 2019 due to the growth of our NAV.
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Realized and unrealized loss from Real Estate-Related Securities
During the three months ended March 31, 2020, realized and unrealized losses from real estate-related securities increased $12.7 million compared to the three months ending March 31, 2019 due primarily to the adverse market conditions related to the COVID-19 pandemic.
Income from Equity Investment in 2018Unconsolidated International Affiliated Funds
During the three months ended March 31, 2020, income from International Affiliated Funds increased $1.9 million compared to the three months ended March 31, 2019 primarily due to $1.1 million of organization costs incurredunrealized gains on current quarter property valuations along with an increase in the prior year which were nonrecurring.

Advisory Fee Dueownership for both ECF and APCF due to Affiliate

additional fundings.

Interest Expense
During the three and nine months ended September 30, 2019, the advisory fee due to affiliateMarch 31, 2020, interest expense increased by $0.1$0.4 million and $0.5 million, respectively, compared to the corresponding periods in 2018year ended three months ending March 31, 2019. The increase was primarily due to the growth in our portfolio which increased the underlying basis for our advisory fee calculation.

Depreciation and Amortization

Depreciation and amortization for the three and nine months ended September 30, 2019 and September 30, 2018 relates to property, furniture and fixtures, equipment and intangible assets in connection with our real properties. The increase was driven by the growth of our portfolio, which increase from seven properties as of September 30, 2019 to ten properties as of September 30, 2019.

Realized and unrealized income from real estate-related securities

During the three and nine months ended September 30, 2019, our investment in real estate-related securities was approximately $10.0 million larger compared to the corresponding periods in 2018. As a result, this increased our realized income in the form of dividend income, and along with upward market movements, increased our unrealized gains.

Interest Expense

During the three and nine months ended September 30, 2019, we incurred interest expense as we entered into a credit facility for acquisition of real estate and real estate-related securities and loan originations.

related indebtedness along with a mortgage payable on our retail property.

Same Property Results of Operations

We evaluate our consolidated results of operations on a same property basis, which allows us to analyze our property operating results excluding acquisitions during the periods under comparison. Properties in our portfolio are considered same property if they were owned for the full periods presented, otherwise they are considerednon-same property. Newly acquired or recently developed properties that have not achieved stabilized occupancy are excluded from same property results and are considerednon-same property. We do not consider our real estate-related securities and International Affiliated Funds segments to be same property.

For the three and nine months ended September 30,March 31, 2020 and March 31, 2019, and September 30, 2018, our same property portfolio consisted of three industrial, two multifamily, one multifamilyoffice and two industrial properties.

one retail property.

Same property operating results are measured by calculating same property net operating income (“NOI”). Same property NOI is a supplementalnon-GAAP disclosure of our operating results that we believe is meaningful as it enables management to evaluate the impact of occupancy, rents, leasing activity, and other controllable property operating results at our real estate properties. We define same property NOI as operating revenues less operating expenses, which exclude (i) depreciation and amortization, (ii) interest expense and othernon-property related revenue and expenses items such as (a) general and administrative expenses, (b) management fee, (c) interest income, and (d) income from real estate-related securities.

Our same property NOI may not be comparable to that of other REITs and should not be considered to be more relevant or accurate in evaluating our operating performance than the current GAAP methodology used in calculating net income (loss).

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The following table reconciles GAAP net (loss) income (loss) attributable to our stockholders to same property NOI for the three and nine months ended September 30,March 31, 2020 and March 31, 2019 and September 30, 2018 ($ in thousands):

   Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
       2019          2018          2019          2018     

Net income (loss) attributable to common stockholders

  $2,207  $(849 $5,701  $(2,077

Adjustments to reconcile to same property NOI

     

General and administrative

   811   623   2,842   3,545 

Advisory fee due to affiliate

   527   397   1,490   1,038 

Depreciation and amortization

   3,351   2,855   10,530   6,484 

Income from real estate-related securities

   (2,561  (153  (7,666  (2,323

Income from commercial mortgage loan

   (259  —     (1,119  —   

Income (loss) from equity investment in unconsolidated international affiliated funds

   85   (20  85   (20

Interest income

   (31  (12  (82  (73

Interest expense

   1,262   —     3,352   —   

Series A preferred stock

   4   —     11   —   
  

 

 

  

 

 

  

 

 

  

 

 

 

NOI

   5,396   2,841   15,144   6,574 

Non-same property NOI

   3,520   1,062   9,793   1,192 
  

 

 

  

 

 

  

 

 

  

 

 

 

Same property NOI

  $1,876  $1,779  $5,351  $5,382 
  

 

 

  

 

 

  

 

 

  

 

 

 

Three Months Ended March 31,
20202019
Net (loss) income attributable to common stockholders$(6,630) $3,744  
Adjustments to reconcile to same property NOI
General and administrative1,034  958  
Advisory fee due to affiliate727  467  
Depreciation and amortization4,144  3,387  
Income (loss) from real estate-related securities7,667  (4,986) 
Income from commercial mortgage loan(245) (21) 
(Income) loss from equity investment in unconsolidated international affiliated funds(1,690) 165  
Interest income(35) (11) 
Interest expense1,189  752  
Series A preferred stock  
NOI6,165  4,459  
Non-same property NOI1,692  —  
Same property NOI$4,473  $4,459  
The following table details the components of same property NOI for the three months ended September 30,March 31, 2020 and March 31, 2019 and 2018 ($ in thousands):

   Three Months Ended
September 30,
   2019 vs. 2018 
   2019   2018   $   % 

Rental revenue

  $3,032   $2,811   $221    8
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

   3,032    2,811    221    8

Rental property operating

   1,156    1,032    124    12
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

   1,156    1,032    124    12
  

 

 

   

 

 

   

 

 

   

 

 

 

Same property NOI

  $1,876   $1,779   $97    5
  

 

 

   

 

 

   

 

 

   

 

 

 

Same Property—Rental Revenue

Same property rental revenue increased $0.2 million for the three months ended September 30, 2019, compared to the corresponding period in 2018 due to increases in base rental income and recovery income at our industrial properties.

Same Property—Rental Property Operating Expenses

Same property rental property operating expenses increased $0.1 million during the three months ended September 30, 2019, compared to the corresponding period in 2018 due to increases in real estate taxes and repairs and maintenance at our industrial properties.

The following table details the components of same property NOI for the nine months ended September 30, 2019 and 2018 ($ in thousands):

   Nine Months Ended
September 30,
   2019 vs. 2018 
   2019   2018   $   % 

Rental revenue

  $8,670   $8,457   $213    3
  

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

   8,670    8,457    213    3

Rental property operating

   3,319    3,075    244    8
  

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

   3,319    3,075    244    8
  

 

 

   

 

 

   

 

 

   

 

 

 

Same property NOI

  $5,351   $5,382   $(31   -1
  

 

 

   

 

 

   

 

 

   

 

 

 

Same Property—Rental Revenue

Same property rental revenue increased $0.2 million for the nine months ended September 30, 2019, compared to the corresponding period in 2018 due to increases in base rental income and recovery income at our multifamily and industrial properties, partially offset by rent concessions at our industrial properties.

Same Property—Rental Property Operating Expenses

Same property rental property operating expenses increased $0.2 million during the nine months ended September 30, 2019, compared to the corresponding period in 2018 due to increases in real estate taxes and repairs and maintenance at our industrial properties.

March 312020 vs 2019
20202019$%
Rental revenue$6,719  $6,741  $(22) %
Total revenues6,719  6,741  (22) %
Rental property operating2,246  2,282  (36) (1)%
Total expenses2,246  2,282  (36) (1)%
Same property NOI$4,473  $4,459  $14  — %


Liquidity and Capital Resources

Our primary needs for liquidity and capital resources are to fund our investments, to make distributions to our stockholders, to repurchase shares of our common stock pursuant to our share repurchase plan, to pay our offering and operating fees and expenses and to pay interest on any outstanding indebtedness we may incur. We will obtain the funds required to purchase investments and conduct our operations from the net proceeds of the Offering and any future offerings we may conduct, from secured and unsecured borrowings from banks and other lenders and from any undistributed funds from operations. Generally, cash needs for items other than asset acquisitions are expected to be met from operations and use of proceeds from our credit facility, and cash needs for asset acquisitions are funded by the Offering and futurepublic offerings we may conductof our common stock and debt financings. However, there may be a delay between the sale of our shares and our purchase of assets, which could result in a delay in the benefits to our stockholders, if any, of returns generated from our investment operations. Once we have raised substantial proceeds in the Offeringpublic offering and acquired a broad portfolio of real estate investments, our target leverage ratio will be approximately 30% to 50% of our gross real estate assets (measured using the fair market value of gross real estate assets, including equity in our securities portfolio), including property and entity-level debt, but excluding debt on the securities portfolio, although it may exceed this level during our offering stage. Our leverage ratio calculation will also factor in the leverage ratios of other vehicles and funds established by Nuveen Real EstateNRE in which we may invest, including the International Affiliated Funds. Our charter restricts the amount of indebtedness we may incur to 300% of our net assets, which approximates 75% of the aggregate cost of our investments, but does not restrict the amount of indebtedness we may incur with respect to any single investment. However, we may borrow in excess of this amount if such excess is approved by a majority of our independent directors, and disclosed to stockholders in the next quarterly report, along with justification for such excess.

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If we are unable to raise substantial funds in our Offering, we will make fewer investments resulting in less diversification in terms of the type, number and size of investments we make and the value of an investment in us will fluctuate with the performance of the specific assets we acquire. Further, we have certain fixed operating expenses, including certain expenses as a publicly offered REIT, regardless of whether we are able to raise

substantial funds. Our inability to raise substantial funds would increase our fixed operating expenses as a percentage of gross income, reducing our net income and limiting our ability to make distributions.

Our operating fees and expenses include, among other things, the advisory feestockholder servicing fees we pay to the Advisor,Dealer Manager, legal, audit and valuation expenses, federal and state filing fees, printing expenses, administrative fees, transfer agent fees, marketing and distribution expenses and fees related to acquiring, financing, appraising and managing our properties. The stockholder servicing fees we pay to the Dealer Manager are accrued up to a maximum amount of 8.75% of the sum of the gross proceeds at the time of the sale of common shares. We do not have any office or personnel expenses as we do not have any employees. We may reimburse the Advisor for certainout-of-pocket expenses in connection with our operations.operations and we did not have any cost to reimburse for three months ended March 31, 2020. The Advisor has agreed to advance all of our organization and offering expenses on our behalf (other than upfront selling commissions, dealer manager fees and stockholder servicing fees) through the first anniversary of our first acquisition.the commencement of the Offering. These expenses include legal, accounting, printing, mailing and filing fees and expenses, due diligence expenses of participating broker-dealers supported by detailed and itemized invoices, costs in connection with preparing sales materials, design and website expenses, fees and expenses of our transfer agent, fees to attend retail seminars sponsored by participating broker-dealers and reimbursements for customary travel, lodging, and meals, but exclude selling commissions, dealer manager fees and stockholder servicing fees. We will reimburse the Advisor for all such advanced expenses ratably over theit incurred in 60 month periodequal monthly installments commencing on the earlier of the date the Company's NAV reaches $1$1.0 billion or January 31, 2023. For purposes of calculating our NAV, the organization and offering expenses paid by the Advisor through the first anniversary of our first investment acquisition are not recognized as expenses or as a component of equity and will not be reflected in our NAV until we reimburse the Advisor for these costs.
As of September 30, 2019,March 31, 2020, the Advisor and its affiliates had incurred organization and offering expenses on our behalf of $4.6 million. Organization costs of $1.1 million consisting ofhave been expensed and offering costs of $4.5$3.5 million are a component of equity in the form of additional paid in capital.
We elected to be taxed as a REIT under Sections 856 through 860 of the Code, commencing with our taxable year ended December 31, 2018 and intend to continue to qualify as a REIT. In order to maintain our qualification as a REIT, we are required to, among other things, distribute as dividends at least 90% of our REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains, to our stockholders and meet certain tests regarding the nature of our income and assets.
On October 24, 2018, we entered into a credit agreement (“Credit Agreement”) with Wells Fargo Bank, National Association (“Wells Fargo”), as administrative agent and lead arranger. The Credit Agreement initially provided for aggregate commitments of up to $60 million for unsecured revolving loans, with an accordion feature that may increase the aggregate commitments to up to $500 million. On December 17, 2018 and June 11, 2019, we amended the Credit Agreement to increase the Credit Facility to $150 million and organization costs of $1.1 million. Such costs became$210 million in aggregate commitments, respectively, with all other terms remaining the same. Loans outstanding under the Credit Agreement bear interest, at our liabilityOperating Partnership’s option, at either an adjusted base rate or an adjusted LIBOR rate, in each case, plus an applicable margin. The applicable margin ranges from 1.30% to 1.90% for borrowings at the adjusted LIBOR rate, in each case, based on January 31, 2018, the date as of which the Offering was declared effective. After the first anniversarytotal leverage ratio of the commencementOperating Partnership and its subsidiaries. Loans under the Credit Facility will mature three years from October 24, 2018, with an option to extend twice for an additional year pursuant to the terms of the first acquisition,Credit Agreement.
As of March 31, 2020, we had $85.3 in borrowings and had outstanding accrued interest of $0.2 million. For the three months ended March 31, 2020, we incurred $0.7 million in interest expense.
As of March 31, 2020, the Company is in compliance with all loan covenants.
On November 8, 2019, we entered into a loan agreement ("Mortgage Payable") secured by Main Street at Kingwood with Nationwide Life Insurance Company ("Nationwide") as the lender. The Mortgage Payable provides for an aggregate principal amount of $48.0 million and will reimbursemature on December 1, 2026. Interest is accrued on the Advisor for any organization and offering expenses that it incurs on our behalf as and when incurred. After the termination of each three-year public offering, the Advisor has agreed to reimburse us to the extent that the organization and offering expenses that we incur with respect to that offering exceed 15%unpaid principal balance of the gross proceeds from such public Offering.

Mortgage Payable at the rate of 3.15% per annum.

As of March 31, 2020, we had $48.0 million in borrowings and $0.1 million in accrued interest outstanding under the Mortgage Payable. For the three months ended March 31, 2020, we incurred $0.4 million in interest expense.

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Cash Flows

The following table sets forthprovides a breakdown of the primary sourcesnet change in our cash and uses ofcash equivalents and restricted cash for the ninethree months ended September 30,March 31, 2020 and 2019 and September 30, 2018 (in($ in thousands):

   Nine Months
Ended
September 30,
2019
   Nine Months
Ended
September 30,
2018
 

Cash flows provided by operating activities

  $8,831   $3,192 

Cash flows used in investing activities

   (66,940   (107,976

Cash flows provided by financing activities

   64,664    117,710 
  

 

 

   

 

 

 

Net increase in cash and cash equivalents and restricted cash

  $6,555   $12,926 
  

 

 

   

 

 

 

Operating activities—

Three Months Ended March 31,
20202019
Cash flows provided by operating activities$4,022  $2,581  
Cash flows used in investing activities(10,446) (45,295) 
Cash flows provided by financing activities3,578  46,062  
Net (decrease) increase in cash and cash equivalents and restricted cash$(2,846) $3,348  
Cash flows provided by operating activities increased $5.6$1.4 million during the ninethree months ended September 30, 2019March 31, 2020 compared to the corresponding period in the 20182019 due to increased cash flows from the operations of our investments in real estate.

Investing activities—estate as a result of growth in the size of our portfolio and positive leasing activity.

Cash flows used in investing activities decreased by $41.0$34.8 million during the ninethree months ended September 30, 2019March 31, 2020 compared to the corresponding period in the 20182019 primarily due to fewer property acquisitionsa $44.7 million reduction in the current year, offset by the sale of the senior note of thefundings related to our commercial mortgage loan offset by an additional funding of $6.4 million towards the $30.0 million commitment to APCF along with an increase in net purchase and proceeds from the sale ofactivity on our real estate-related securities.

Financing activities—securities portfolio of $2.7 million.

Cash flows provided by financing activities decreased by $53.0$42.5 million during the ninethree months ended September 30, 2019March 31, 2020 compared to the corresponding period in the 20182019 primarily due to funding

from TIAA as parta net increase in repayments on the credit facility of their commitments to purchase Class N shares$67.5 million and a $6.2 million increase in the prior year,distributions offset by an increase in net borrowings onproceeds from the credit facility.

Non-GAAP Metrics

issuance of common stock of $31.5 million.

Funds from Operations and Adjusted Funds from Operations

We believe funds from operations (“FFO”) is a meaningful supplementalnon-GAAP operating metric. Our Consolidated Financial Statementsconsolidated financial statements are presented under historical cost accounting which, among other things, requires depreciation of real estate investments to be calculated on a straight linestraight-line basis. As a result, our operating results imply that the value of our real estate investments will decrease evenly over a set time period. However, we believe that the value of real estate investments will fluctuate over time based on market conditions and as such, depreciation under historical cost accounting may be less informative. FFO is a standard REIT industry metric defined by the National AssociationalAssociation of Real Estate Investment Trusts (“NAREIT”).

FFO, as defined by NAREIT and presented below, is calculated as net income or loss (computed in accordance with GAAP), excluding gains or losses from sales of depreciable real property and impairment write-downs on depreciable real property, plus real estate-related depreciation and amortization.

The following table presents a reconciliation of FFO to net income (loss) ($ in thousands):

   Three Months
Ended
September 30,
   Nine Months Ended
September 30,
 
   2019   2018   2019   2018 

Net income (loss)

  $2,211   $(849  $5,712   $(2,077

Adjustments:

        

Real estate depreciation and amortization

   3,351    2,855    10,530    6,484 
  

 

 

   

 

 

   

 

 

   

 

 

 

Funds From Operations

  $5,562   $2,006   $16,242   $4,407 
  

 

 

   

 

 

   

 

 

   

 

 

 

We also believe that Adjusted FFO (“AFFO”) is a meaningful supplementalnon-GAAP disclosure of our operating results. AFFO further adjusts FFO in order for our operating results to reflect the specific characteristics of our business by adjusting for items we believe are not related to our core operations. Our adjustments to FFO to arrive to AFFO include straight-line rental income, amortization of above and below- marketabove-and below-market lease intangibles, organization costs, unrealized gains or losses from changes in fair value of real estate- relatedestate-related securities, and amortization of restricted stock award, andawards, unamortized origination fee related to the commercial mortgage loan.loan, and unrealized loss (income) from investments in international affiliated funds. AFFO is not defined by NAREIT and our calculation of AFFO may not be comparable to the disclosures made by other REITs.

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Table of contents
The following table presents a reconciliation of net (loss) income to FFO and to AFFO ($ in thousands):

   Three Months Ended
September 30,
  Nine Months Ended
September 30,
 
   2019  2018  2019  2018 

Funds from Operations

  $5,562  $2,006  $16,242   4,407 

Adjustments:

     

Straight-line rental income

   (283  (537  (952  (714

Amortization of above and below market lease intangibles

   (93  (15  (357  (46

Organization costs

   —     —     —     1,091 

Unrealized (gain) loss from changes in fair value of real estate-related securities

   (2,047  393   (4,859  (1,459

Amortization of restricted stock awards

   17   17   51   45 

Unamortized origination fee related to commercial mortgage loan

    —     99   —   

Unrealized loss from investment in international affiliated funds

   228   18   293   18 
  

 

 

  

 

 

  

 

 

  

 

 

 

Adjusted Funds from Operations attributable to stockholders

  $3,384  $1,882  $10,517  $3,342 
  

 

 

  

 

 

  

 

 

  

 

 

 

Three Months Ended March 31,
20202019
Net (loss) income$(6,626) $3,748  
Adjustments:
Real estate depreciation and amortization4,270  3,387  
Funds from Operations(2,356) 7,135  
Adjustments:—  —  
Straight-line rental income(665) (410) 
Amortization of above and below market lease intangibles(180) (87) 
Unrealized loss (gain) from changes in fair value of real estate related securities6,498(4,769) 
Unrealized loss on commercial mortgage loan331  —  
Amortization of restricted stock awards11  11  
Unrealized (income) loss from investment in international affiliated funds(1,408) 324  
Unamortized origination fee related to commercial mortgage loan—  430  
Adjusted Funds from Operations attributable to stockholders$2,231  $2,634  

FFO and AFFO should not be considered to be more relevant or accurate than the current GAAP methodology in calculating net income (loss) or in evaluating our operating performance. In addition, FFO and AFFO should not be considered as alternatives to net income (loss) as indications of our performance or as alternatives to cash flows from operating activities as indications of our liquidity, but rather should be reviewed in conjunction with these and other GAAP measurements. Further, FFO and AFFO are not intended to be used as liquidity measures indicative of cash flow available to fund our cash needs, including our ability to make distributions to our stockholders.

Distributions

Beginning September 30, 2018,

Distribution Policy
We intend to distribute sufficient income so that we establishedsatisfy the requirements for qualification as a monthlyREIT. In order to qualify as a REIT, we are required to distribute 90% of our annual REIT taxable income, determined without regard to the dividends-paid deduction and excluding net capital gains, to our stockholders. Our distribution policy is set by our board of directors and is subject to change based on available cash flows. We cannot guarantee the amount of distributions paid, if any. Our stockholders will not be entitled to receive a distribution if the shares are repurchased prior to the applicable time of the record date fordate. In connection with a distribution to our stockholders, our board of directors approves a quarterly distribution for a certain dollar amount for each class of our common stock. We then calculate each stockholder’s specific distribution amount for the quarter using applicable record and declaration dates, and the distributions begin to accrue on the date we admit our stockholders.
We initially established monthly record dates for quarterly distributions to stockholders onof record as of the last day of each applicable month typically payable priorwithin 25 days following month end. On January 17, 2020, our board of directors amended our distribution policy to reflect that we intend to pay distributions monthly rather than quarterly going forward, subject to the enddiscretion of the month following quarter end.

Each classboard of common stock receives the same gross distribution per share.directors. The net distribution varies for each class based on the applicable advisory fee and stockholder servicing fee, which is deducted from the monthly distribution per share.

share and paid directly to the applicable distributor.

Distributions
Based on the monthly record dates established by the board of directors, we accrue for distribution on a monthly basis. We accrued $1.9 million for March 2020 in Distribution Payable on the Consolidated Balance Sheets.
For the three months ended March 31, 2020, we declared and paid distributions in the amount of $8.7 million, which consists of a 4th quarter distribution of $5.1 million and two monthly distributions totaling $3.6 million, resulting from the amendment of our distribution policy to reflect our intention to pay monthly rather than quarter distributions.
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Table of contents
The following table summarizes our distributions declared and paid during the three months ended September 30,March 31, 2020 and March 31, 2019 and 2018 ($ in thousands):

   For the three months ended
September 30, 2019
  For the three months ended
September 30, 2018
 
   Amount   Percentage  Amount   Percentage 

Distributions

       

Paid in cash

  $3,796    98.91 $—      0.00

Reinvested in shares

   42    1.09  —      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Total distributions

  $3,838    100.00 $—      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Sources of distributions

       

Cash flows from operating activities

  $3,796    100.00 $—      0.00

Credit facility draw down

   —      0.00  —      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Total sources of distributions

  $3,796    100.00 $—      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Cash flows from operating activities

  $3,986    $1,444   

Funds from Operations

  $5,562    $2,006   

The following table summarizes our distributions declared and paid during the nine months ended September 30, 2019 and 2018 ($ in thousands):

   For the nine months ended
September 30, 2019
  For the nine months ended
September 30, 2018
 
   Amount   Percentage  Amount   Percentage 

Distributions

       

Paid in cash

  $8,924    99.29 $—      0.00

Reinvested in shares

   64    0.71  —      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Total distributions

  $8,988    100.00 $—      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Sources of distributions

       

Cash flows from operating activities

  $8,831    98.96 $—      0.00

Credit facility draw down

   93    1.04  —      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Total sources of distributions

  $8,924    100.00 $—      0.00
  

 

 

   

 

 

  

 

 

   

 

 

 

Cash flows from operating activities

  $8,831    $3,192   

Funds from Operations

  $16,242    $4,407   

For the Three Months Ended March 31, 2020For the Three Months Ended March 31, 2019
AmountPercentageAmountPercentage
Distributions
Paid in cash$8,419  96.61 %$2,474  99.60 %
Reinvested in shares295  3.39 %10  0.40 %
Total distributions$8,714  100.00 %$2,484  100.00 %
Sources of distributions
Cash flows from operating activities$4,022  47.77 %$2,474  100.00 %
Debt proceeds4,397  52.23 %—  0.00 %
Total sources of distributions$8,419  100.00 %$2,474  100.00 %
Cash flows from operating activities$4,022  $2,581  

Net Asset Value

We calculate NAV per share in accordance with the valuation guidelines that have been approved by our board of directors. We believe our NAV is a meaningful supplementalnon-GAAP operating metric. The following table provides a breakdown of the major components of our NAV as of September 30, 2019March 31, 2020 ($ and shares in thousands, except per share data):

Components of NAV

  September 30,
2019
 

Investment in real property

  $379,815 

Investment in real estate-related assets

   35,946 

Investment in international affiliated funds

   36,759 

Investment in commercial mortgage loan

   12,403 

Cash and cash equivalents

   7,725 

Restricted cash

   4,529 

Other assets

   2,978 

Debt obligations

   (118,277

Subscriptions received in advance

   (4,529

Other liabilities

   (10,550

Stockholder servicing fees payable the following month(1)

   (4
  

 

 

 

Net Asset Value

  $346,795 
  

 

 

 

Net Assets Value attributable to Series A preferred stock

  $129 
  

 

 

 

Net Asset Value attributable to common stockholders

  $346,666 
  

 

 

 

Number of outstanding shares of common stock

   32,056 

(1)

Components of NAVMarch 31, 2020
Investments in real property$445,032 
Investments in international affiliated funds45,047 
Investments in real estate-related securities30,047 
Investments in commercial mortgage loan12,831 
Cash and cash equivalents10,044 
Restricted cash2,781 
Other assets2,829 
Debt obligations(132,277)
Other liabilities(8,433)
Subscriptions received in advance(2,781)
Stockholder servicing fees only applypayable the following month(1)
(30)
Net Asset Value$405,090 
Net Assets Value attributable to Class S, Class T and Class D shares. For purposesSeries A preferred stock$129 
Net Asset Value attributable to common stockholders$404,961 
Number of NAV we recognize the stockholder servicing fee as a reductionoutstanding shares of NAV on a monthly basis as such fee is paid. Under GAAP, we accrue the full cost of the stockholder servicing fee as an offering cost at the time we sell Class S, Class T and Class D shares. As of September 30, 2019, we have accrued under GAAP approximately $651,000 of stockholder servicing fees payable to the Dealer Manager related to the Class D and Class T shares sold.

common stock
37,662 

(1)Stockholder servicing fees only apply to Class T, Class S and Class D shares. For purposes of NAV we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis as such fee is paid. Under GAAP, we accrue the full cost of the stockholder servicing fee as an offering cost at the time we sell Class T, Class S and Class D shares. As of March 31, 2020, we have accrued under GAAP approximately $3.2 million of stockholder servicing fees payable to the Dealer Manager related to the Class T, Class S and Class D shares sold.
The following table provides a breakdown of our total NAV and NAV per share by share class as of September 30, 2019 (inMarch 31, 2020 ($ in thousands, except per share data):

NAV Per Share

  Class N
Shares
   Class I
Shares
   Class D
Shares
   Class T
Shares
   Total 

Net asset value

  $321,906   $15,681   $4,539   $4,540   $346,666 

Number of outstanding shares

   29,731    1,470    426    429    32,056 
  

 

 

   

 

 

   

 

 

   

 

 

   

NAV per shares as of September 30, 2019

  $10.83   $10.67   $10.65   $10.58   

As

NAV Per ShareClass T SharesClass S SharesClass D SharesClass I SharesClass N SharesTotal
Net asset value$24,833  $13,202  $11,849  $34,067  $321,010  $404,961  
Number of outstanding shares2,358  1,256  1,116  3,201  29,731  37,662  
NAV per shares as of March 31, 2020$10.53  $10.51  $10.62  $10.64  $10.80  
39

Table of September 30, 2019, we had not sold any Class S shares. We will disclose the NAV per share for each outstanding class of common stock in future periods once shares of such class are outstanding.

contents

Set forth below are the weighted averages of the key assumptions in the discounted cash flow methodology used in the September 30, 2019March 31, 2020 valuations, based on property types. Once we own more than one retail and other property, we will include the key assumptions for such property type.

Property Type

  Discount
Rate
  Exit
Capitalization
Rate
 

Industrial

   6.91  6.11

Multifamily

   7.00   5.40 

Office

   7.16   6.41 
types.

Property TypeDiscount RateExit Capitalization Rate
Industrial6.81%6.01%
Multifamily6.885.40
Office7.176.42

These assumptions are determined by our independent valuation advisor. A change in these assumptions would impact the calculation of the value of our property investments. For example, assuming all other factors remain unchanged, the changes listed below would result in the following effects on our investment values:

Input

  Hypothetical
Change
   Industrial
Investment
Values
  Multifamily
Investment
Values
  Office
Investment
Values
 

Discount Rate

   0.25% decrease    +2.0  +2.0  +1.8

(weighted average)

   0.25% increase    (1.9%)   (1.8%)   (1.9%) 

Exit Capitalization Rate

   0.25% decrease    +2.6  +3.0  +2.3

(weighted average)

   0.25% increase    (2.4%)   (2.7%)   (2.3%) 

InputHypothetical
Change
Industrial
Investment
Values
Multifamily
Investment
Values
Office
Investment
Values
Discount Rate0.25% decrease  +3.0%+1.8%+2.1%
(weighted average)0.25% increase  (1.0)%(2.0)%(1.5)%
Exit Capitalization Rate0.25% decrease  +3.8%+2.9%+2.7%
(weighted average)0.25% increase  (1.5)%(2.9)%2.0%
The following table reconciles stockholders’ equity per our Consolidated Balance Sheets to our NAV ($ in thousands):

   September 30,
2019
 

Reconciliation of Stockholders’ Equity to NAV

  

Stockholders’ equity under US GAAP

  $303,824 

Adjustments:

  

Organization and offering costs(1)

   4,648 

Accrued stockholder servicing fees(2)

   651 

Unrealized real estate appreciation(3)

   19,538 

Accumulated depreciation and amortization(4)

   20,088 

Origination fee income(5)

   90 

Write-off of assets(6)

   27 

Straight-line rent receivable

   (2,071
  

 

 

 

Net Asset Value

  $346,795 
  

 

 

 

(1)

The Advisor and its affiliates agreed

March 31, 2020
Reconciliation of Stockholders’ Equity to advance organizationNAV
Stockholders’ equity under US GAAP$343,905 
Adjustments:
Organization and offering costs on our behalf through December 31, 2018 and had incurred organization and offering expenses of $4.6 million. Organization costs of $1.1 million are expensed and Offering costs of $3.5 million is a component of equity in the form of additional paid in capital. For NAV, such costs will be recognized as a reduction to NAV as they are reimbursed over 60 months commencing on the earlier of the date the NAV reaches $1 billion or January 31, 2023.

(1)
4,648 
(2)

Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class T and Class D shares. Under GAAP, we accrued the full cost of the stockholder servicing fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum stockholder servicing fee) as an offering cost at the time we sold Class T and Class D shares. For purposes of NAV we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis as such fee is paid.

fees
(2)
3,247 
(3)

Our investments in

Unrealized real estate are presented under historical cost in our GAAP Consolidated Financial Statements. As such, any increases in the fair market value of our investments in real estate are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate are recorded at fair value.

appreciation
(3)
27,718 
Unrealized mortgage payable appreciation(4)

We depreciate our investments in real estate and amortize certain other assets and liabilities in accordance with GAAP. Such

1,000 
Accumulated depreciation and amortization is not recorded for purposes of determining our NAV.

(5)
27,572 
(5)Straight-line rent receivable

In addition, we received origination fee income from the origination of our commercial mortgage loan. For purposes of NAV we recognize the origination fee as income upfront whereas for GAAP, the income is amortized as income over the life of the commercial mortgage loan originated.

(3,000)
(6)Net Asset Value

Under GAAP, for our investments in real estate, we retire the cost of our asset when a tenant vacates and remove the associated accumulated depreciation and amortization from the accounts with the resulting gains or losses reflected in net income or loss for the period. For purposes of determining our NAV, our investments in real estate are recorded at fair value

$405,090 

(1)The Advisor and its affiliates agreed to advance organization and offering costs on our behalf through December 31, 2018 and had incurred organization and offering expenses of $4.6 million. Organization costs of $1.1 million are expensed and Offering costs of $3.5 million is a component of equity in the form of additional paid-in capital. For NAV, such costs will be recognized as a reduction to NAV as they are reimbursed over 60 months commencing on the earlier of the date the NAV reaches $1.0 billion or January 31, 2023.

(2) Accrued stockholder servicing fee represents the accrual for the full cost of the stockholder servicing fee for Class T, Class S, and Class D shares. Under GAAP, we accrue the full cost of the stockholder servicing fee payable over the life of each share (assuming such share remains outstanding the length of time required to pay the maximum stockholder servicing fee) as an offering cost at the time we sold the shares. For purposes of NAV, we recognize the stockholder servicing fee as a reduction of NAV on a monthly basis as such fee is paid.
(3) Our investments in real estate are presented under historical cost in our GAAP consolidated financial statements. As such, any changes in the fair market value of our investments in real estate are not included in our GAAP results. For purposes of determining our NAV, our investments in real estate are recorded at fair value.
(4) Our mortgage payable is presented under historical cost in our GAAP consolidated financial statements. As such, any changes in the fair market value of our mortgage payable is not included in our GAAP results. For purposes of determining our NAV, our mortgage payable is recorded at fair value.
(5) In accordance with GAAP, we depreciate our investments in real estate and amortize certain other assets and liabilities . Such depreciation and amortization is not recorded for purposes of determining our NAV. Additionally, we retire the cost of our asset when a tenant vacates and remove the associated accumulated depreciation and amortization from the accounts with the resulting gains or losses reflected in net income or loss for the period.
40

Limitations and Risks

As with any valuation methodology, our methodology is based upon a number of estimates and assumptions that may not be accurate or complete. Different parties with different assumptions and estimates could derive a different NAV per share. Accordingly, with respect to our NAV per share, we can provide no assurance that:

(1)

a stockholder would be able to realize this NAV per share upon attempting to resell his or her shares;

(2)

we would be able to achieve, for our stockholders, the NAV per share, upon a listing of our shares of common stock on a national securities exchange, selling our real estate portfolio, or merging withan-other company; or

(3)

the NAV per share, or the methodologies relied upon to estimate the NAV per share, will be found by any regulatory authority to comply with any regulatory requirements.

(1)a stockholder would be able to realize this NAV per share upon attempting to resell his or her shares;
(2)we would be able to achieve, for our stockholders, the NAV per share, upon a listing of our shares of common stock on a national securities exchange, selling our real estate portfolio, or merging with an-other company; or
(3)the NAV per share, or the methodologies relied upon to estimate the NAV per share, will be found by any regulatory authority to comply with any regulatory requirements.
Furthermore, the NAV per share was calculated as of a particular point in time. The NAV per share will fluctuate over time in response to, among other things, changes in real estate market fundamentals, capital markets activities, and attributes specific to the properties and assets within our portfolio.

Critical Accounting Policies

The preparation of the Consolidated Financial Statementsconsolidated financial statements in accordance with GAAP involves significant judgements and assumptions and require estimates about matters that are inherently uncertain. These judgments affect our reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the Consolidated Financial Statementsconsolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our Consolidated Financial Statements.consolidated financial statements. Additionally, other companies may utilize different estimates that may impact the comparability of our results of operations to those of companies in similar businesses. We consider our accounting policies over investments in real estate and revenue recognition to be our critical accounting policies. See Note 2 “Summary of Significant Accounting Policies” to the Consolidated Financial Statementsconsolidated financial statements in this Quarterly Report on Form10-Q for further descriptions of such critical accounting policies along with other significant accounting policy disclosures.

Recent Accounting Pronouncements

See Note 2 “Summary of Significant Accounting Policies” to the Consolidated Financial Statementsconsolidated financial statements in this Quarterly Report on Form10-Q for a discussion concerning recent accounting pronouncements.

Contractual Obligations

The following table aggregates our contractual obligations and commitments with payments due subsequent to September 30, 2019 (inMarch 31, 2020 ($ in thousands):

Obligations

  Total   Less than
1 year
   1-3 Years   3-5
Years
   More than
5 Years
 

Organization and offering expenses

  $4,648   $—     $—     $1,239   $3,409 

Indebtedness

   118,277    —      118,277    —      —   
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total

  $122,925   $—     $118,277   $1,239   $3,409 
  

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

ObligationsTotalLess than
1 year
1-3 Years3-5
Years
More than
5 Years
Indebtedness$133,277  $—  $85,277  $—  $48,000  
APCF unfunded commitment13,623  13,623  —  —  —  
Organization and offering costs4,648  —  —  1,472  3,176  
Interest expense(1)
13,703  2,871  6,422  3,024  1,386  
Total$165,251  $16,494  $91,699  $4,496  $52,562  
(1) Represents interest expense for our fixed rate Mortgage payable and Credit facility with the assumption that its paid off at maturity.
Off-Balance Sheet Arrangements

We have nooff-balance sheet arrangements.

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Table of contents

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

As of September 30, 2019 our investments in real estate-related securities consisted of $35.9 million in shares of common stock of publicly-traded REITs.

We may be exposed to interest rate changes primarily as a result of long-term debt used to maintain liquidity, fund capital expenditures and expand our investment portfolio and operations. Market fluctuations in real estate financing may affect the availability and cost of funds needed to expand our investment portfolio. In addition, restrictions upon the availability of real estate financing or high interest rates for real estate loans could adversely affect our ability to dispose of real estate in the future. We seek to limit the impact of interest rate changes on earnings and cash flows and to lower our overall borrowing costs. We may use derivative financial instruments to hedge exposures to changes in interest rates on loans secured by our assets. Also, we are exposed to both credit risk and market risk.
Market risk is the adverse effect on the value of a financial instrument that results from a change in interest rates. The market risk associated with interest-rate contracts is managed by establishing and monitoring parameters that limit the types and degree of market risk that may be undertaken. With regard to variable rate financing, we assess our interest rate cash flow risk by continually identifying and monitoring changes in interest rate exposures that may adversely impact expected future cash flows and by evaluating hedging opportunities. We maintain risk management control systems to monitor interest rate cash flow risk attributable to both our outstanding and forecasted debt obligations as well as our potential offsetting hedge positions. While this hedging strategy is designed to minimize the impact on our net income and funds from operations from changes in interest rates, the overall returns on your investment may be reduced. Our board of directors has not yet established policies and procedures regarding our use of derivative financial instruments for hedging or other purposes.
Credit Risk
Credit risk is the failure of the counterparty to perform under the terms of the derivative contract. If the fair value of a derivative contract is positive, the counterparty will owe us, which creates credit risk for us. If the fair value of a derivative contract is negative, we will owe the counterparty and, therefore, do not have credit risk. We seek to minimize the credit risk in derivative instruments by entering into transactions with high-quality counterparties. We did not have derivatives as of March 31, 2020.
Currency Risk
We may be exposed to currency risks related to our international investments, including our investments in the International Affiliated Funds. We may seek to manage or mitigate our risk to the exposure of the effects of currency changes through the use of a wide variety of derivative financial instruments. We did not have derivatives as of March 31, 2020.
Interest Rate Risk
We are exposed to interest rate risk with respect to our investmentsvariable-rate indebtedness, whereas an increase in real estate-related securities dueinterest rates would directly result in higher interest expense costs. We may seek to changes inmanage of mitigate our risk to the fair valueexposure of interest risk through interest rate protection agreements to fix or cap a portion of our investments. The fair value may fluctuate, thusvariable rate debt. As of March 31, 2020, the amount we will realize upon any saleoutstanding principal balance of our investments is unknown. As of September 30, 2019, the fair value at which we may sell our investments in real estate-related securities is not known, but we believe that a 10% change in the fair valuevariable rate indebtedness was $85.3 million and consisted of our investments in real estate-related securities may result in an unrealized loss of $3.6 million.

As of September 30, 2019, our investment in the International Affiliated Funds consisted of $27.2 million in shares of European Cities Partnership SCSp, a Euro-denominated fund. We may be exposedCredit Facility, which is indexed to foreign currency risk with respect to our investment in the International Affiliated Funds due to changes in the foreign currency exchange rates. Foreign currencies may fluctuate, thus the amount we will realize upon any sale of our investment is unknown.

Certain of our commercial mortgage loan andone month U.S. Dollar-denominated LIBOR.

Our credit facility areis variable rate and indexed toone-month U.S. denominated LIBOR. For the three months ended September 30, 2019,March 31, 2020, a 10% increase inone-month U.S. U.S denominated LIBOR would have resulted in increased interest expense of $0.1 million.

The fair market values of the credit facility is sensitive to changes in LIBOR. Similarly, due to the variable rate on our credit facility a 100 basis point increase in LIBOR will reduce our net income by $0.9 million and a similar basis point decrease will increase our net income by $0.9 million.

COVID-19 Developments
In December 2019, a novel strain of coronavirus emerged in Wuhan, Hubei Province, China. While initially the outbreak was largely concentrated in China and caused significant disruptions to its economy, it has now spread to several other countries and infections have been reported globally. The World Health Organization has declared the coronavirus outbreak a pandemic, the Health and Human Services Secretary has declared a public health emergency in the United States in response to the outbreak and the President of the United States has declared the coronavirus outbreak a national emergency. Due to the fact our properties are located in the United States, the coronavirus will impact our investments and operating results to the extent that its continued spread within the United States reduces occupancy, increases the cost of operation, negatively impacts the ability to obtain necessary goods and services or provide adequate staffing, limits hours or necessitates the closure of such properties or results in an economic downturn and corporate bankruptcies. Similarly, our investments in the International Affiliated Funds may be negatively impacted by the impact of coronavirus on the foreign countries where their investments are located. The extent to which the coronavirus impacts our investments and operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information that may emerge concerning the severity of the coronavirus and the actions taken to contain the coronavirus or treat its impact, among others. To
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the extent our investments and operating results are impacted, this may impact our liquidity and need for capital resources within the next twelve months.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

An evaluation of the effectiveness of the design and operation of our “disclosure controls and procedures” (as defined in Rule13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), as of the end of the period covered by this Quarterly Report on Form10-Q was made under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”). Based upon this evaluation, our CEO and CFO have concluded that our disclosure controls and procedures (a) are effective to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified by SEC rules and forms and (b) include, without limitation, controls and procedures designed to ensure that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Controls over Financial Reporting

There have been no changes in our “internal control over financial reporting” (as defined in Rule13a-15(f) of the Exchange Act) that occurred during the period covered by this Quarterly Report on Form10-Q that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

Neither we nor the Advisor are currently involved in any material litigation.

Item 1A. Risk Factors.

Our share repurchase program requires that we follow certain restrictive procedures with respect to new investments if, during any consecutive24-month period, we do not have at least one month in which we fully satisfy 100% of properly submitted repurchase requests or accept all properly submitted tenders in a self-tender offer for our shares, which may adversely affect our flexibility and our ability to achieve our investment objectives.

Subject to certain exceptions, our share repurchase program generally requires that if, during any consecutive24-month period, we do not have at least one month in which we fully satisfy 100% of properly submitted repurchase requests or accept all properly submitted tenders in a self-tender offer for our shares, we will not make any new investments (excluding short-term cash management investments under 30 days in duration) and we will use all available investable assets to satisfy repurchase requests (subject to the limitations under the program) until all outstanding repurchase requests have been satisfied. If triggered, this requirement may prevent us from pursuing potentially accretive investment opportunities and may keep us from fully realizing our investment objectives. In addition, this requirement may limit our ability to pay distributions to our stockholders.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Unregistered Sales of Equity Securities

None.

Use of Offering Proceeds

On January 31, 2018, the Registration Statement on FormS-11 (FileNo. 333-222231) for our initial public offering of up to $5 billion in shares of our common stock was declared effective under the Securities Act. The offering price for each class of our common stock is determined monthly and is made available on our website and in prospectus supplement filings.

As of September 30, 2019,March 31, 2020, we received netgross proceeds of $323.9$385.1 million from the Offering. The following table summarizes certain information about the Offering proceeds therefrom ($ in thousands except for share data):

   Class T
Shares
  Class S
Shares
   Class D
Shares
  Class I
Shares
   Class N
Shares
   Total 

Offering proceeds:

          

Shares sold

   429,471   —      426,344   1,470,148    29,730,608    32,056,571 

Gross offering proceeds

  $4,598  $—     $4,495  $15,551   $300,000   $324,644 

Selling commissions and other dealer manager fees

   (112  —      —     —      —      (112

Accrued stockholder servicing fees

   (260  —      (391  —      —      (651
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

Net offering proceeds

  $4,226  $—     $4,104  $15,551   $300,000   $323,881 
  

 

 

  

 

 

   

 

 

  

 

 

   

 

 

   

 

 

 

Class T
Shares
Class S
Shares
Class D
Shares
Class I
Shares
Class N
Shares
Total
Offering proceeds:
Shares sold2,358,700  1,255,756  1,115,645  3,201,009  29,730,608  37,661,718  
Gross offering proceeds$300,499  $12,072  $34,081  $25,012  $13,390  $385,054  
Selling commissions and other dealer manager fees(499) (164) —  —  —  $(663) 
Accrued stockholder servicing fees(1,488) (797) (1,062) —  —  $(3,347) 
Net offering proceeds$298,512  $11,111  $33,019  $25,012  $13,390  $381,044  

We primarily used the net proceeds from the Offering andunregistered sales along with the unregistered salesOffering toward the acquisition of $359.0$411 million of real estate, investments in International Affiliated Fundsinternational affiliated funds of $36.8$45 million, investment in a commercial mortgage loan of $12.3$13 million and $32.4$34 million in real estate-related securities. In addition to the

net proceeds from the Offering, we financed our investments with $118.3$85 million of financing from the credit facility.facility and $48 million from mortgage payable. In addition, we may from time to time use proceeds from the Offering to pay down our credit facility if there are no acquisitions at the time proceeds are received. See Item 2—“Management’s Discussion and Analysis of Financial Condition and Results of Operations— Liquidity and Capital Resources” for additional details on our borrowings.

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Share Repurchase Plan

We have adopted a share repurchase plan, whereby on a monthly basis, stockholders may request that we repurchase all or any portion of their shares. We may choose to repurchase all, some or none of the shares that have been requested to be repurchased at the end of any particular month, in our discretion, subject to any limitations in the share repurchase plan. The total amount of aggregate repurchases of Class T, Class S, Class D, and Class I shares iswill be limited to 2% of the aggregate NAV per month and and 5% of the aggregate NAV per calendar quarter. If during any consecutive24-month period, we do not have at least one month in which we fully satisfy 100% of properly submitted repurchase requests or accepts all properly submitted tenders in a self- tender offer for our shares we will not make any new investments (excluding short-term cash management investments under 30 days in duration) and will use all available investable assets to satisfy repurchase requests (subject to the limitations under this program) until all outstanding repurchase requests have been satisfied.

Shares arewould be repurchased at a price equal to the transaction price on the applicable repurchase date, subject to any early repurchase deduction. Shares that have not been outstanding for at least one year arewould be repurchased at 95% of the transaction price. Due to the illiquid nature of investments in real estate, we may not have sufficient liquid resources to fund repurchase requests and has established limitations on the amount of funds we may use for repurchases during any calendar month and quarter. Further, we may modify, suspend or terminate the share repurchase plan.

We repurchased 9,843 Class I Shares at a price of $10.59 per sharedid not repurchase any shares during the three and nine months ended September 30, 2019.

March 31, 2020.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

None.

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Item 6. Exhibits.

Exhibit No.

Description
3.1 

Description

Articles of Amendment and Restatement (filed as Exhibit 3.1 to the Registrant’s Registration Statement on Form S-11/A filed on January 24, 2018 and incorporated herein by reference).
10.13.2 Articles Supplementary (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on January 8, 2019 and incorporated herein by reference).
3.3 Bylaws (filed as Exhibit 3.2 to the Registrant’s Registration Statement on Form S-11 filed on December 21, 2017 and incorporated herein by reference).
10.1 Amendment No. 1 to First Amended and Restated Advisory Agreement dated October  14, 2019 by and between Nuveen Global Cities REIT, Inc., Nuveen Global Cities REIT OP, LP and Nuveen Real Estate Global Cities Advisors, LLC (filed as Exhibit 10.1 to the Registrant’s Current Report on Form8-K filed on October 17, 2019 and incorporated herein by reference).
10.2Selected Dealer Agreement dated July  9, 2019 by and among Nuveen Global Cities REIT, Inc., Nuveen Securities, LLC and Ameriprise Financial Services, Inc. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form8-K filed on July  10, 2019 and incorporated herein by reference).
10.3Cost Reimbursement Agreement dated July  9, 2019 by and among Nuveen Global Cities REIT, Inc., Nuveen Securities, LLC and American Enterprise Investment Services Inc. (filed as Exhibit 10.2 to the Registrant’s Current Report on Form8-K filed on July 10, 2019 and incorporated herein by reference).

Exhibit No.

Description

31.1*
31.2*
32.1*
101.INSXBRL Instance Document
101.SCHXBRL Taxonomy Extension Schema Document
101.CALXBRL Taxonomy Extension Calculation Linkbase Document
101.LABXBRL Taxonomy Extension Label Linkbase Document
101.PREXBRL Taxonomy Extension Presentation Linkbase Document
101.DEFXBRL Taxonomy Extension Definition Linkbase Document


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SIGNATURES

Pursuant to the requirements of the Securities Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Nuveen Global Cities REIT, Inc.
By:

/s/ Michael J.L. Sales

Michael J.L. Sales

Chief Executive Officer and Chairman of the

Board

By:

/s/ James E. Sinople

James E. Sinople
Chief Financial Officer and Treasurer

Date:November 12, 2019

May 14, 2020

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