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Tiaa Real Estate Account

Filed: 10 Nov 20, 10:35am

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
ý QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 2020.
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from__________to __________
Commission file number: 33-92990; 333-237134

TIAA REAL ESTATE ACCOUNT
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction
of incorporation or organization)
NOT APPLICABLE
(I.R.S. Employer Identification No.)
C/O TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NEW YORK 10017-3206
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (212) 490-9000
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES ý  NO o
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
YES ý  NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 Rule 12b-2 of the Exchange Act.
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer ý (Do not check if a smaller reporting company)
 
Smaller Reporting Company o
Emerging Growth Company o
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o  NO ý




TABLE OF CONTENTS
Page
Part IFinancial Information
Item 1.Unaudited Consolidated Financial Statements
Item 2.Management's Discussion and Analysis of the Account's Financial Condition and Results of Operations
Item 3.Quantitative and Qualitative Disclosures about Market Risk
Item 4.Controls and Procedures
Part IIOther Information
Item 1.Legal Proceedings
Item 1A.Risk Factors
Item 2.Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.Defaults Upon Senior Securities
Item 4.Mine Safety Disclosures
Item 5.Other Information
Item 6.Exhibits
Signatures






PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
(In millions, except per accumulation unit amounts)
September 30,December 31,
20202019
(Unaudited)
ASSETS
Investments, at fair value:
Real estate properties
(cost: $14,201.5 and $13,048.5)
$16,715.0 $15,835.0 
       Real estate joint ventures and funds
       (cost: $5,163.8 and $6,244.4)
6,348.0 7,516.0 
Marketable securities:
Real estate-related
(cost: $634.7 and $686.0)
662.2 (1)825.7 (1)
Other
(cost: $690.0 and $4,144.7)
689.9 4,150.2 
Loans receivable
(principal: $1,533.0 and $1,504.5)
1,500.2 1,503.1 
Loans receivable with related parties
(principal: $69.3 and $69.3)
69.4 69.0 
Total investments
(cost: $22,292.3 and $25,697.4)
$25,984.7 $29,899.0 
Cash and cash equivalents8.0 15.1 
Due from investment manager5.5 
Other329.8 (2)290.3 (2)
TOTAL ASSETS$26,322.5 $30,209.9 
LIABILITIES
 Loans payable, at fair value
(principal outstanding: $2,462.6 and $2,338.0)
2,495.7 2,365.0 
Line of credit, at fair value91.0 250.0 
Due to investment manager1.8 
Accrued real estate property expenses265.2 225.9 
Payable for collateral for securities loaned2.1 25.7 
Other38.4 35.4 
TOTAL LIABILITIES$2,894.2 $2,902.0 
COMMITMENTS AND CONTINGENCIES
NET ASSETS
Accumulation Fund22,911.0 26,759.1 
Annuity Fund517.3 548.8 
TOTAL NET ASSETS$23,428.3 $27,307.9 
NUMBER OF ACCUMULATION UNITS OUTSTANDING52.8 60.8 
NET ASSET VALUE, PER ACCUMULATION UNIT$434.164 $440.422 
(1) Includes securities loaned of $2.0 million at September 30, 2020 and $25.2 million at December 31, 2019.
(2) Includes cash collateral for securities loaned of $2.1 million at September 30, 2020 and $25.7 million at December 31, 2019.


See notes to the consolidated financial statements
3


TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF OPERATIONS
(In millions)
(Unaudited)
For the Three Months Ended September 30,For the Nine Months Ended September 30,
2020201920202019
INVESTMENT INCOME
Real estate income, net:
Rental income$295.0 $282.6 $906.0 $823.6 
Real estate property level expenses and taxes:
Operating expenses66.5 64.5 196.6 181.8 
Real estate taxes53.3 46.9 157.3 138.9 
Interest expense24.1 27.1 74.0 80.1 
Total real estate property level expenses and taxes143.9 138.5 427.9 400.8 
Real estate income, net151.1 144.1 478.1 422.8 
Income from real estate joint ventures and funds33.1 61.4 110.5 170.9 
Interest20.7 43.5 85.0 129.7 
Dividends6.0 5.9 17.1 17.5 
TOTAL INVESTMENT INCOME210.9 254.9 690.7 740.9 
Expenses:
Investment management charges16.4 17.3 46.6 53.6 
Administrative charges10.9 12.1 34.2 37.6 
Distribution charges5.8 7.5 18.1 24.1 
Mortality and expense risk charges0.3 0.3 0.9 1.0 
Liquidity guarantee charges14.3 15.3 45.4 41.4 
TOTAL EXPENSES47.7 52.5 145.2 157.7 
INVESTMENT INCOME, NET163.2 202.4 545.5 583.2 
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND LOANS PAYABLE
Net realized gain (loss) on investments:
Real estate properties(3.0)300.0 (61.0)300.0 
Real estate joint ventures and funds(460.5)(43.7)
Marketable securities19.7 27.5 41.0 280.6 
Loans receivable(1.6)
Net realized gain (loss) on investments16.7 327.5 (482.1)536.9 
Net change in unrealized appreciation (depreciation) on:
Real estate properties(89.1)(83.2)(273.0)161.0 
Real estate joint ventures and funds(56.7)(138.0)2.6 (94.3)
Marketable securities1.5 37.3 (120.5)19.8 
Loans receivable(9.2)(1.0)(31.4)(3.8)
Loans receivable with related parties0.4 (0.4)0.4 (0.4)
Loans payable(42.4)(32.1)(6.1)(98.4)
Net change in unrealized depreciation on investments and loans payable(195.5)(217.4)(428.0)(16.1)
NET REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS AND LOANS PAYABLE(178.8)110.1 (910.1)520.8 
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS$(15.6)$312.5 $(364.6)$1,104.0 

See notes to the consolidated financial statements
3


TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
(In millions)
(Unaudited)
For the Three Months Ended September 30,For the Nine Months Ended September 30,
2020201920202019
FROM OPERATIONS
Investment income, net$163.2 $202.4 $545.5 $583.2 
Net realized gain (loss) on investments16.7 327.5 (482.1)536.9 
Net change in unrealized depreciation on investments and loans payable(195.5)(217.4)(428.0)(16.1)
NET CHANGE IN NET ASSETS RESULTING FROM OPERATIONS(15.6)312.5 (364.6)1,104.0 
FROM PARTICIPANT TRANSACTIONS
Premiums401.1 641.6 1,533.0 1,990.1 
Annuity payments(11.8)(11.6)(35.9)(35.0)
Withdrawals and death benefits(1,158.2)(638.4)(5,012.1)(1,865.0)
NET CHANGE IN NET ASSETS RESULTING FROM PARTICIPANT TRANSACTIONS(768.9)(8.4)(3,515.0)90.1 
NET CHANGE IN NET ASSETS(784.5)304.1 (3,879.6)1,194.1 
NET ASSETS
Beginning of period24,212.8 26,732.6 27,307.9 25,842.6 
End of period$23,428.3 $27,036.7 $23,428.3 $27,036.7 


























See notes to the consolidated financial statements
4


TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, Unaudited)
 For the Nine Months Ended September 30,
20202019
CASH FLOWS FROM OPERATING ACTIVITIES
Net (decrease) increase in net assets resulting from operations$(364.6)$1,104.0 
Adjustments to reconcile net changes in net assets resulting from operations to net cash provided by operating activities:
Net realized loss (gain) on investments482.1 (536.9)
Net change in unrealized depreciation on investments and loans payable428.0 16.1 
Purchase of real estate properties(1,092.7)(491.8)
Capital improvements on real estate properties(179.7)(219.4)
Proceeds from sale of real estate properties350.3 813.0 
Purchases of long term investments(852.0)(1,047.2)
Proceeds from long term investments1,658.2 1,145.2 
Purchases and originations of loans receivable(114.8)(356.9)
Purchases and originations of loans receivable with related parties(69.3)
Proceeds from sales of loans receivable63.0 
Proceeds from payoffs of loans receivable20.0 27.1 
Decrease (Increase) in other investments3,447.9 (133.0)
Change in due to (from) investment manager7.3 (1.7)
Increase in other assets(43.2)(14.9)
Decrease (Increase) in other liabilities18.3 (70.4)
NET CASH PROVIDED BY OPERATING ACTIVITIES3,828.1 163.9 
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from line of credit540.0 
Payments on line of credit(699.0)
Mortgage loan proceeds received47.5 
Payments of mortgage loans(165.0)(290.0)
Premiums1,533.0 1,990.1 
Annuity payments(35.9)(35.0)
Withdrawals and death benefits(5,012.1)(1,865.0)
NET CASH USED IN FINANCING ACTIVITIES(3,839.0)(152.4)
NET (DECREASE) INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH(10.9)11.5 
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
 Beginning of period cash, cash equivalents and restricted cash40.4 47.3 
 Net (decrease) increase in cash, cash equivalents and restricted cash(10.9)11.5 
 End of period cash, cash equivalents and restricted cash$29.5 $58.8 
SUPPLEMENTAL DISCLOSURES:
 Cash paid for interest$74.0 $82.2 
 Mortgage loan assumed as part of real estate acquisition$289.6 $110.0 
 Loan receivable converted to equity in real estate investment$(1.7)$
 Loan assignment as part of a real estate disposition$$(285.4)
The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (in millions):
 As of September 30,
20202019
Cash and cash equivalents$8.0 $13.6 
Restricted cash(1)
21.5 45.2 
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH$29.5 $58.8 
(1) Restricted cash is included within other assets in the Consolidated Statements of Assets and Liabilities.
See notes to the consolidated financial statements
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TIAA REAL ESTATE ACCOUNT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1—Organization and Significant Accounting Policies
Business: The TIAA Real Estate Account (“Account”) is an insurance separate account of Teachers Insurance and Annuity Association of America (“TIAA”) and was established by resolution of TIAA’s Board of Trustees (the “Board”) on February 22, 1995, under the insurance laws of the State of New York, for the purpose of funding variable annuity contracts issued by TIAA. The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account, and make withdrawals from the Account on a daily basis, under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.
The investment objective of the Account is to seek favorable total returns primarily through the rental income and appreciation of a diversified portfolio of directly held, private real estate investments and real estate-related investments while offering investors guaranteed, daily liquidity. The Account holds real estate properties directly and through subsidiaries wholly-owned by TIAA for the sole benefit of the Account. The Account also holds limited interests in real estate joint ventures and funds, as well as investments in loans receivable with real estate properties as underlying collateral. Additionally, the Account invests in real estate-related and non-real estate-related publicly traded securities, cash and other instruments to maintain adequate liquidity levels for operating expenses, capital expenditures and to fund benefit payments (withdrawals, transfers and related transactions).
The Consolidated Financial Statements were prepared in accordance with accounting principles generally accepted in the United States of America ("GAAP"), which requires the use of estimates made by management. Actual results may vary from those estimates and such differences may be material.
The Consolidated Financial Statements of the Account as of September 30, 2020 and for the three and nine months ended September 30, 2020 and 2019 are unaudited and include all adjustments necessary to present a fair statement of results for the interim periods presented. Results of operations for the interim periods are not necessarily indicative of results for the entire year. These Consolidated Financial Statements have been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission (“SEC”). Accordingly, certain footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted from this report pursuant to the rules of the SEC. As a result, these Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and notes thereto included in the Account’s annual report on Form 10-K for the year ended December 31, 2019.
The following is a summary of the significant accounting policies of the Account.
Basis of Presentation: The accompanying Consolidated Financial Statements include the Account and those subsidiaries wholly-owned by TIAA for the sole benefit of the Account. All significant intercompany accounts and transactions between the Account and such subsidiaries have been eliminated.
The Accumulation Unit Value (“AUV”) used for financial reporting purposes may differ from the AUV used for processing transactions. The AUV used for financial reporting purposes includes security and participant transactions effective through the period end date to which this report relates. Total return is computed based on the AUV used for processing transactions.
Determination of Investments at Fair Value: The Account reports all investments at fair value in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946—Financial Services—Investment Companies ("ASC 946"). Further in accordance with the adoption of the fair value option allowed under ASC 825—Financial Instruments, and at the election of Account management, loans payable and a line of credit are reported at fair value. The FASB has defined fair value as the price that would be received to sell
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an asset or paid to transfer a liability in an orderly transaction between market participants excluding transaction costs.
The following is a description of the valuation methodologies used to determine the fair value of the Account’s investments and investment related loans payable.
Valuation of Real Estate Properties—Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. Accordingly, the Account does not record depreciation. Determination of fair value involves significant levels of judgment because the actual fair value of real estate can be determined only by negotiation between the parties in a sales transaction.
The Account’s primary objective when valuing its real estate investments is to produce a valuation that represents a reasonable estimate of the fair value of its investments. Implicit in the Account’s definition of fair value are the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
Buyer and seller are similarly motivated;
Both parties are well informed or well advised, and acting in what they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, capital expenditures, discount rates and capitalization rates. Valuation techniques include discounted cash flow analysis, prevailing market capitalization rates or multiples applied to earnings from the property, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties. Amounts ultimately realized from each investment may vary significantly from the fair value presented.
Real estate properties owned by the Account are initially valued based on an independent third party appraisal, as reviewed by TIAA’s internal appraisal staff and as applicable by the Independent Fiduciary, RERC, LLC (the "Independent Fiduciary"), at the time of the closing of the purchase. Such initial valuation may result in a potential unrealized gain or loss reflecting the difference between an investment’s fair value (i.e., exit price) and its cost basis (which is inclusive of transaction costs).
Subsequently, each property is appraised each quarter by an independent third party appraiser, reviewed by TIAA’s internal appraisal staff and as applicable the Account’s Independent Fiduciary. In general, the Account obtains appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments, and thus, adjustments to the valuations of its holdings (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day or month in each period.
Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when the account receives a bona fide bid for the sale of a property held within the Account or one of the Account’s joint ventures. Adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant). Alternatively, adjustments may be made to reflect the execution or renewal of a significant lease. Also, adjustments may be made to reflect factors (such as sales values for comparable properties or local employment rate) bearing uniquely on a particular region in which the Account holds properties. TIAA’s internal appraisal staff oversees the entire appraisal process, in conjunction with the Independent Fiduciary (the Independent Fiduciary is more fully described in the following paragraph). Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the Independent
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Fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).
The Independent Fiduciary was initially appointed in March 2006 by a special subcommittee of the Investment Committee of the Board to, among other things, oversee the entire appraisal process. In March 2018, RERC, LLC, was re-appointed as the Account's Independent Fiduciary for a term expiring in February 2021. The Independent Fiduciary must approve all independent appraisers used by the Account. All appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices, the real estate appraisal industry standards created by The Appraisal Foundation. Real estate appraisals are estimates of property values based on a professional’s opinion. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. These independent appraisers are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent, Royal Institute of Chartered Surveyors) and state certified appraisers from national or regional firms with relevant property type experience and market knowledge. Under the Account’s current procedures, each independent appraisal firm will be rotated off of a particular property at least every three years, although such appraisal firm may perform appraisals of other Account properties subsequent to such rotation.
Also, the Independent Fiduciary may require additional appraisals if factors or events have occurred that could materially change a property’s value (including those identified previously) and such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued appropriately. The Independent Fiduciary must also approve any valuation change of real estate-related assets where a property’s value changed by more than 6% from the most recent independent annual appraisal, or if the value of the Account would change by more than 4% within any calendar quarter or more than 2% since the prior calendar month. When a real estate property is subject to a mortgage, the property is valued independently of the mortgage and the property and mortgage fair values are reported separately (see Valuation of Loans Payable). The Independent Fiduciary reviews and approves all mortgage valuation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value until the next valuation review or appraisal.
Valuation of Real Estate Joint Ventures—Real estate joint ventures are stated at the fair value of the Account’s ownership interests of the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related loans payable, and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. The fair value of real estate and loans payable held by joint ventures is determined in the same manner described above in Valuation of Real Estate Properties. The Independent Fiduciary reviews and approves all valuation adjustments before such adjustments are recorded by the Account. Upon the disposition of all real estate investments by an investee entity, the Account will continue to state its equity in the remaining net assets of the investee entity during the wind down period, if any, which occurs prior to the dissolution of the investee entity.
Valuation of Real Estate Funds—Real estate fund interests are stated at the fair value of the Account’s ownership in
the real estate fund. Management uses net asset value information provided by fund managers as a practical expedient to estimate fair value. The Account receives estimates from limited partners on a quarterly basis, and audited information is provided annually. Upon receipt of the information, management reviews and determines whether the net asset values provided are an appropriate representation of the fair value of the Account's interests in the real estate funds and makes valuation adjustments as necessary. Valuation of real estate funds proceeds under the direction of the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole.
Valuation of Marketable Securities—Equity securities listed or traded on any national market or exchange are valued at the last sale price as of the close of the principal securities market or exchange on which such securities are traded or, if there is no sale, at the mean of the last bid and asked prices on such market or exchange, exclusive of transaction costs.
Valuation of Debt Securities—Debt securities with readily available market quotations, other than money market instruments, are generally valued at the most recent bid price or the equivalent quoted yield for such securities (or
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those of comparable maturity, quality and type). Debt securities for which market quotations are not readily available, are valued at fair value as determined by management and the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole.
Short-term investments are valued in the same manner as debt securities, as described above.
Money market instruments are valued at amortized cost, which approximates fair value.
Valuation of Loans Receivable (i.e., the Account as a creditor)—Loans receivable are stated at fair value and are initially valued at the face amount of the loan funding. Subsequently, loans receivable are valued at least quarterly by TIAA’s internal valuation department based on market factors, such as market interest rates and spreads for comparable loans, the liquidity for loans of similar characteristics, the performance of the underlying collateral (such as the loan- to-value ratio and the cash flow of the underlying collateral) and the credit quality of the counterparty. The Independent Fiduciary reviews and approves all loan receivable valuation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each loan receivable to calculate the Account’s daily net asset value until the next valuation review.
Valuation of Loans Payable (i.e., the Account as a debtor)—Mortgage or other loans payable, including the Account's line of credit, are stated at fair value. The estimated fair value of loans payable is generally based on the amount at which the liability could be transferred in a current transaction, exclusive of transaction costs. Fair values are estimated based on market factors, such as market interest rates and spreads on comparable loans, the liquidity for loans of similar characteristics, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral), the maturity date of the loan, the return demands of the market, and the credit quality of the Account. Different assumptions or changes in future market conditions could significantly affect estimated fair values. At times, the Account may assume debt in connection with the purchase of real estate (including under the Account's line of credit or additional credit facilities). The Independent Fiduciary reviews and approves all valuation adjustments before such adjustments are recorded by the Account.
See Note 5Assets and Liabilities Measured at Fair Value on a Recurring Basis for further discussion and disclosure regarding the determination of the fair value of the Account’s investments.
Accumulation and Annuity Funds: The accumulation fund represents the net assets attributable to participants in the accumulation phase of their investment (“Accumulation Fund”). The annuity fund represents the net assets attributable to the participants currently receiving annuity payments (“Annuity Fund”). The net increase or decrease in net assets from investment operations is apportioned between the funds based upon their relative daily net asset values. Once an Account participant begins receiving lifetime annuity income benefits, payment levels cannot be reduced as a result of the Account’s actual mortality experience. In addition, the contracts pursuant to which the Account is offered are required to stipulate the maximum expense charge for all Account level expenses that can be assessed, which is not to exceed 2.5% of average net assets per year. The Account pays a fee to TIAA to assume mortality and expense risks.
Accounting for Investments: The investments held by the Account are accounted for as follows:
Real Estate Properties—Rent from real estate properties consists of all amounts earned under tenant leases, including base rent, recoveries of real estate taxes and other expenses and charges for miscellaneous services provided to tenants. Rental income is recognized in accordance with the billing terms of the lease agreements. The Account bears the direct expenses of the real estate properties owned. These expenses include, but are not limited to, fees to local property management companies, property taxes, utilities, maintenance, repairs, insurance, and other operating and administrative costs. An estimate of the net operating income earned from each real estate property is accrued by the Account on a daily basis and such estimates are adjusted when actual operating results are determined.
Real Estate Joint Ventures—The Account has ownership interests in various real estate joint ventures (collectively, the “joint ventures”). The Account records its contributions as increases to its investments in the joint ventures, and distributions from the joint ventures are treated as income within income from real estate joint ventures and funds in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are
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recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Income distributions from the joint ventures are recorded based on the Account’s proportional interest of the income distributed by the joint ventures. Income and losses incurred but not yet distributed or realized from the Account by the joint ventures are recorded as unrealized gains and losses.
Real Estate Funds—The Account has ownership interests in various private real estate funds. The Account records its contributions as increases to the investments, and distributions from the investments are treated as income within income from real estate joint ventures and funds in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Unrealized gains and losses are recorded based upon the changes in the net asset values of the real estate funds as determined from the financial statements of the real estate funds when received by the Account. Prior to the receipt of the financial statements from the real estate funds, the Account estimates the value of its interest using information provided by the fund managers. Changes in value based on such estimates are recorded by the Account as unrealized gains and losses.
Marketable Securities—Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. Dividend income is recorded on the ex-dividend date within dividend income. Dividends that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas dividends identified as capital gains or losses are recorded as realized gains or losses. Realized gains and losses on securities transactions are accounted for on the specific identification method.
Loans Receivable—The Account may originate, purchase or sell loans collateralized by real estate. The cost basis of originated loans is comprised of the principal balance and direct costs incurred that represent a component of the loan’s reported fair value. The cost basis of purchased loans consists of the purchase price of the loan and additional direct costs incurred that represent a component of the loan’s reported fair value. Additional costs incurred by the Account to originate or purchase loans that do not represent a component of a loan’s fair value are recorded as expenses in the period incurred. Nonrefundable origination fees paid by borrowers are recognized as interest income once all activities required to execute the loan are completed. Prepayment fees received from the payoff of loans in advance of their maturity date are recognized as interest income on the date the payoff occurs. Interest income from loans in accrual status is recognized based on the current coupon rate of the loans.
Interest income accruals are suspended when a loan becomes a non-performing loan, defined as a loan more than ninety days in arrears or at any point when management believes the full collection of principal is doubtful. Interest income on non-performing loans is recognized only as cash payments are received. Loans can be rehabilitated to accrual status once all past due interest has been collected and management believes the full collection of principal is likely.
Realized and Unrealized Gains and Losses—Realized gains and losses are recorded at the time an investment is sold or a distribution is received in relation to an investment sale from a real estate joint venture or fund. Real estate and loan receivable transactions are accounted for as of the date on which the purchase or sale transactions close (settlement date). The Account recognizes a realized gain on the sale of an investment to the extent that the contract sales price exceeds the cost-to-date of the investment being sold. A realized loss occurs when the cost-to-date exceeds the sales price. Realized gains and losses from partial sales of non-financial assets are recognized in accordance with ASC 610-20 - Gains and Losses from the Derecognition of Nonfinancial Assets. Realized gains and losses from the sale of financial assets are recognized in accordance with ASC 860 - Transfers and Servicing. Unrealized gains and losses are recorded as the fair values of the Account’s investments are adjusted, and as discussed within the Real Estate Joint Ventures, Real Estate Funds and Loans Receivable sections above.
Unrealized gains and losses are recorded as the fair values of the Account’s investments are adjusted, and as discussed within the Real Estate Joint Ventures and Real Estate Funds sections above.
Net Assets—The Account’s net assets as of the close of each valuation day are valued by taking the sum of:
the value of the Account’s cash, cash equivalents, and short-term and other debt instruments;
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the value of the Account’s other securities and other non-real estate assets;
the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;
an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non-real estate-related investments (including short-term marketable securities) since the end of the prior valuation day; and
actual net operating income earned from the Account’s properties, other real estate-related investments and non-real estate-related investments (but only to the extent any such item of income differs from the estimated income accrued for on such investments),
and then reducing the sum by liabilities held within the Account, including the daily investment management fee, administration and distribution fees, mortality and expense fee, liquidity guarantee fee, and certain other expenses attributable to operating the Account. Daily estimates of net operating income are adjusted to reflect actual net operating income on a monthly basis, at which time such adjustments (if any) are reflected in the Account’s unit value.
After the end of every quarter, the Account reconciles the amount of expenses deducted from the Account (which is established in order to approximate the costs that the Account will incur) with the expenses the Account actually incurred. If there is a difference, the Account adds it to or deducts it from the Account in equal daily installments over the remaining days of the following quarter. Material differences may be repaid in the current calendar quarter. The Account’s at cost deductions are based on projections of Account assets and overall expenses, and the size of any adjusting payments will be directly affected by the difference between management’s projections and the Account’s actual assets or expenses.
Variable Interest Entities: Variable interests are financial relationships which expose a reporting entity to the risks and rewards of variability in the entity's assets and operations. When variable interests exist, they are subject to evaluation under the variable interest entity ("VIE") model if any one of the following four characteristics are present: (a) the entity is insufficiently capitalized; (b) the equity holders do not have power to control the activities that most significantly impact the entity's financial performance; (c) the voting rights of the equity holders are not proportionate to their economic interests; or (d) the equity holders are not exposed to the residual losses or benefits that would normally be associated with equity interests.
ASC 810 - Consolidation prohibits a reporting entity that qualifies as an investment company under ASC 946 from consolidating an investee that is not an investment company. This scope exception does not apply to situations in which an investment company has an interest in another investment company. Accordingly, the Account's investments in other investment companies (e.g., real estate funds) are subject to evaluation under the VIE model.
The Account consolidates a VIE if it concludes that the Account is the primary beneficiary of the VIE. The primary beneficiary has both: (i) the power to direct the activities of a VIE that most significantly impact the VIE's economic performance; and (ii) the obligation to absorb losses or the right to receive benefits that could potentially be significant to the VIE. The following activities have been identified by the Account as having the most significant impact on a VIE's economic performance:
control over the ability to acquire and dispose of investments held by the entity;
the ability to kick out a managing entity without cause, either unilaterally or with a group of equity investors;
the ability to modify the power of the managing entity without its consent; and
control over the day-to-day decision making of the underlying investments
An equity investor in a VIE may not actively be involved in the significant activities (i.e., it may cede day-to-day decision making to a third party), but if the equity investor has approval rights or some other mechanism to retain ultimate control, the equity investor with these rights would be concluded as having power over the activity. On a quarterly basis, the Account evaluates all involvements with VIEs, including any changes to governing powers of continuing VIEs. The consolidation status of VIEs may change as a result of such continued evaluation. At the
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reporting date, the Account was not deemed to be the primary beneficiary of any VIEs. Refer to Note 7—Investments in Real Estate Funds for additional detail.
Cash and Cash Equivalents: Cash and cash equivalents are balances held by the Account in bank deposit accounts which, at times, exceed federally insured limits. The Account’s management monitors these balances to mitigate the exposure of risk due to concentration and has not experienced any losses from such concentration.
Other Assets and Other Liabilities: Other assets and other liabilities consist of operating assets and liabilities utilized and held at each individual real estate property investment. Other assets consist of, amongst other items, cash, tenant receivables and prepaid expenses; whereas other liabilities primarily consist of security deposits. Other assets also include cash collateral held for securities on loan.
Federal Income Taxes: Based on provisions of Section 817 of the Internal Revenue Code of 1986, as amended, the Account is taxed as a segregated asset account of TIAA and as such, the Account incurs no material federal income tax attributable to the net investment activity of the Account. The Account’s federal income tax return is generally subject to examination for a period of three years after filed. State and local tax returns may be subject to examination for an additional period of time depending on the jurisdiction. Management has analyzed the Account’s tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Account’s Consolidated Financial Statements.
Restricted Cash: The Account held restricted cash in escrow accounts for security deposits, as required by certain states, as well as for property taxes, insurance, and various other property related matters as required by certain creditors related to outstanding loans payable collateralized by certain real estate investments. These amounts are recorded within other assets on the Consolidated Statements of Assets and Liabilities. See Note 9—Loans Payable for additional information regarding the Account’s outstanding loans payable.
Changes in Net Assets: Premiums include premiums paid by existing accumulation unit holders in the Account and transfers into the Account. Withdrawals and death benefits include withdrawals out of the Account which include transfers out of the Account and required minimum distributions.
Due to/from Investment Manager: Due to/from investment manager represents amounts that are to be paid or received by TIAA on behalf of the Account. Amounts generally are paid or received by the Account within one or two business days and no interest is contractually charged on these amounts.
Securities Lending: The Account may lend securities to qualified borrowers to earn additional income. The Account receives cash collateral against the loaned securities and maintains cash collateral in an amount not less than 100% of the market value of loaned securities during the period of the loan; any additional collateral required due to changes in security values is delivered to the Account the next business day. Cash collateral received by the Account is invested exclusively in an interest-bearing deposit account. The value of the loaned securities and the liability to return the cash collateral received are reflected in the Consolidated Statements of Assets and Liabilities. When loaning securities, the Account retains the benefits of owning the securities, including the economic equivalent of dividends or interest generated by the securities. All income generated by the securities lending program is reflected within interest income on the Consolidated Statements of Operations.
Securities lending transactions are for real estate-related equity securities, and the resulting loans are continuous, can be recalled at any time, and have no set maturity. Securities lending income recognized by the Account consists of interest earned on cash collateral and lending fees, net of any rebates to the borrower and compensation to the agent. Such income is reflected within interest income on the Consolidated Statements of Operations.  In lending its securities, the Account bears the market risk with respect to the investment of collateral and the risk that the agent may default on its contractual obligations to the Account. The agent bears the risk that the borrower may default on its obligation to return the loaned securities as the agent is contractually obligated to indemnify the Account if at the time of a default by a borrower some or all of the loan securities have not been returned.
Accounting Pronouncement: 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
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relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate ("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 does not expect the guidance to materially impact the Account.
Note 2—Related Party Transactions
Investment management, administrative and distribution services are provided to the Account at cost by TIAA. Services provided at cost are paid by the Account on a daily basis based upon projected expenses to be provided to the Account. Payments are adjusted periodically to ensure daily payments are as close as possible to the Account’s actual expenses incurred. Differences between actual expenses and the amounts paid by the Account are reconciled and adjusted quarterly.
Investment management services for the Account are provided by TIAA officers, under the direction and control of the Board, pursuant to investment management procedures adopted by TIAA for the Account. TIAA’s investment management decisions for the Account are subject to review by the Independent Fiduciary. TIAA also provides various portfolio accounting and related services for the Account.
The Account is a party to the Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account (the “Distribution Agreement”), dated January 1, 2008, by and among TIAA, for itself and on behalf of the Account, and TIAA-CREF Individual and Institutional Services, LLC (“Services”). Services is a direct wholly-owned subsidiary of TIAA, and is registered with the SEC as a broker-dealer and a registered investment adviser and is a member of the Financial Industry Regulatory Authority. Pursuant to the Distribution Agreement, Services performs distribution services for the Account which include, among other things, (i) distribution of annuity contracts issued by TIAA and funded by the Account, (ii) advising existing annuity contract owners in connection with their accumulations and (iii) helping employers implement and manage retirement plans. In addition, TIAA performs administrative functions for the Account, which include, among other things, (i) maintaining accounting records and performing accounting services, (ii) receiving and allocating premiums, (iii) calculating and making annuity payments, (iv) processing withdrawal requests, (v) providing regulatory compliance and reporting services, (vi) maintaining the Account’s records of contract ownership and (vii) otherwise assisting generally in all aspects of the Account’s operations. Both distribution services (pursuant to the Distribution Agreement) and administrative services are provided to the Account by Services and TIAA, as applicable, on an at cost basis. The Distribution Agreement is terminable by either party upon 60 days written notice and terminates automatically upon any assignment thereof.
In addition to providing the services described above, TIAA charges the Account fees to bear certain mortality and expense risks, and risks with providing the liquidity guarantee (described below). These fees are charged as a percentage of the net assets of the Account. Rates for these fees are established annually.
Once an Account participant begins receiving lifetime annuity income benefits, payment levels cannot be reduced as a result of the Account’s actual mortality experience. As such, mortality and expense risk expenses are contractual charges for TIAA’s assumption of this risk.
TIAA provides the Account with a liquidity guarantee enabling the Account to have funds available to meet participant redemption, transfer or cash withdrawal requests. The liquidity guarantee is required by the New York State Department of Financial Services and is subject to a prohibited transaction exemption that the Account received in 1996 (96-76) from the U.S. Department of Labor (the “PTE 96-76”). The Account pays TIAA for the risk associated with providing the liquidity guarantee through a daily deduction from the Account’s net assets. Whether the liquidity guarantee is exercised is based on the cash level of the Account from time to time, as well as recent participant withdrawal activity and the Account’s expected working capital, debt service and cash needs, and subject to the oversight of the Independent Fiduciary. If the Account cannot fund participant withdrawal or redemption requests from the Account’s own cash flow and liquid investments, TIAA will fund them by purchasing accumulation units issued by the Account (accumulation units that are purchased by TIAA are generally referred to as “liquidity units”). TIAA guarantees that participants can redeem their accumulation units at the accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. Liquidity units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s participants.
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Expenses for the services and fees described above are identified as such in the accompanying Consolidated Statements of Operations and are further identified as "Expenses" in Note 11—Financial Highlights.
The Account has loans receivable outstanding with related parties as of September 30, 2020. The loans are with joint ventures in which the Account also has an equity interest. The loans are held at fair value in accordance with the valuation policies described in Note 1—Organization and Significant Accounting Policies. The following table presents the key terms of the loans as of the reporting date (in millions):
Related PartyEquity Ownership InterestInterest RateMaturity DateFair Value at
PrincipalSeptember 30, 2020December 31, 2019
20202019
(Unaudited)
36.5 36.5 MRA Hub 34 Holding, LLC95.00%2.50% + LIBOR9/1/2022$36.5 $36.5 
32.8 32.8 THP Student Housing, LLC97.00%3.20%9/1/202432.9 32.5 
TOTAL LOANS RECEIVABLE WITH RELATED PARTIES$69.4 $69.0 
Note 3—Concentrations of Risk
The outbreak of the novel coronavirus (commonly known as “COVID-19”) and the subsequent global pandemic began significantly impacting the U.S. and global financial markets and economies during the first quarter of 2020. During the second and third quarters of 2020, the Account received multiple requests for rent and loan payment relief as a result of the COVID-19 pandemic. Requests have generally been comprised of deferrals, with payments postponed for a brief period (i.e., less than six months) and then repaid over the remaining duration of the contract. As of September 30, 2020, the Account has not had material exposure to rent concessions, tenant defaults or loan defaults. The duration and extent of COVID-19 over the long-term cannot be reasonably estimated at this time. The ultimate impact of the COVID-19 pandemic and the extent to which the COVID-19 pandemic impacts the Account’s business, results of operations, investments, and cash flows will depend on future developments, which are highly uncertain and difficult to predict.
Concentrations of risk may arise when a number of properties are located in a similar geographic region such that the economic conditions of that region could impact tenants’ obligations to meet their contractual obligations or cause the values of individual properties to decline. Additionally, concentrations of risk may arise if any one tenant comprises a significant amount of the Account's rent, or if tenants are concentrated in a particular industry.
As of September 30, 2020, the Account had no significant concentrations of tenants as no single tenant had annual contract rent that made up more than 4% of the rental income of the Account. Moreover, the Account's tenants have no notable concentration present in any one industry. There are 0 significant lease expirations scheduled to occur over the next twelve months.
The Account’s wholly-owned real estate investments and investments in joint ventures are located in the United States. The following table represents the diversification of the Account’s portfolio by region and property type as of September 30, 2020 (unaudited):
Diversification by Fair Value(1)
WestEastSouthMidwestTotal
Office13.4 %18.8 %5.5 %%37.7 %
Apartment9.9 %6.6 %8.0 %1.1 %25.6 %
Retail6.6 %3.7 %7.6 %0.8 %18.7 %
Industrial9.5 %1.7 %4.8 %0.5 %16.5 %
Other(2)
0.5 %0.4 %0.6 %%1.5 %
Total39.9 %31.2 %26.5 %2.4 %100.0 %

(1)Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.
(2)Represents interests in Storage Portfolio investments, a hotel investment and land.
Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY.
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Properties in the “East” region are located in: CT, DC, DE, KY, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV.
Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX.
Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI.
Note 4—Leases
The Account’s wholly-owned real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2051. Rental income is recognized in accordance with the billing terms of the lease agreements. The leases do not have material variable payments, material residual value guarantees or material restrictive covenants. Certain leases have the option to extend or terminate at the tenant's discretion, with termination options resulting in additional fees due to the Account. Aggregate minimum annual rentals for wholly-owned real estate investments owned by the Account through the non-cancelable lease term, excluding short-term residential leases, as of September 30, 2020 (unaudited) and December 31, 2019 are as follows (millions):
As of
Years EndedSeptember 30, 2020December 31, 2019
2020$164.5 (1)$550.4 
2021627.3 505.0 
2022555.6 442.1 
2023479.8 381.2 
2024401.1 316.6 
Thereafter1,333.7 1,078.4 
Total$3,562.0 $3,273.7 
(1) Representative of minimum rents owed for the remaining months of the calendar year ending December 31, 2020.
Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts, sales volume or contractual increases as defined in the lease agreement. These contractual contingent rentals are not included in the table above.
The Account has ground leases for which the Account is the lessee. The leases do not contain material residual value guarantees or material restrictive covenants. The fair value of right-of-use assets and leases liabilities related to ground leases are reflected on the balance sheet within other assets and other liabilities, respectively.
The fair values and key terms of the right-of-use assets and lease liabilities related to the Account's ground leases are as follows (millions):
As of
September 30, 2020December 31, 2019
(Unaudited)
Assets:
  Right-of-use assets, at fair value$37.5 $25.7 
Liabilities:
  Ground lease liabilities, at fair value$37.5 $25.7 
As of
September 30, 2020December 31, 2019
Key Terms:(Unaudited)
  Weighted-average remaining lease term (years)69.084.4
  Weighted-average discount rate(1)
7.70 %6.15 %
(1) Discount rates are reflective of the rates utilized during the most recent appraisal of the associated real estate investments.
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For the nine months ended September 30, 2020, operating lease costs related to ground leases were $1.6 million. These costs include variable lease costs, which are immaterial. Aggregate future minimum annual payments for ground leases held by the Account are as follows (millions):
As of
Years EndedSeptember 30, 2020December 31, 2019
(Unaudited)
2020(1)
$0.6 (1)$1.2 
20212.3 1.2 
20222.3 1.2 
20232.3 1.2 
20242.3 1.3 
Thereafter416.0 375.9 
Total$425.8 $382.0 
(1) Representative of minimum rents owed for the remaining months of the calendar year ending December 31, 2020.
Note 5—Assets and Liabilities Measured at Fair Value on a Recurring Basis
Valuation Hierarchy: The Account’s fair value measurements are grouped into three levels, as defined by the FASB. The levels are defined as follows:
Level 1 fair value inputs are quoted prices for identical items in active, liquid and visible markets such as stock exchanges.
Level 2 fair value inputs are observable information for similar items in active or inactive markets, and appropriately consider counterparty creditworthiness in the valuations.
Level 3 fair value inputs reflect our best estimate of inputs and assumptions market participants would use in pricing an asset or liability at the measurement date. The inputs are unobservable in the market and significant to the valuation estimate.
An investment’s categorization within the valuation hierarchy described above is based upon the lowest level of input that is significant to the fair value measurement. Real estate fund investments are excluded from the valuation hierarchy, as these investments are fair valued using their net asset value as a practical expedient since market quotations or values from independent pricing services are not readily available. See Note 1Organization and Significant Accounting Policies for further discussion regarding the use of a practical expedient for the valuation of real estate funds.
The Account’s determination of fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon vendor-provided, evaluated prices or internally developed models that primarily use market-based or independently sourced market data, including interest rate yield curves, market spreads, and currency rates. Valuation adjustments will be made to reflect changes in credit quality, a counterparty’s creditworthiness, the Account’s creditworthiness, liquidity, and other observable and unobservable inputs that are applied consistently over time.
The methods described above are considered to produce fair values that represent an estimate by management of what an unaffiliated buyer in the marketplace would pay to purchase the asset or would receive to transfer the liability. Since fair value calculations involve significant professional judgment in the application of both observable and unobservable attributes, actual realizable values or future fair values may differ from amounts reported. Furthermore, while the Account believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments, while reasonable, could result in different estimates of fair value at the reporting date. As discussed in Note 1Organization and Significant Accounting Policies in more detail, the Account generally obtains independent third party appraisals on a quarterly basis, and there may be circumstances in the interim in which the true realizable value of a property is not reflected in the Account’s daily net asset value calculation or in the Account’s periodic Consolidated Financial Statements. This disparity may be more apparent when the
16


commercial and/or residential real estate markets experience an overall and possibly dramatic decline (or increase) in property values in a relatively short period of time between appraisals.
The following tables show the major categories of assets and liabilities measured at fair value on a recurring basis as of September 30, 2020 (unaudited) and December 31, 2019, using unadjusted quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3); and fair value using the practical expedient (millions):
DescriptionLevel 1: Quoted Prices in Active Markets for Identical AssetsLevel 2: Significant Other Observable InputsLevel 3: Significant Unobservable InputsFair Value Using Practical ExpedientTotal at September 30, 2020
Real estate properties$— $— $16,715.0 $— $16,715.0 
Real estate joint ventures— — 5,993.8 — 5,993.8 
Real estate funds— — — 354.2 354.2 
Marketable securities:
Real estate-related662.2 — — — 662.2 
United States Treasury securities— 689.9 — — 689.9 
Loans receivable(1)
— — 1,569.6 — 1,569.6 
Total Investments at September 30, 2020$662.2 $689.9 $24,278.4 $354.2 $25,984.7 
Loans payable$— $— $(2,495.7)$— $(2,495.7)
Line of credit$— $— $(91.0)$— $(91.0)
DescriptionLevel 1: Quoted Prices in Active Markets for Identical AssetsLevel 2: Significant Other Observable InputsLevel 3: Significant Unobservable InputsFair Value Using Practical ExpedientTotal at December 31, 2019
Real estate properties$— $— $15,835.0 $— $15,835.0 
Real estate joint ventures— — 7,204.2 — 7,204.2 
Real estate funds— — — 311.8 311.8 
Marketable securities:
Real estate-related825.7 — — — 825.7 
Government agency notes— 259.6 — — 259.6 
United States Treasury securities— 2,589.1 — — 2,589.1 
Corporate bonds— 1,268.3 — — 1,268.3 
Municipal bonds— 33.2 — — 33.2 
Loans receivable(1)
— — 1,572.1 — 1,572.1 
Total Investments at December 31, 2019$825.7 $4,150.2 $24,611.3 $311.8 $29,899.0 
Loans payable$— $— $(2,365.0)$— $(2,365.0)
Line of credit$— $— $(250.0)$— $(250.0)
(1) Amount shown is reflective of loans receivable and loans receivable with related parties.
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The following tables show the reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and nine months ended September 30, 2020 and 2019 (millions, unaudited):
Real Estate
Properties
Real Estate
Joint Ventures
Loans
Receivable
(3)
Total
Level 3
Investments
Loans
Payable
Line of Credit
For the three months ended September 30, 2020
Beginning balance July 1, 2020$16,748.6 $6,024.6 $1,578.2 $24,351.4 $(2,457.0)$(291.0)
Total realized and unrealized losses included in changes in net assets(92.1)(45.6)(8.8)(146.5)(42.4)— 
    Purchases(1)
55.4 15.0 3.5 73.9 — — 
    Sales(4)
3.1 — — 3.1 — — 
    Settlements(2)
— (0.2)(3.3)(3.5)3.7 200.0 
Ending balance September 30, 2020$16,715.0 $5,993.8 $1,569.6 $24,278.4 $(2,495.7)$(91.0)
Real Estate
Properties
Real Estate
Joint Ventures
Loans
Receivable
(3)
Total
Level 3
Investments
Loans
Payable
Line of Credit
For the nine months ended September 30, 2020
Beginning balance January 1, 2020$15,835.0 $7,204.2 $1,572.1 $24,611.3 $(2,365.0)$(250.0)
Total realized and unrealized losses included in changes in net assets(334.0)(422.1)(32.6)(788.7)(6.1)— 
    Purchases(1)
1,564.3 57.0 114.8 1,736.1 (289.6)(540.0)
    Sales(350.3)— (64.7)(415.0)— — 
    Settlements(2)
— (845.3)(20.0)(865.3)165.0 699.0 
Ending balance September 30, 2020$16,715.0 $5,993.8 $1,569.6 $24,278.4 $(2,495.7)$(91.0)
Real Estate
Properties
Real Estate
Joint Ventures
Loans
Receivable
(3)
Total
Level 3
Investments

Loans
Payable
Line of Credit
For the three months ended September 30, 2019
Beginning balance July 1, 2019$16,471.9 $6,720.3 $1,105.1 $24,297.3 $(2,774.7)$— 
Total realized and unrealized gains (losses) included in changes in net assets216.8 (131.5)(1.4)83.9 (32.1)— 
    Purchases(1)
126.3 366.9 207.2 700.4 (47.5)— 
    Sales(1,095.3)— — (1,095.3)— — 
    Settlements(2)
— (0.5)(3.0)(3.5)565.8 — 
Ending balance September 30, 2019$15,719.7 $6,955.2 $1,307.9 $23,982.8 $(2,288.5)$— 
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Real Estate
Properties
Real Estate
Joint Ventures
Loans
Receivable
(3)
Total
Level 3
Investments

Loans
Payable
Line of Credit
For the nine months ended September 30, 2019
Beginning balance January 1, 2019$15,531.1 $6,356.6 $913.0 $22,800.7 $(2,608.0)$— 
Total realized and unrealized gains (losses) included in changes in net assets461.0 (145.1)(4.2)311.7 (98.4)— 
    Purchases(1)
826.0 750.8 426.2 2,003.0 (157.5)— 
    Sales(1,098.4)— — (1,098.4)— — 
    Settlements(2)
— (7.1)(27.1)(34.2)575.4 — 
Ending balance September 30, 2019$15,719.7 $6,955.2 $1,307.9 $23,982.8 $(2,288.5)$— 
(1)Includes purchases, contributions for joint ventures, capital expenditures, lending for loans receivable and assumption of loans payable.
(2)Includes operating income for real estate joint ventures net of distributions, principal payments and payoffs of loans receivable, and principal payments and extinguishment of loans payable.
(3)Amount shown is reflective of loans receivable and loans receivable with related parties.
(4)Amount shown is inclusive of post closing realized losses.
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The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of September 30, 2020 (unaudited).
TypeAsset ClassValuation
Technique(s)
Unobservable
Inputs(1)
Range (Weighted Average)
Real Estate Properties and Joint VenturesOfficeIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.8% - 9.0% (6.7%)
4.0% - 8.3% (5.5%)
Income Approach—Direct CapitalizationOverall Capitalization Rate4.0% - 8.0% (5.0%)
IndustrialIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.2% - 9.0% (6.6%)
4.3% - 7.3% (5.4%)
Income Approach—Direct CapitalizationOverall Capitalization Rate3.8% - 7.0% (4.8%)
ApartmentIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.3% - 7.8% (6.4%)
4.3% - 6.8% (5.1%)
Income Approach—Direct CapitalizationOverall Capitalization Rate3.8% - 6.0% (4.6%)
RetailIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.3% - 11.8% (6.8%)
5.0% - 9.4% (5.6%)
Income Approach—Direct CapitalizationOverall Capitalization Rate4.0% - 11.5% (5.1%)
HotelIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
10.3% (10.3%)
7.8% (7.8%)
Income Approach—Direct CapitalizationOverall Capitalization Rate7.5% (7.5%)
Loans PayableOfficeDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
34.5% - 55.4% (45.1%)
2.4% - 3.4% (3.0%)
Net Present ValueLoan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple
34.5% - 55.4% (45.1%)
1.2 - 1.4 (1.3)
IndustrialDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
31.4% - 59.2% (52.9%)
3.5% - 4.3% (3.6%)
Net Present ValueLoan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple
31.4% - 59.2% (52.9%)
1.2 - 1.5 (1.4)
ApartmentDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
29.8% - 68.7% (47.9%)
2.6% - 3.4% (3.0%)
Net Present ValueLoan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple
29.8% - 68.7% (47.9%)
1.2 - 1.6 (1.4)
RetailDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
42.0% - 65.1% (46.5%)
2.8% - 3.9% (3.1%)
Net Present ValueLoan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple
42.0% - 65.1% (46.5%)
1.3- 1.6 (1.3)
Loans Receivable, including those with related partiesOfficeDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
49.5% - 91.8% (74.6%)
3.5% - 9.5% (6.4%)
IndustrialDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
31.2% - 90.2% (61.8%)
4.3% - 12.4% (8.1%)
ApartmentDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
47.5% - 74.7% (63.5%)
3.2% - 7.0% (4.9%)
Retail & HospitalityDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
52.8% - 93.0% (84.7%)
5.3% - 9.3% (6.0%)




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The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of September 30, 2019 (unaudited).
TypeAsset ClassValuation
Technique(s)
Unobservable
Inputs(1)
Range (Weighted Average)
Real Estate Properties and Joint VenturesOfficeIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.5% - 8.5% (6.6%)
4.0% - 7.5% (5.5%)
Income Approach—Direct CapitalizationOverall Capitalization Rate3.9% - 7.0% (5.0%)
IndustrialIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.3% - 9.3% (6.7%)
4.3% - 8.3% (5.4%)
Income Approach—Direct CapitalizationOverall Capitalization Rate3.9% - 7.8% (4.9%)
ApartmentIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.3% - 7.8% (6.5%)
4.3% - 6.8% (5.1%)
Income Approach—Direct CapitalizationOverall Capitalization Rate3.8% - 6.0% (4.6%)
RetailIncome Approach—Discounted Cash FlowDiscount Rate
Terminal Capitalization Rate
5.0% - 11.7% (6.6%)
4.3% - 9.2% (5.4%)
Income Approach—Direct CapitalizationOverall Capitalization Rate3.3% - 11.0% (4.9%)
Loans PayableOffice and IndustrialDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
31.6% - 59.9% (46.6%)
3.2% - 4.4% (3.6%)
Net Present ValueLoan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
31.6% - 59.9% (46.6%)
1.2 - 1.4 (1.3)
ApartmentDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
30.5% - 61.2% (47.3%)
3.2% - 3.6% (3.4%)
Net Present ValueLoan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
30.5% - 61.2% (47.3%)
1.2 - 1.5 (1.3)
RetailDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
32.1% - 63.3% (40.9%)
3.2% - 4.4% (3.6%)
Net Present ValueLoan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
32.1% - 63.3% (40.9%)
1.2 - 1.5 (1.3)
Loans ReceivableApartment, Industrial, Office, Retail and StorageDiscounted Cash FlowLoan to Value Ratio
Equivalency Rate
49.7% - 86.2% (75.6%)
3.6% - 8.7% (6.8%)
(1) Equivalency Rate is defined as the prevailing market interest rate used to discount the contractual loan payments.

Real Estate Properties and Joint Ventures: The significant unobservable inputs used in the fair value measurement of the Account’s real estate property and joint venture investments are the selection of certain investment rates (Discount Rate, Terminal Capitalization Rate, and Overall Capitalization Rate). Significant increases (decreases) in any of those inputs in isolation would result in significantly lower (higher) fair value measurements, respectively.
Loans Payable: The significant unobservable inputs used in the fair value measurement of the Account’s loans payable are the loan to value ratios and the selection of certain credit spreads and weighted average cost of capital risk premiums. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value, respectively.
Loans Receivable: The significant unobservable inputs used in the fair value measurement of the Account’s loans receivable are the loan to value ratios and the selection of certain credit spreads. Significant increases (decreases) in any of those inputs in isolation would result in a significantly lower (higher) fair value, respectively.
During the nine months ended September 30, 2020 and 2019, there were no transfers between Levels 1, 2 or 3.
21


The amount of total net unrealized gains (losses) included in changes in net assets attributable to the change in net unrealized gains (losses) relating to Level 3 investments and loans payable using significant unobservable inputs still held as of the reporting date is as follows (millions, unaudited):
Real Estate
Properties
Real Estate
Joint
Ventures
Loans
Receivable(1)
Total
Level 3
Investments

Loans
Payable
For the three months ended September 30, 2020$(89.1)$(10.0)$(8.8)$(107.9)$(42.4)
For the nine months ended September 30, 2020$(322.0)$(328.2)$(31.0)$(681.2)$(6.1)
For the three months ended September 30, 2019$183.9 $(131.6)$(1.4)$50.9 $(16.7)
For the nine months ended September 30, 2019$428.1 $(143.8)$(4.2)$280.1 $(83.0)
(1) Amount shown is reflective of loans receivable and loans receivable with related parties.
Note 6—Investments in Joint Ventures
The Account owns interests in several real estate properties through joint ventures and receives distributions and allocations of profits and losses from the joint ventures based on the Account’s ownership interest in those investments. Several of these joint ventures have loans payable collateralized by the properties owned by the aforementioned joint ventures. At September 30, 2020, the Account held investments in joint ventures with ownership interest percentages that ranged from 33.3% to 98.0%. Certain joint ventures are subject to adjusted distribution percentages when earnings in the investment reach a predetermined threshold.
A condensed summary of the results of operations of the joint ventures are shown below (millions, unaudited):
 For the Three Months Ended September 30,For the Nine Months Ended September 30,
2020201920202019
Operating Revenue and Expenses
Revenues$246.6 $287.7 $782.9 $825.6 
Expenses134.8 151.7 434.7 446.4 
Excess of revenues over expenses$111.8 $136.0 $348.2 $379.2 
Note 7—Investments in Real Estate Funds
The Account has ownership interests in real estate funds (each a "Fund", and collectively the "Funds"). The Funds are setup as limited partnerships or entities similar to a limited partnership, and as such, meet the definition of a VIE as the limited partners collectively lack the power, through voting or similar rights, to direct the activities of the Fund that most significantly impact the Fund's economic performance. Management has determined that the Account is not the primary beneficiary for any of the Funds, as the Account lacks the power to direct the activities of each Fund that most significantly impact the respective Fund's economic performance, and the Account further lacks substantive kick-out rights to remove the entity with these powers. Refer to Note 1—Organization and Significant Accounting Policies for a description of the methodology used to determine the primary beneficiary of a VIE.
No financial support (such as loans or financial guarantees) was provided to the Funds during the three and nine months ended September 30, 2020. The Account is contractually obligated to make additional capital contributions in certain Funds in future years. These commitments are identified in Note 13—Commitments and Contingencies.
22


The carrying amount and maximum exposure to loss relating to unconsolidated VIEs in which the Company holds a variable interest but is not the primary beneficiary were as follows at September 30, 2020 (in millions, unaudited):
Fund NameCarrying AmountMaximum Exposure to LossLiquidity ProvisionsInvestment Strategy
LCS SHIP Venture I, LLC (90.0% Account Interest)$184.5 $184.5 Redemptions prohibited prior to liquidation.To invest in senior housing properties.
Liquidation estimated to begin no earlier than 2025.
The Account is permitted to sell or transfer its interest in the fund, subject to consent and approval of the manager.
SP V - II, LLC (61.8% Account Interest)$26.5 $26.5 Redemptions prohibited prior to liquidation.To invest in medical office properties in the U.S.
Liquidation estimated to begin no earlier than 2022.
The Account is permitted to sell or transfer its interest in the fund, subject to consent and approval of the manager.
Taconic New York City GP Fund, LP (60.0% Account Interest)$31.7 $31.7 Redemptions prohibited prior to liquidation.To invest in real estate and real estate-related assets in the New York City metropolitan statistical area ("MSA").
Liquidation estimated to begin no earlier than 2024.
The Account is permitted to sell its interest in the fund, subject to consent and approval of the general partner.
Veritas - Trophy VI, LLC (90.4% Account Interest)$45.1 $45.1 Redemptions prohibited prior to liquidation.To invest in multi-family properties primarily in the San Francisco Bay and Los Angeles MSA.
The Account is not permitted to sell or transfer its interest in the fund until August 2022. After this date, the Account can sell or transfer its interest in the fund with the consent and approval of the manager.
IDR - Core Property Index Fund, LLC (1.9% Account Interest)$24.7 $24.7 Redemptions are permitted for a full calendar quarter and upon at least 90 days prior written notice, subject to fund availability.To invest primarily in open-ended funds that fall within the NFI-ODCE Index and are actively managed.
The Account is permitted to sell its interest in the fund, subject to consent and approval of the manager.
Townsend Group Value-Add Fund (99.0% Account Interest)$6.2 $6.2 Redemptions prohibited prior to liquidation.To invest in value-add real estate investment opportunities in the U.S. market.
Liquidation estimated to begin no earlier than 2027.
The Account is prohibited from transferring its interest in the fund without consent by the general partner, which can be withheld in their sole discretion
Silverpeak - REA Alt Inv Fund LP (90.0% Account Interest)$14.0 $14.0 Redemptions prohibited prior to liquidation.To invest in alternative real estate investments primarily in major U.S. metropolitan markets.
Liquidation estimated to begin no earlier than 2028.
The Account is permitted to sell its interest in the fund to qualified institutional investors, subject to consent and approval of the manager.
Grubb Southeast Real Estate Fund VI, LLC (66.7% Account Interest)$16.5 $16.5 Redemptions prohibited prior to liquidation.To acquire office investments across the Southeast.
Liquidation estimated to begin no earlier than 2026.
The Account is not permitted to sell or transfer its interest in the fund until June 2021. After this date, the Account can sell or transfer its interest in the fund with the consent and approval of the manager.
23


Fund NameCarrying AmountMaximum Exposure to LossLiquidity ProvisionsInvestment Strategy
JCR Capital - REA Preferred Equity Parallel Fund (49.2% Account Interest)$5.0 $5.0 Redemptions prohibited prior to liquidation.To invest primarily in multi-family properties.
Liquidation estimated to begin no earlier than 2026.
The Account is prohibited from transferring its interest in the fund without consent by the general partner, which can be withheld in their sole discretion
Total$354.2 $354.2 

Note 8—Loans Receivable
The Account’s loan receivable portfolio is primarily comprised of mezzanine loans secured by the borrower’s direct and indirect interests in commercial real estate. Mezzanine loans are subordinate to first mortgages on the underlying real estate collateral. The following property types represent the underlying real estate collateral for the Account's mezzanine loans (in millions):
September 30, 2020December 31, 2019
(Unaudited)
Principal OutstandingFair Value% of Fair ValuePrincipal OutstandingFair Value% of Fair Value
Office(1)
$791.3 $777.5 49.6 %$769.3 $768.0 48.8 %
Industrial195.4 195.4 12.4 %199.6 199.6 12.7 %
Retail136.1 133.7 8.5 %158.5 158.5 10.1 %
Storage82.0 73.8 4.7 %82.0 82.0 5.2 %
Apartments(1)
262.2 259.3 16.5 %229.1 228.8 14.6 %
Hotel135.3 129.9 8.3 %135.3 135.2 8.6 %
$1,602.3 $1,569.6 100.0 %$1,573.8 $1,572.1 100.0 %
(1) Includes loans receivable with related parties.
The Account monitors the risk profile of the loan receivable portfolio with the assistance of a third-party rating service that models the loans and assigns risk ratings based on inputs such as loan-to-value ratios, yields, credit quality of the borrowers, property types of the collateral, geographic and local market dynamics, physical condition of the collateral, and the underlying structure of the loans. Ratings for loans are updated monthly. Assigned ratings can range from AAA to C, with an AAA designation representing debt with the lowest level of credit risk and C representing a greater risk of default or principal loss. Loans that are more than 90 days past due are classified as delinquent and assigned a D rating. Mezzanine debt in good health is typically reflective of a risk rating in the B range (e.g., BBB, BB, or B), as these ratings reflect borrowers' having adequate financial resources to service their financial commitments, but also acknowledging that adverse economic conditions, should they occur, would likely impede on a borrowers' ability to pay.

24


All borrowers of loans rated C or higher are current as of September 30, 2020. NaN of the Account's loans are currently in forbearance. The forbearance allows for the deferral of the June, July and August 2020 debt service payments. The deferred payments will be repaid in equal installments over the 12 month period from January 9, 2021 to December 9, 2021, at which time the forbearance period will end. Interest income continues to be accrued during the deferral period so long as future collection of the deferred payments are probable.
The following table presents the fair values of the Account's loan portfolio based on the risk ratings as of September 30, 2020 (in millions, unaudited), listed in order of the strength of the risk rating (from strongest to weakest):
September 30, 2020December 31, 2019
(Unaudited)
Number of LoansFair Value% of Fair ValueNumber of LoansFair Value% of Fair Value
AA0$%1$48.3 3.1 %
BBB386.6 5.5 %7456.1 29.0 %
BB15960.0 61.2 %13787.4 50.1 %
B4232.8 14.8 %3205.0 13.0 %
C2147.0 9.4 %0%
D173.8 4.7 %0%
NR(1)
269.4 4.4 %375.3 4.8 %
27$1,569.6 100.0 %27$1,572.1 100.0 %
(1) "NR" designates loans not assigned an internal credit rating. As of September 30, 2020 and December 31, 2019, this is comprised of 2 loans with related parties. The loans are collateralized by equity interests in real estate investments.
The following table represents loans receivable in nonaccrual status as of September 30, 2020 (in millions, unaudited). Loans are placed in nonaccrual status when a loan is more than 90 days in arrears or at any point when management believes the full collection of principal is doubtful.
AgingNumber of LoansPrincipal OutstandingFair Value
Past Due - 90 Days +1$82.0 $73.8 

25


Note 9—Loans Payable
At September 30, 2020, the Account had outstanding loans payable secured by the following assets (millions):
Property
Annual Interest Rate and
Payment Frequency(2)
Principal
Amounts Outstanding as of
Maturity
September 30, 2020December 31, 2019
(Unaudited)
Red Canyon at Palomino Park5.34% paid monthly$$27.1 August 1, 2020
Green River at Palomino Park5.34% paid monthly33.2 August 1, 2020
Blue Ridge at Palomino Park5.34% paid monthly33.4 August 1, 2020
Ashford Meadows Apartments5.17% paid monthly44.6 August 1, 2020
The Knoll3.98% paid monthly16.4 December 5, 2020
Ascent at Windward3.51% paid monthly34.6 34.6 January 1, 2022
The Palatine(1)
4.25% paid monthly74.8 75.9 January 10, 2022
The Forum at Carlsbad(1)
4.25% paid monthly84.4 85.7 March 1, 2022
Fusion 15603.42% paid monthly37.4 37.4 June 10, 2022
San Diego Office Portfolio(4)
3.62% paid monthly50.7 48.2 August 15, 2022
The Colorado(1)
3.69% paid monthly86.8 88.1 November 1, 2022
The Legacy at Westwood(1)
3.69% paid monthly44.2 44.9 November 1, 2022
Regents Court(1)
3.69% paid monthly37.5 38.1 November 1, 2022
1001 Pennsylvania Avenue(1)
3.70% paid monthly315.9 320.7 June 1, 2023
Biltmore at Midtown3.94% paid monthly36.4 36.4 July 5, 2023
Cherry Knoll3.78% paid monthly35.3 35.3 July 5, 2023
Lofts at SoDo3.94% paid monthly35.1 35.1 July 5, 2023
Pacific City2.00 + LIBOR paid monthly105.0 October 1, 2023
Birkdale Village(1)
4.30% paid monthly77.5 April 1, 2024
1401 H Street, NW3.65% paid monthly115.0 115.0 November 5, 2024
The District at La Frontera(1)
3.84% paid monthly38.8 39.3 December 1, 2024
The District at La Frontera(1)
4.96% paid monthly4.3 4.4 December 1, 2024
Circa Green Lake3.71% paid monthly52.0 52.0 March 5, 2025
Union - South Lake Union3.66% paid monthly57.0 57.0 March 5, 2025
Holly Street Village3.65% paid monthly81.0 81.0 May 1, 2025
Henley at Kingstowne(1)
3.60% paid monthly70.6 71.0 May 1, 2025
32 South State Street4.48% paid monthly24.0 24.0 June 6, 2025
Vista Station Office Portfolio(1)
4.00% paid monthly20.1 20.5 July 1, 2025
780 Third Avenue3.55% paid monthly150.0 150.0 August 1, 2025
780 Third Avenue3.55% paid monthly20.0 20.0 August 1, 2025
Vista Station Office Portfolio(1)
4.20% paid monthly44.0 44.7 November 1, 2025
701 Brickell Avenue3.66% paid monthly184.0 184.0 April 1, 2026
Marketplace at Mill Creek3.82% paid monthly39.6 September 11, 2027
Overlook At King Of Prussia3.82% paid monthly40.8 September 11, 2027
Winslow Bay Commons3.82% paid monthly25.8 September 11, 2027
1900 K Street, NW3.93% paid monthly163.0 163.0 April 1, 2028
99 High Street3.90% paid monthly277.0 277.0 March 1, 2030
Total Principal Outstanding$2,462.6 $2,338.0 
Fair Value Adjustment(3)
33.1 27.0 
Total Loans Payable$2,495.7 $2,365.0 
(1)The mortgage is adjusted monthly for principal payments.
(2)All interest rates are fixed except for Pacific City, which has a variable interest rate based on a spread above the one month London Interbank Offered Rate, as published by ICE Benchmark Administration Limited. Some mortgages held by the Account are structured to begin principal and interest payments after an initial interest only period.
(3)The fair value adjustment consists of the difference (positive or negative) between the principal amount of the outstanding debt and the fair value of the outstanding debt. See Note 1—Organization and Significant Accounting Policies.
(4)The loan is collateralized by a mezzanine loan receivable. The mezzanine loan receivable is collateralized by the property reflected within the table above.
26


Note 10—Lines of Credit
The Account has 2 unsecured revolving credit agreements (“Lines of Credit”), each with a maximum total commitment of $500.0 million. Draws against the Lines of Credit can take the form of Eurodollar Loans or Alternate Base Rate Loans (“ABR Loans”). Eurodollar Loans and ABR Loans require a minimum funding of $5.0 million.
Eurodollar Loans are issued for a term of twelve months or less and bear interest during the period (“Interest Period”) at a rate equal to the Adjusted London Interbank Offered Rate (“Adjusted LIBOR”) plus a spread (the “Eurodollar Applicable Rate”), with the spread dependent upon the leverage ratio of the Account. Adjusted LIBOR is calculated by multiplying the Statutory Reserve Rate, as determined by the Federal Reserve Board for Eurodollar liabilities, by LIBOR, as determined by the Intercontinental Exchange on the date of issuance that corresponds to the length of the Interest Period. The Account may prepay Eurodollar Loans at any time during the life of the loan without penalty. The Account is limited to 5 active Eurodollar Loans on each Line of Credit; however, the Account may retire and initiate new Eurodollar Loans without restriction so long as the total number of loans in active status does not exceed the limit.
ABR Loans are issued for a specific length of time and bear interest at a rate equal to the highest rate among the following calculations plus a spread (the "ABR Applicable Rate"), with the spread dependent on the leverage ratio of the Account: (i) the Prime Rate on the date of issuance, with the Prime Rate being defined as the rate of interest last quoted by the Wall Street Journal as the Prime Rate; (ii) the Federal Reserve Bank of New York (“NYFRB”) rate as provided by the NYFRB on the date of issuance plus 0.5%; or (iii) the Adjusted LIBOR rate plus 1.0%. The Account may prepay ABR Loans at any time during the life of the loan without penalty.
For the three and nine months ended September 30, 2020, expenses charged to the Account related to the Lines of Credit were $0.7 million and $2.3 million , respectively. As of September 30, 2020, the Account was in compliance with all covenants required by the Lines of Credit.
The following table provides a summary of the key characteristics of the Lines of Credit as of September 30, 2020:
Line of Credit ILine of Credit II
Current Balance (in millions)$91.0 $
Maximum Capacity (in millions)$500.0 $500.0 
Inception DateSeptember 20, 2018August 18, 2020
Maturity DateSeptember 20, 2021August 16, 2021
Extension OptionYes(1)No
Eurodollar Applicable Rate Range0.85% - 1.05%1.60% - 1.80%
ABR Applicable Rate Range0.85% - 1.05%0.60% - 0.80%
Unused Fee (2)
0.20% per annum0.25% per annum
(1)
The line of credit expires on September 20, 2021, with an option to extend for 2 consecutive twelve month terms at the Account’s election. The Account may request an additional $250.0 million in commitments from the Lenders at any time; however, this request is subject to approval at the sole discretion of the Lenders and is not a guarantee that an expansion beyond the original $500.0 million commitment will be granted.
(2)The Account is charged a fee on the unused portion of the Lines of Credit.





27


Note 11—Financial Highlights
Selected condensed financial information for an Accumulation Unit of the Account is presented below. Per Accumulation Unit data is calculated on average units outstanding.
For the Nine Months Ended September 30, 2020Years Ended December 31,
201920182017
(Unaudited)
Per Accumulation Unit Data:
Rental income$15.951 $18.165 $17.757 $17.132 
Real estate property level expenses and taxes7.533 8.734 8.548 7.722 
Real estate income, net8.418 9.431 9.209 9.410 
Other income3.742 6.752 6.162 4.762 
Total income12.160 16.183 15.371 14.172 
Expense charges(1)
2.556 3.439 3.161 3.318 
Investment income, net9.604 12.744 12.210 10.854 
Net realized and unrealized (loss) gain on investments and loans payable(15.862)10.262 6.877 5.839 
Net (decrease) increase in Accumulation Unit Value(6.258)23.006 19.087 16.693 
Accumulation Unit Value:
Beginning of period440.422 417.416 398.329 381.636 
End of period$434.164 $440.422 $417.416 $398.329 
Total return(3)
(1.42)%5.51 %4.79 %4.37 %
Ratios to Average net assets(2):
Expenses(1)
0.77 %0.78 %0.76 %0.83 %
Investment income, net2.89 %2.90 %2.95 %2.72 %
Portfolio turnover rate(3):
Real estate properties(4)
5.5 %7.8 %11.8 %2.7 %
Marketable securities(5)
91.1 %28.7 %5.1 %5.7 %
Accumulation Units outstanding at end of period (millions)52.8 60.8 60.7 61.3 
Net assets end of period (millions)$23,428.3 $27,307.9 $25,842.6 $24,942.6 
(1)Expense charges per Accumulation Unit and the Ratio of Expenses to average net assets reflect the year to date Account level expenses and exclude real estate property level expenses which are included in real estate income, net.
(2)Percentages for the nine months ended September 30, 2020 are annualized.
(3)Percentages for the nine months ended September 30, 2020 are not annualized.
(4)Real estate investment portfolio turnover rate is calculated by dividing the lesser of purchases or sales of real estate property investments (including contributions to, or return of capital distributions received from, existing real estate joint ventures and fund investments) by the average value of the portfolio of real estate investments held during the period.
(5)Marketable securities portfolio turnover rate is calculated by dividing the lesser of purchases or sales of securities, excluding securities having maturity dates at acquisition of one year or less, by the average value of the portfolio securities held during the period.

28


Note 12—Accumulation Units
Changes in the number of Accumulation Units outstanding were as follows (in millions):
For the Nine Months Ended September 30, 2020For the Year Ended December 31, 2019
(Unaudited)
Outstanding:
Beginning of period60.8 60.7 
Credited for premiums3.5 6.2 
Annuity, other periodic payments, withdrawals and death benefits(11.5)(6.1)
End of period52.8 60.8 
Note 13—Commitments and Contingencies
Commitments—As of September 30, 2020 and December 31, 2019, the Account had the following immediately callable commitments to purchase additional interests in its real estate funds or provide additional funding through its loans receivable investments (in millions):
Commitment ExpirationSeptember 30, 2020December 31, 2019
(Unaudited)
Real Estate Funds(1)
Taconic New York City GP Fund11/2020$6.0 $11.4 
LCS SHIP Venture I, LLC12/202028.1 28.1 
Townsend Strategic Ventures LP12/2020243.8 250.0 
Silverpeak NRE Fund Co, LLC01/202186.1 
TREA Flagler Venture, LLC02/202150.0 
Grubb Southeast Real Estate Fund VI, LLC06/202182.7 86.6 
Colony Zeus Partners LP09/2021250.0 
Veritas Trophy VI, LLC(2)
08/202239.2 35.8 
SP V - II, LLC09/202273.8 74.9 
JCR Capital - REA Preferred Equity Parallel Fund12/202294.5 100.0 
954.2 586.8 
Loans Receivable(3)
SCG Oakland Portfolio Mezzanine03/2021$6.7 $7.0 
BREP VIII Industrial Mezzanine03/202114.4 14.1 
311 South Wacker Mezzanine06/20215.7 7.6 
Rosemont Towson Mezzanine09/20211.2 1.2 
Liberty Park Mezzanine11/20214.1 5.0 
San Diego Office Portfolio Senior Loan08/20227.5 10.0 
San Diego Office Portfolio Mezzanine08/20222.5 3.3 
MRA Hub 34 Holding, LLC09/20221.5 1.5 
1330 Broadway Mezzanine09/202211.7 14.0 
Colony New England Hotel Portfolio Senior Loan11/202214.1 14.1 
Colony New England Hotel Portfolio Mezzanine11/20224.7 4.7 
Exo Apartments Senior Loan01/20237.1 7.1 
Exo Apartments Mezzanine01/20232.4 2.4 
Five Oak Mezzanine03/20232.4 
86.0 92.0 
TOTAL COMMITMENTS$1,040.2 $678.8 
(1)Additional capital can be called during the commitment period at any time. The commitment period can only be extended by the manager with the consent of the Account. The commitment expiration date is reflective of the most recent signed agreement between the Account and the fund manager, including any side letter agreements.
29


(2)The fund manager is granted 18 months from the initial contribution date, August 2019, to make its first capital call. If none have occurred, the Account's commitment will be reduced by $15.0 million. If a capital call occurs during the initial 18 month window, the commitment period will be modified to three years from the first capital call date.
(3)Advances from the Account can be requested during the commitment period at any time. The commitment expiration date is reflective of the most recent signed agreement between the Account and the borrower, including any side letter agreements. Certain loans contain extension clauses on the term of the loan that do not require the Account's prior consent. If elected, the Account's commitment may be extended through the extension term.
Contingencies—In the normal course of business, the Account may be named, from time to time, as a defendant or may be involved in various legal actions, including arbitration, class actions and other litigation.
The Account establishes an accrual for all litigation and regulatory matters when it believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted, as appropriate, in light of additional information. The amount of loss ultimately incurred in relation to those matters may be higher or lower than the amounts accrued for those matters.
As of the date of this report, management of the Account does not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material effect on the Account’s business, financial position or results of operations.
Note 14—Subsequent Events
The following transactions occurred subsequent to September 30, 2020 (in millions, unaudited):
Sales - Properties
Property NameSales DateOwnership PercentageSectorLocation
Net Sales Price(1)
Realized Gain on Sale(2)
Colony Industrial Portfolio10/5/2020100.0%IndustrialVarious$153.4 $25.1 
(1) The net sales price represents the sales price, less selling expenses.
(2) Majority of the realized gain has been previously recognized as unrealized gains(losses) in the Account's Consolidated Statements of Operations.
Transactions - Other
DescriptionTransaction DateTransaction TypeTransaction Amount
Real estate-related marketable securities10/2/2020Sale$100.0 
Real estate-related marketable securities10/5/2020Sale$100.0 
Line of Credit I10/6/2020Payoff$91.0 
Real estate-related marketable securities10/8/2020Sale$100.0 
Real estate-related marketable securities11/9/2020Sale$200.0 

30

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

REAL ESTATE PROPERTIES—64.3% and 53.0%
Location/DescriptionTypeFair Value at
September 30, 2020December 31, 2019
(Unaudited)
Alabama:
River RidgeRetail$29.6 $— 
Riverchase VillageRetail38.3 40.3 
Arizona:
Camelback CenterOffice50.0 49.0 
Riverside 202 IndustrialIndustrial30.3 29.6 
California:
88 Kearny StreetOffice217.3 221.0 
101 Pacific Coast HighwayOffice94.0 96.1 
200 Middlefield RoadOffice61.0 68.0 
30700 Russell RanchOffice36.7 39.0 
Allure at CamarilloApartments64.1 63.9 
Almond AvenueLand11.6 9.5 
BLVD63Apartments147.0 158.0 
Bridgepointe Shopping CenterRetail127.0 129.0 
Centre Pointe and Valley ViewIndustrial60.4 60.7 
Cerritos Industrial ParkIndustrial166.0 164.0 
Charleston PlazaRetail98.0 100.0 
Creekside at Alta LomaApartments84.6 85.2 
Frontera Industrial Business ParkIndustrial95.3 90.0 
Great West Industrial PortfolioIndustrial208.3 203.0 
Holly Street VillageApartments155.1 (1)158.1 (1)
Larkspur CourtsApartments145.0 155.0 
Northern CA RA Industrial PortfolioIndustrial116.9 111.9 
Oakmont IE West PortfolioIndustrial116.3 109.2 
Oceano at Warner CenterApartments91.8 94.4 
Ontario Industrial PortfolioIndustrial518.7 506.9 
Ontario Mills Industrial PortfolioIndustrial77.0 65.4 
Otay Mesa Industrial PortfolioIndustrial36.5 33.7 
Pacific CityRetail162.1 (1)— 
Pacific PlazaOffice111.0 112.7 
Rancho Cucamonga Industrial PortfolioIndustrial90.8 88.3 
Rancho Del MarApartments93.7 94.7 
Regents CourtApartments103.0 (1)105.0 (1)
Southern CA RA Industrial PortfolioIndustrial158.2 151.8 
StellaApartments173.0 175.1 
Stevenson PointIndustrial74.6 66.6 
Terra HouseApartments141.4 146.0 
The Forum at CarlsbadRetail203.0 (1)224.0 (1)
The Legacy at WestwoodApartments149.1 (1)149.1 (1)
West Lake North Business ParkOffice58.1 62.3 
WestcreekApartments54.3 57.1 
Westwood MarketplaceRetail150.0 150.0 
Wilshire Rodeo PlazaOffice313.1 336.4 
Colorado:
1600 BroadwayOffice118.0 116.0 
Palomino ParkApartments350.1 361.0 (1)
South Denver MarketplaceRetail67.2 71.2 
31

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

Location/DescriptionTypeFair Value at
September 30, 2020December 31, 2019
(Unaudited)
Connecticut:
Wilton Woods Corporate CampusOffice$102.1 $112.1 
Florida:
5 WestApartments61.1 62.3 
701 Brickell AvenueOffice422.6 (1)406.6 (1)
Boca Arbor ClubApartments63.5 62.9 
Broward Industrial PortfolioIndustrial68.8 67.7 
Casa PalmaApartments98.7 102.0 
Cypress TraceRetail36.2 — 
Fusion 1560Apartments74.5 (1)84.1 (1)
Lakepointe at JacarandaApartments49.1 48.8 
Lofts at SoDoApartments61.0 (1)64.7 (1)
Market SquareRetail20.3 — 
Orion on OrpingtonApartments51.1 52.4 
Publix at Weston CommonsRetail69.5 74.5 
Seneca Industrial ParkIndustrial127.6 126.7 
Shoppes at Lake MaryRetail18.9 — 
Sole at BrandonApartments75.4 79.0 
Sole at City CenterApartments101.1 — 
The Manor ApartmentsApartments48.1 51.5 
The Manor at Flagler VillageApartments132.1 138.1 
The Residences at the Village of Merrick ParkApartments69.5 72.3 
Weston Business CenterIndustrial79.3 75.0 
Georgia:
Ascent at WindwardApartments69.0 (1)68.4 (1)
Atlanta Industrial PortfolioIndustrial40.5 41.0 
Biltmore at MidtownApartments73.6 (1)73.5 (1)
Eisenhower CrossingRetail13.4 — 
Fayette PavilionRetail101.3 

— 
Glen LakeApartments56.8 55.3 
Heritage PavilionRetail40.5 

— 
Marketplace at Mill CreekRetail76.4 (1)— 
Newnan PavilionRetail40.2 — 
Shawnee Ridge Industrial PortfolioIndustrial99.8 99.9 
Woodstock SquareRetail32.0 

— 
Illinois:
32 South State StreetRetail48.4 (1)51.4 (1)
803 CordayApartments92.5 93.8 
Chicago Caleast Industrial PortfolioIndustrial86.3 85.6 
Chicago Industrial PortfolioIndustrial33.1 30.1 
Village CrossingRetail143.5 

— 
Maryland:
Cherry KnollApartments57.7 (1)60.1 (1)
Landover Logistics CenterIndustrial47.7 44.7 
The Shops at Wisconsin PlaceRetail63.7 65.6 
Massachusetts:
99 High StreetOffice545.2 (1)543.7 (1)
350 WashingtonRetail124.0 134.0 
Fort Point Creative Exchange PortfolioOffice265.0 275.0 
32

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

Location/DescriptionTypeFair Value at
September 30, 2020December 31, 2019
(Unaudited)
Northeast RA Industrial PortfolioIndustrial$44.2 $43.5 
One Beeman RoadIndustrial35.8 34.6 
Minnesota:
The BridgesApartments66.0 67.2 
The KnollApartments37.2 37.3 (1)
New Jersey:
10 New Maple AvenueIndustrial21.5 21.9 
200 Milik StreetIndustrial57.6 56.4 
MarketfairRetail101.1 106.2 
South River Road IndustrialIndustrial133.2 133.5 
New York:
21 Penn PlazaOffice310.4 334.9 
250 North 10th StreetApartments— 138.1 
780 Third AvenueOffice373.5 (1)389.1 (1)
837 Washington StreetOffice211.0 232.0 
The ColoradoApartments247.0 (1)259.0 (1)
North Carolina:
Alexander PlaceRetail40.0 — 
Birkdale VillageRetail113.6 (1)— 
Birkdale Village - ResidentialApartments71.7 — 
Centric GatewayApartments72.7 75.0 
Winslow Bay CommonsRetail47.0 (1)— 
Oregon:
The CordeliaApartments41.1 43.2 
Pennsylvania:
1619 Walnut StreetRetail22.5 23.0 
Overlook at King of PrussiaRetail60.4 (1)— 
Rhode Island:
Warwick Shopping CenterRetail17.9 — 
South Carolina:
Columbiana StationRetail46.7 

— 
Greene CrossingApartments80.5 79.7 
Tennessee:
Bellevue PlaceRetail8.6 — 
Pavilion at Turkey CreekRetail51.3 — 
Southside at McEwenRetail47.9 49.2 
Town and CountryRetail30.7 — 
Texas:
3131 McKinneyOffice38.6 46.4 
Beltway North Commerce CenterIndustrial— 30.2 
Carrington ParkApartments66.0 67.3 
Churchill on the ParkApartments71.8 73.0 
Cliffs at Barton CreekApartments45.6 47.2 
Dallas Industrial PortfolioIndustrial254.1 237.9 
District on La FronteraApartments71.7 (1)76.6 (1)
Houston Apartment PortfolioApartments157.7 162.3 
Lincoln CentreOffice434.2 413.2 
Lincoln Centre - Hilton DallasHotel66.0 76.5 
Northwest Houston Industrial PortfolioIndustrial75.0 77.2 
33

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

Location/DescriptionTypeFair Value at
September 30, 2020December 31, 2019
(Unaudited)
Park 10 DistributionIndustrial$12.0 $11.1 
Park Creek ApartmentsApartments42.8 — 
Pinnacle Industrial PortfolioIndustrial68.7 66.7 
Pinto Business ParkIndustrial153.9 154.1 
The MaronealApartments55.6 56.4 
Utah:
Vista Station Office PortfolioOffice115.9 (1)115.4 (1)
Virginia:
8270 Greensboro DriveOffice45.8 49.6 
Ashford Meadows ApartmentsApartments102.2 105.3 (1)
Creeks at Virginia CenterRetail47.4 — 
Henley at KingstowneApartments103.1 (1)103.0 (1)
Plaza AmericaRetail96.7 113.3 
The Ellipse at BallstonOffice79.5 82.2 
The PalatineApartments123.0 (1)128.0 (1)
Washington:
Circa Green LakeApartments97.0 (1)102.0 (1)
Northwest RA Industrial PortfolioIndustrial49.5 49.7 
Pacific Corporate ParkIndustrial64.5 62.5 
Prescott Wallingford ApartmentsApartments67.4 70.6 
Rainier Corporate ParkIndustrial167.3 161.3 
Regal Logistics CampusIndustrial131.0 121.0 
Union - South Lake UnionApartments109.0 (1)115.0 (1)
Washington D.C.:
1001 Pennsylvania AvenueOffice798.5 (1)798.4 (1)
1401 H Street, NWOffice223.4 (1)211.4 (1)
1900 K Street, NWOffice344.2 (1)335.4 (1)
Mass CourtApartments166.1 169.0 
The AshtonApartments29.8 30.6 
The Louis at 14thApartments160.1 164.2 
The WoodleyApartments— 180.3 
Various:
Colony Industrial PortfolioIndustrial160.2 (3)135.9 (3)
TOTAL REAL ESTATE PROPERTIES
(Cost $14,201.5 and $13,048.5)$16,715.0 $15,835.0 
REAL ESTATE JOINT VENTURES AND FUNDS—24.5% and 25.1%
REAL ESTATE JOINT VENTURES—23.1% and 24.1%
Location/DescriptionTypeFair Value at
September 30, 2020December 31, 2019
(Unaudited)
California:
CA—Colorado Center LP
Colorado Center (50% Account Interest)
Office$356.4 (2)$384.5 (2)
PC Borrower, LLC
Pacific City (70% Account Interest)
Retail— 62.2 (2)
TREA GM Industrial Road Investor Member LLC
150 Industrial Road (98% Account Interest)
Office99.5 98.0 
34

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

Location/DescriptionTypeFair Value at
September 30, 2020December 31, 2019
(Unaudited)
TREA 9625 Towne Center, LLC
9625 Towne Centre Drive (49.9% Account Interest)
Office$59.6 $53.1 
TREA Campus Pointe 1, LLC
Campus Pointe 1 (45% Account Interest)
Office170.3 163.5 
TREA Campus Pointe 2 & 3, LLC
Campus Pointe 2 & 3 (45% Account Interest)
Office (5)
146.9 143.6 
TREA Campus Pointe 4, LLC
Campus Pointe 4 (45% Account Interest)
Office10.4 9.6 
TREA Campus Pointe 5, LLC
Campus Pointe 5 (45% Account Interest)
Office41.3 37.4 
ARE-SD Regions NO. 58, LLC
Campus Pointe 6 (45% Account Interest)
Office125.5 116.6 
T-C 1500 Owens, LLC
1500 Owens Street (49.9% Account Interest)
Office84.5 81.5 
TREA JP Venture Fairfield LLC
Fairfield Tolenas Development (95% Account Interest)
Land9.4 — 
T-C Foundry Square II Venture LLC
Foundry Square II (50.1% Account Interest)
Office323.2 318.4 
T-C Illinois Street, LLC
409-499 Illinois Street (40% Account Interest)
Office247.9 237.5 
Valencia Town Center Associates LP
Valencia Town Center (50% Account Interest)
Retail114.6 (2)136.4 (2)
Florida:
Florida Mall Associates, Ltd
The Florida Mall (50% Account Interest)
Retail672.1 (2)748.3 (2)
TREA Florida Retail, LLC
Florida Retail Portfolio (80% Account Interest)
Retail156.8 158.4 
West Dade County Associates
Miami International Mall (50% Account Interest)
Retail110.1 (2)157.5 (2)
Maryland:
WP Project Developer
The Shops at Wisconsin Place (33.33% Account Interest)
Retail27.1 29.9 
Massachusetts:
One Boston Place REIT
One Boston Place (50.25% Account Interest)
Office243.6 246.8 
T-C 225 Binney, LLC
225 Binney Street (70% Account Interest)
Office232.0 231.5 
T-C 501 Boylston Street Member, LLC
501 Boylston (50.1% Account Interest)
Office204.7 (2)206.9 (2)
Nevada:
Fashion Show Holding I, LLC
Fashion Show (50% Account Interest)
Retail578.5 (2)706.9 (2)
New York:
401 West 14th Street, LLC
401 West 14th Street (42.19% Account Interest)
Retail31.3 (2)44.8 (2)
440 Ninth Avenue Owner, LLC
440 Ninth Avenue (88.52% Account Interest)
Office129.6 (2)133.1 (2)
817 Broadway Owner, LLC
817 Broadway (61.46% Account Interest)
Office23.5 (2)33.7 (2)
MRA Hub 34 Holding, LLC
The Hub (95% Account Interest)
Office78.3 (2)74.8 (2)
RGM 42, LLC
MiMA (70% Account Interest)
Apartments101.9 (2)113.0 (2)
35

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

Location/DescriptionTypeFair Value at
September 30, 2020December 31, 2019
(Unaudited)
North Carolina:
CC 101 North Tryon, LLC 101 N. Tryon Street (85% Account Interest)Office$57.9 (2)$47.9 (2)
Tennessee:
West Town Mall, LLC
West Town Mall (50% Account Interest)
Retail122.3 (2)144.0 (2)
Texas:
Four Oaks Venture LP
Four Oaks Place LP (51% Account Interest)
Office341.7 (2)352.8 (2)
TREA I-35 Logistics Investor Member, LLC
I-35 Logistics Center (95% Account Interest)
Land25.9 6.9 
Washington:
TREA 4th and Madison Investor Member, LLC
Fourth and Madison (51% Account Interest)
Office170.5 (2)167.3 (2)
Various:
DDRTC Core Retail Fund, LLC
SITE Centers Joint Venture (85% Account Interest)
Retail— 878.0 (2,3)
Simpson Housing LLP
Simpson Housing Portfolio (80% Account Interest)
Apartments429.4 (2,3)431.2 (2,3)
THP Student Housing, LLC
THP Student Housing Portfolio (97% Account Interest)
Apartments188.9 (2,3)186.8 (2,3)
Storage Portfolio I, LLC
Storage Portfolio I (66.02% Account Interest)
Storage96.4 (2,3)93.6 (2,3)
Storage Portfolio II, LLC
Storage Portfolio II (90% Account Interest)
Storage129.2 (2,3)130.5 (2,3)
Storage Portfolio III, LLC
Storage Portfolio III (90% Account Interest)
Storage52.6 (3)37.3 (3)
TOTAL REAL ESTATE JOINT VENTURES
(Cost $4,818.0 and $5,971.1)
$5,993.8 $7,204.2 
REAL ESTATE FUNDS—1.4% and 1.0%
LCS SHIP Venture I, LLC (90.0% Account Interest)$184.5 $216.1 
Veritas - Trophy VI, LLC (90.4% Account Interest)45.1 4.2 
Taconic New York City GP Fund, LP (60.0% Account Interest)31.7 29.8 
SP V - II, LLC (61.8% Account Interest)26.5 23.3 
IDR - Core Property Index Fund, LLC (1.9% Account Interest)24.7 25.0 
Townsend Group Value-Add Fund (99.0% Account Interest)6.2 — 
Silverpeak - REA Alt Inv Fund LP (90.0% Account Interest)14.0 — 
Grubb Southeast Real Estate Fund VI, LLC (66.7% Account Interest)16.5 13.4 
JCR Capital (49.2% Account Interest)5.0 — 
TOTAL REAL ESTATE FUNDS
(Cost $345.8 and $273.3)
$354.2 $311.8 
TOTAL REAL ESTATE JOINT VENTURES AND FUNDS
(Cost $5,163.8 and $6,244.4)
$6,348.0 $7,516.0 
36

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

MARKETABLE SECURITIES—5.2% and 16.7%
REAL ESTATE-RELATED MARKETABLE SECURITIES—2.5% and 2.8%
SharesIssuerFair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
25,073 25,333 Acadia Realty Trust$0.3 $0.7 
72,132 77,213 Agree Realty Corporation4.6 5.4 
21,307 20,424 Alexander & Baldwin, Inc.0.2 0.4 
633 635 Alexander's, Inc.0.2 0.2 
93,551 114,902 Alexandria Real Estate Equities, Inc.15.0 18.6 
14,876 14,387 American Assets Trust, Inc.0.4 0.7 
40,698 40,898 American Campus Communities, Inc.1.4 1.9 
32,275 31,822 American Financial Trust, Inc.0.2 0.4 (7)
288,780 241,918 American Homes 4 Rent8.2 6.3 
261,881 298,037 American Tower Corp.63.3 68.5 
171,575 247,312 Americold Realty Trust6.1 8.7 
44,017 44,204 Apartment Investment and Management Company1.5 2.3 
62,320 62,827 Apple Hospitality Inc.0.6 1.0 
16,581 15,666 Armada Hoffler Properties Inc.0.2 0.3 
— 26,793 Ashford Hospitality Trust, Inc.— 0.1 
77,855 106,486 Avalonbay Communities, Inc.11.6 22.3 
6,887 7,650 Bluerock Residential Growth, Inc.0.1 0.1 
93,143 106,065 Boston Properties, Inc.7.5 14.6 
— 8,938 Braemar Hotels & Resorts, Inc.— 0.1 
50,095 52,132 Brandywine Realty Trust0.5 0.8 
142,974 88,801 Brixmore Property Group Inc1.7 1.9 
13,576 19,539 Brookfield Property REIT0.2 (7)0.4 
59,447 27,796 Camden Property Trust5.3 2.9 
28,242 28,420 CareTrust REIT Inc.0.5 0.6 
14,406 14,592 Catchmark Timber Trust, Inc.0.1 0.2 
— 50,454 CBL & Associates Properties, Inc.— 0.1 (7)
— 25,522 Cedar Shopping Centers, Inc.— 0.1 
13,700 13,659 Chatham Lodging Trust0.1 0.3 
13,872 15,789 City Office REIT Inc.0.1 0.2 
5,720 5,192 Clipper Realty, Inc.— 0.1 
143,518 492,974 Colony Capital, Inc.0.4 2.3 
33,852 34,825 Columbia Property Trust Inc.0.4 0.7 
6,229 5,492 Community Healthcare Trust, Inc.0.3 0.2 
35,356 35,462 CoreCivic, Inc.0.3 0.6 
4,974 3,830 Corenergy Infrastructure Trust, Inc.— 0.2 
11,604 11,903 Corepoint Lodging, Inc.0.1 0.1 
11,984 11,149 CoreSite Realty Corporation1.4 1.3 
33,373 33,505 Corporate Office Properties Trust0.8 1.0 
44,005 43,565 Cousins Properties, Inc.1.3 1.8 
221,349 248,664 Crown Castle International Corporation36.8 35.3 
57,436 57,474 Cubesmart1.9 1.8 
67,494 60,485 CyrusOne Inc.4.7 4.0 
59,040 59,944 DiamondRock Hospitality Company0.3 0.7 
153,741 94,906 Digital Realty Trust, Inc.22.6 11.4 
70,104 — Diversified Healthcare Trust0.2 — 
49,461 49,622 Douglas Emmett, Inc.1.2 2.2 
215,078 244,465 Duke Realty Corporation7.9 8.5 
37

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

SharesIssuerFair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
23,594 22,034 Easterly Government Properties, Inc.$0.5 $0.5 
34,924 41,238 EastGroup Properties, Inc.4.5 5.5 
43,479 44,235 Empire State Realty Trust0.3 0.6 
21,944 23,023 EPR Properties0.6 1.6 
56,313 60,851 Equinix Inc.42.8 35.5 
247,605 256,618 Equity Lifestyle Properties, Inc.15.2 18.1 
220,359 283,999 Equity Residential11.3 23.0 
40,399 188,894 Essential Properties Realty0.7 4.7 
30,746 54,492 Essex Property Trust, Inc.6.2 16.4 
76,604 107,410 Extra Space Storage, Inc.8.2 11.3 
7,718 8,142 Farmland Partners, Inc.0.1 (7)0.1 
22,373 66,222 Federal Realty Investment Trust1.6 8.5 
37,527 37,538 First Industrial Realty Trust, Inc.1.5 1.6 
20,802 20,389 Four Corners Property Trust0.5 0.6 
30,706 30,896 Franklin Street Properties Corp.0.1 0.3 
14,805 14,739 Front Yard Residential Corp.0.1 0.2 
197,372 180,230 Gaming and Leisure Properties, Inc.7.3 7.8 
58,800 160,000 GDS Holdings LTD ADR4.8 4.0 (7)
34,822 35,427 GEO Group Inc./The0.4 0.6 
9,977 9,933 Getty Realty Corp.0.3 0.3 
9,944 9,121 Gladstone Commercial Corporation0.2 0.2 
5,607 6,226 Gladstone Land Corporation0.1 0.1 
12,135 9,380 Global Medical REIT, Inc.0.2 0.1 
26,651 26,663 Global Net Lease, Inc.0.4 0.5 
39,943 39,221 Healthcare Realty Trust Inc.1.2 1.3 
107,725 60,957 Healthcare Trust of America2.8 1.8 
406,778 496,493 Healthpeak Properties, Inc.11.0 17.1 
10,062 10,385 Hersha Hospitality Trust0.1 0.2 
58,079 30,535 Highwoods Properties, Inc.1.9 1.5 
13,400 — Hilton Worldwide Holdings1.1 — 
391,981 661,737 Host Hotels & Resorts, Inc.4.2 12.3 
44,652 275,440 Hudson Pacific Properties, Inc.1.0 10.4 
28,014 26,784 Independence Realty Trust, Inc.0.3 0.4 
19,191 19,292 Industrial Logics Properties0.4 0.4 
— 134,775 Interxion Holding NV— 7.0 
3,791 3,467 Investors Real Estate Trust0.2 0.3 
550,440 559,204 Invitation Homes, Inc.15.4 16.8 
85,040 84,852 Iron Mountain Inc.2.3 2.7 
15,700 163,782 iShares Dow Jones US Real Estate Index Fund1.3 15.2 (7)
36,211 36,559 JBG Smith Properties1.0 1.5 
6,583 — Jernigan Capital Inc.0.1 — 
67,058 95,936 Kilroy Realty Corporation3.5 8.0 
181,606 120,171 Kimco Realty Corporation2.0 2.5 
24,550 24,663 Kite Realty Group Trust0.3 0.5 
43,653 25,456 Lamar Advertising Corporation2.9 2.3 
23,500 — Las Vegas Sands Corporation1.1 — 
80,643 71,595 Lexington Realty Trust0.8 0.8 
— 46,357 Liberty Property Trust— 2.8 
13,865 13,885 Life Storage, Inc.1.5 1.5 
11,494 11,718 LTC Properties, Inc.0.4 0.5 
38

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

SharesIssuerFair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
25,596 25,783 Mack-Cali Realty Corporation$0.3 $0.6 
9,400 — Marriott Internationsl0.9 — 
225,132 152,801 Medical Properties Trust, Inc.4.0 3.2 
266,400 220,000 Megaport, LTD3.1 1.7 
78,400 85,000 MGM Growth Properties, L.L.C.2.2 2.6 
66,600 — MGM Resorts International1.4 — 
92,586 103,823 Mid-America Apartment Communities, Inc.10.7 13.7 
28,064 27,502 Monmouth Real Estate Investment Corporation0.4 0.4 
12,719 12,615 National Health Investors, Inc.0.8 1.0 
50,917 50,907 National Retail Properties, Inc.1.8 2.7 
18,309 17,663 National Storage Affiliates Trust0.6 0.6 
24,224 24,918 New Senior Investment Group0.1 0.2 
6,412 5,632 Nexpoint Residential Trust, Inc.0.3 0.3 
215,500 — NEXTDC LTD1.9 — 
14,139 14,200 Office Properties Income Trust, Inc.0.3 0.5 
145,294 64,786 Omega Healthcare Investors, Inc.4.4 2.7 
4,669 4,628 One Liberty Properties, Inc.0.1 0.1 
78,036 42,727 Outfront Media Inc.1.1 1.1 
56,251 58,127 Paramount Group Inc.0.4 0.8 
245,999 71,359 Park Hotels & Resorts, Inc.2.5 1.8 
65,974 38,713 Pebblebrook Hotel Trust0.8 1.0 (7)
— 20,665 Pennsylvania Real Estate Investment Trust— 0.1 
61,538 55,271 Physicians Realty Trust1.1 1.0 
37,307 37,274 Piedmont Office Realty Trust, Inc.0.5 0.8 
4,353 3,863 Plymouth Industrial REIT, Inc.0.1 0.1 
19,371 19,688 Potlatch Corporation0.8 0.9 
14,060 13,220 Preferred Apartment Communities, Inc.0.1 0.2 
481,188 472,201 ProLogis48.3 42.1 
5,942 5,958 PS Business Parks, Inc.0.7 1.0 
81,548 82,126 Public Storage, Inc.18.2 17.5 
36,153 105,041 QTS Realty Trust, Inc.2.3 5.7 
39,104 38,741 Rayonier, Inc.1.0 1.3 
203,950 197,129 Realty Income Corporation12.4 14.4 
159,800 159,520 Regency Centers Corporation6.1 10.1 
33,743 33,519 Retail Opportunity Investment0.4 0.6 
63,396 63,727 Retail Properties of America0.4 0.9 
4,850 4,440 Retail Value, Inc.0.1 0.2 
299,126 282,611 Rexford Industrial Realty Inc.13.7 12.8 
48,523 50,071 RLJ Lodging Trust0.4 0.9 
23,850 23,246 RPT Realty0.1 0.3 
14,916 13,660 Ryman Hospitality Properties0.5 1.2 
178,227 167,181 Sabra Health Care REIT Inc.2.5 3.6 
5,111 3,168 Safe Hold, Inc.0.3 (7)0.1 
3,527 3,537 Saul Centers, Inc.0.1 0.2 
68,913 76,914 SBA Communications Corporation21.8 18.5 
— 70,465 Senior Housing Properties Trust— 0.6 
48,468 48,715 Service Properties Trust0.4 1.2 
188,182 200,628 Simon Property Group, Inc.12.2 29.9 
154,971 394,633 Site Centers Corporation1.1 5.5 
62,444 115,766 SL Green Realty Corp.2.9 (7)10.6 
39

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

SharesIssuerFair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
50,179 29,513 Spirit Realty Capital Inc.$1.7 $1.5 
44,309 39,632 Stag Industrial, Inc.1.4 1.3 
135,689 228,776 STORE Capital Corporation3.7 8.5 
30,564 30,813 Summit Hotel Properties, Inc.0.2 0.4 
125,070 123,951 Sun Communities, Inc.17.6 18.6 
63,544 66,821 Sunstone Hotel Investors, L.L.C.0.5 (7)0.9 (7)
26,770 27,198 Tanger Factory Outlet Centers, Inc.0.2 0.4 
31,238 39,475 Taubman Centers, Inc.1.0 1.2 
113,712 139,538 Terreno Realty Corporation6.2 7.6 
87,283 42,266 The Macerich Company0.6 (7)1.1 (7)
87,107 86,400 UDR, Inc.2.8 4.0 
10,834 10,668 UMH Properties, Inc.0.1 0.2 
112,027 150,082 UNITI Group, Inc.1.2 1.2 (7)
3,794 3,816 Universal Health Realty Income Trust0.2 0.4 
34,307 34,264 Urban Edge Properties0.3 0.7 
8,790 8,803 Urstadt Biddle Properties, Inc.0.1 0.2 
15,700 85,000 Vanguard Real Estate ETF1.2 (7)7.9 
259,633 190,949 Ventas, Inc.10.9 11.0 
321,061 318,132 VEREIT, Inc.2.1 2.9 
397,575 377,486 Vici Properties, Inc.9.3 9.6 
96,868 51,469 Vornado Realty Trust3.3 3.4 
54,997 55,611 Washington Prime Group, Inc.0.1 (7)0.2 (7)
24,389 23,876 Washington Real Estate Investment Trust0.5 0.7 
36,058 36,198 Weingarten Realty Investors0.6 1.1 
288,574 300,767 Welltower Inc.15.9 24.5 
456,736 386,918 Weyerhaeuser Company13.0 11.7 
11,775 11,404 Whitestone Real Estate Investment Trust B0.1 0.2 
69,680 50,897 WP Carey Inc.4.5 4.1 
11,800 — Wynn Resorts LTD0.8 — 
33,491 33,741 Xenia Hotels & Resorts, Inc.0.3 0.7 
TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES
(Cost $634.7 and $686.0)
$662.2 $825.7 
40

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

OTHER MARKETABLE SECURITIES—2.7% and 13.9%
U.S. GOVERNMENT AGENCY NOTES—0.0% and 0.7%
Issuer
Yield(4)
Maturity
Date
Fair Value at
PrincipalSeptember 30, 2020December 31, 2019
20202019
(Unaudited)
$— $65.4 Federal Home Loan Bank1.734%11/19/2021$— $65.5 
— 50.0 Federal Home Loan Bank1.700%12/20/2021— 50.0 
— 4.8 Federal Home Loan Bank Discount Notes1.521%-1.572%1/6/2020— 4.8 
— 21.2 Federal Home Loan Bank Discount Notes1.680%1/10/2020— 21.2 
— 26.0 Federal Home Loan Bank Discount Notes1.700%1/15/2020— 26.0 
— 43.0 Federal Home Loan Bank Discount Notes1.575%-1.593%1/31/2020— 42.9 
TOTAL U.S. GOVERNMENT AGENCY NOTES
(Cost $— and $210.2)
$ $210.4 
FOREIGN GOVERNMENT AGENCY NOTES— 0.0% and 0.2%
PrincipalIssuer
Yield(4)
Maturity
Date
Fair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
$— $49.3 Japan Bank for International Cooperation1.625%10/17/2022$— $48.9 
— 0.2 Korea Development Bank1.908%10/1/2022— 0.3 
TOTAL FOREIGN GOVERNMENT AGENCY NOTES
(Cost $— and $49.5)
$ $49.2 
UNITED STATES TREASURY SECURITIES—2.7% and 8.7%
PrincipalIssuer
Yield / Coupon Rate(4)
Maturity
Date
Fair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
$— $11.9 United States Treasury Bills1.540%1/2/2020$— $11.9 
— 40.0 United States Treasury Bills1.537%1/14/2020— 40.0 
— 238.3 United States Treasury Bills1.530%1/21/2020— 238.3 
— 10.1 United States Treasury Bills1.629%1/23/2020— 10.1 
— 26.1 United States Treasury Bills1.526%1/30/2020— 26.1 
— 39.9 United States Treasury Bills1.538%2/4/2020— 39.9 
— 20.0 United States Treasury Bills1.550%2/6/2020— 20.0 
— 149.7 United States Treasury Bills1.503%2/11/2020— 149.8 
— 49.9 United States Treasury Bills1.575%2/13/2020— 49.9 
— 13.0 United States Treasury Bills1.554%2/20/2020— 13.0 
— 49.9 United States Treasury Bills1.583%2/27/2020— 49.9 
— 46.1 United States Treasury Bills1.515%3/5/2020— 46.1 
— 54.5 United States Treasury Bills1.576%3/12/2020— 54.5 
— 44.8 United States Treasury Bills1.780%3/19/2020— 44.9 
— 38.9 United States Treasury Bills1.515%4/2/2020— 38.8 
62.0 — United States Treasury Bills0.213%10/8/202062.0 — 
61.0 — United States Treasury Bills0.111%10/22/202061.0 — 
86.5 — United States Treasury Bills0.097%11/5/202086.5 — 
34.5 — United States Treasury Bills0.101%11/19/202034.5 — 
100.0 — United States Treasury Bills0.098%12/17/2020100.0 — 
41

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

PrincipalIssuer
Yield / Coupon Rate(4)
Maturity
Date
Fair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
$84.0 $— United States Treasury Bills0.091%1/21/2021$84.0 $— 
80.0 — United States Treasury Cash Management Bill0.115%12/15/202080.0 — 
50.0 — United States Treasury Cash Management Bill0.097%1/5/202150.0 — 
132.0 — United States Treasury Cash Management Bill0.108%1/12/2021131.9 — 
— 99.8 United States Treasury Notes1.375%5/31/2020— 99.9 
— 100.4 United States Treasury Notes2.625%7/31/2020— 100.6 
— 249.5 United States Treasury Notes1.500%8/15/2020— 249.8 
— 653.1 United States Treasury Notes2.625%8/15/2020— 653.9 
— 100.8 United States Treasury Notes2.250%4/30/2021— 100.8 
— 199.4 United States Treasury Notes1.625%6/30/2021— 200.0 
— 99.9 United States Treasury Notes1.750%7/31/2021— 100.2 
— 49.6 United States Treasury Notes1.250%10/31/2021— 49.7 
— 100.0 United States Treasury Notes1.750%7/15/2022— 100.3 
— 100.7 United States Treasury Notes1.875%7/31/2022— 100.7 
TOTAL UNITED STATES TREASURY SECURITIES
(Cost $690.0 and $2,586.3)
$689.9 $2,589.1 
CORPORATE BOND SECURITIES—0.0% and 4.2%
PrincipalIssuerCoupon Rate
Credit Rating(8)
Maturity
Date
Fair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
$— $11.5 Air Lease Corporation2.250%BBB1/15/2023$— $11.5 
— 13.8 American Honda Finance1.700%A9/9/2021— 13.7 
— 19.7 American Honda Finance2.050%A1/10/2023— 19.7 
— 27.7 Apple, Inc.1.700%AA+9/11/2022— 27.7 
— 29.2 Banco Santander SA3.500%A-4/11/2022— 30.0 
— 12.0 Bank of America Corporation2.369%A-7/21/2021— 12.0 
— 21.6 Bank of America Corporation2.503%A-10/21/2022— 21.8 
— 29.5 Bank of New York Mellon Corporation1.950%A8/23/2022— 29.6 
— 8.1 BB+T Corporation2.150%A-2/1/2021— 8.1 
— 3.5 Berkshire Hathaway Energy2.400%A-2/1/2020— 3.5 
— 10.0 Boeing Co.1.650%BBB10/30/2020— 10.0 
— 28.9 Boeing Co.2.300%BBB8/1/2021— 29.0 
— 10.9 BPCE SA2.750%A+12/2/2021— 11.0 
— 8.0 Canadian National Railway2.400%A2/3/2020— 8.0 
— 21.8 Capital One, NA2.150%BBB+9/6/2022— 21.8 
— 4.8 Caterpillar Financial Service1.850%A9/4/2020— 4.7 
— 42.5 Caterpillar Financial Service1.299%A3/8/2021— 42.6 
— 12.0 Centerpoint Energy Resource4.500%BBB+1/15/2021— 12.2 
— 32.9 Citigroup, Inc.2.312%BBB+11/4/2022— 32.9 
— 27.0 Columbia Pipeline Group3.300%A36/1/2020— 27.1 
— 24.5 Diageo Capital PLC4.828%A-7/15/2020— 24.9 
— 19.6 DTE Energy Corporation2.250%BBB11/1/2022— 19.6 
— 34.5 Exxon Mobil Corporation1.902%AA+8/16/2022— 34.7 
— 14.0 Fifth Third Bank2.875%BBB+7/27/2020— 14.1 
42

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

PrincipalIssuerCoupon Rate
Credit Rating(8)
Maturity
Date
Fair Value at
September 30, 2020December 31, 2019
20202019
(Unaudited)
$— $5.0 Fifth Third Bank2.250%A-6/14/2021$— $5.0 
— 4.0 General Dynamics Corporation2.875%A5/11/2020— 4.0 
— 2.3 Georgia Power Company2.000%A-3/30/2020— 2.3 
— 15.0 Georgia Power Company2.000%A-9/8/2020— 15.0 
— 8.0 Georgia Power Company2.400%A-4/1/2021— 8.0 
— 7.5 Goldman Sachs Group, Inc.2.600%BBB+4/23/2020— 7.5 
— 12.2 Goldman Sachs Group, Inc.2.600%BBB+12/27/2020— 12.2 
— 25.0 Goldman Sachs Group, Inc.2.350%BBB+11/15/2021— 25.1 
— 10.5 HSBC Bank USA, NA4.875%A8/24/2020— 10.7 
— 11.7 John Deere Capital Corporation1.950%A6/13/2022— 11.7 
— 25.0 JP Morgan Chase Bank, NA2.604%A+2/1/2021— 25.0 
— 20.0 JP Morgan Chase Bank, NA3.086%A+4/26/2021— 20.1 
— 65.0 Mitsubishi UFJ Financial Group2.190%A-9/13/2021— 65.2 
— 9.2 Morgan Stanley2.650%BBB+1/27/2020— 9.2 
— 20.0 Morgan Stanley2.800%BBB+6/16/2020— 20.1 
— 8.3 Morgan Stanley2.500%BBB+4/21/2021— 8.4 
— 7.0 Morgan Stanley2.625%BBB+11/17/2021— 7.1 
— 18.4 MPLX LP1.899%BBB9/9/2021— 18.5 
— 20.0 MUFG Union Bank, NA2.100%A12/9/2022— 20.0 
— 50.8 Nextera Energy Capital2.403%BBB+9/1/2021— 51.2 
— 20.0 Occidental Petroleum Corporation2.854%BBB2/8/2021— 20.1 
— 14.9 Occidental Petroleum Corporation2.600%BBB8/13/2021— 15.0 
— 31.1 Occidental Petroleum Corporation2.700%BBB8/15/2022— 31.4 
— 35.0 Omnicom GP/Omnicom CAP4.450%BBB+8/15/2020— 35.5 
— 20.0 Oracle Corporation1.900%A+9/15/2021— 20.0 
— 11.6 Paccar Financial Corporation2.000%A+9/26/2022— 11.7 
— 19.3 Paypal Holdings, Inc.2.200%BBB+9/26/2022— 19.4 
— 20.0 PNC Bank, NA2.315%A12/9/2022— 20.0 
— 20.0 PNC Bank, NA2.028%A12/9/2022— 20.0 
— 20.0 Skandinaviska Enskilda1.875%A+9/13/2021— 19.9 
— 5.0 Sumitomo Mitsui Financial Group2.934%A-3/9/2021— 5.1 
— 5.0 Sumitomo Mitsui Financial Group2.058%A-7/14/2021— 5.0 
— 101.4 Swedish Export Credit1.625%AA+11/14/2022— 101.0 
— 23.0 The Walt Disney Company1.830%A9/1/2021— 23.1 
— 17.1 Toronto Dominion Bank2.500%AA-12/14/2020— 17.2 
— 14.5 Toronto Dominion Bank2.170%A3/17/2021— 14.5 
— 10.0 Toronto Dominion Bank1.900%A12/1/2022— 10.0 
— 20.0 United Technologies Corporation1.900%BBB+5/4/2020— 20.0 
— 12.8 Wells Fargo Bank, NA3.325%A+7/23/2021— 12.9 
— 30.0 Wells Fargo Bank, NA2.082%A+9/9/2022— 30.0 
TOTAL CORPORATE BOND SECURITIES
(Cost $— and $1,265.4)
$ $1,268.3 
43

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

MUNICIPAL BOND SECURITIES—0.0% and 0.1%
PrincipalFair Value at
IssuerCoupon Rate
Credit Rating(8)
Maturity
Date
September 30, 2020December 31, 2019
20202019
(Unaudited)
$— $0.7 Broward County Florida Airport System Revenue1.844%A+10/1/2020$— $0.6 
— 0.6 Broward County Florida Airport System Revenue1.874%A+10/1/2021— 0.5 
— 0.6 Broward County Florida Airport System Revenue1.936%A+10/1/2022— 0.6 
— 2.0 California State Health Facilities Financing Authority1.896%AA-6/1/2021— 2.0 
— 1.0 California State Health Facilities Financing Authority1.893%AA-6/1/2022— 1.0 
— 1.3 Colorado State Health Facilities Authority HOS2.075%A+11/1/2020— 1.2 
— 0.8 Colorado State Health Facilities Authority HOS2.185%A+11/1/2021— 0.8 
— 1.1 Colorado State Health Facilities Authority HOS2.237%A+11/1/2022— 1.1 
— 0.8 Florida State Municipal Power Agency1.966%A210/1/2020— 0.8 
— 1.1 Florida State Municipal Power Agency1.986%A210/1/2021— 1.2 
— 1.0 Florida State Municipal Power Agency2.064%A210/1/2022— 1.0 
— 0.6 Hamilton County Ohio Healthcare Facilities2.135%AA6/1/2020— 0.6 
— 0.9 Harris County Texas Cultural Education Facilities2.015%AA-5/15/2020— 0.9 
— 1.3 Harris County Texas Cultural Education Facilities2.065%AA-5/15/2021— 1.3 
— 1.3 Harris County Texas Cultural Education Facilities2.102%AA-5/15/2022— 1.3 
— 0.5 Indiana State Finance Authority2.242%AA-3/1/2020— 0.5 
— 1.1 Lansing Michigan Board of Water and Light Utility System1.952%AA-7/1/2022— 1.2 
— 7.1 Massachusetts State Water Resources1.661%AA+8/1/2020— 7.1 
— 1.2 Massachusetts State Water Resources1.702%AA+8/1/2021— 1.2 
— 2.9 Massachusetts State Water Resources1.734%AA+8/1/2022— 2.9 
— 0.3 Matanuska-Susitna Borough Alaska2.016%AA+3/1/2023— 0.3 
— 0.5 Midland County Texas Fresh Water Supply1.872%AA-9/15/2021— 0.5 
— 0.5 Midland County Texas Fresh Water Supply1.910%AA-9/15/2022— 0.5 
— 0.2 Park Creek Metropolitan District Revenue2.292%AA12/1/2022— 0.2 
— 0.2 Stockton California Public Financing Authority1.942%AA10/1/2020— 0.2 
— 0.2 Stockton California Public Financing Authority2.048%AA10/1/2021— 0.2 
— 0.1 Stockton California Public Financing Authority2.145%AA10/1/2022— 0.1 
— 0.7 Texas State University System Revenue Finance1.760%Aa23/15/2020— 0.7 
44

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

PrincipalFair Value at
IssuerCoupon Rate
Credit Rating(8)
Maturity
Date
September 30, 2020December 31, 2019
20202019
(Unaudited)
$— $0.5 Texas State University System Revenue Finance1.810%Aa23/15/2021$— $0.5 
— 1.7 Texas State University System Revenue Finance1.839%Aa23/15/2022— 1.7 
— 0.5 University of Akron1.976%A11/1/2021— 0.5 
TOTAL MUNICIPAL BOND SECURITIES
(Cost $— and $33.3)
$ $33.2 
TOTAL OTHER MARKETABLE SECURITIES
     (Cost $690.0 and $4,144.7)
$689.9 $4,150.2 
TOTAL MARKETABLE SECURITIES
     (Cost $1,324.7 and $4,830.7)
$1,352.1 $4,975.9 
LOANS RECEIVABLE—5.7% and 5.0%
BorrowerProperty Type
Interest Rate(6)
Maturity DateFair Value at
PrincipalSeptember 30, 2020December 31, 2019
20202019
(Unaudited)
$— $6.3 DJM Capital Partners MezzanineRetail5.00%3/9/2020$— $6.3 
54.1 53.8 SCG Oakland PortfolioOffice4.25% + LIBOR3/1/202154.1 53.8 
— 20.0 Crest at Las Colinas Station MezzanineApartments5.11% + LIBOR5/10/2021— 20.0 
89.5 87.5 311 South Wacker MezzanineOffice4.70% + LIBOR6/7/202186.0 86.8 
60.0 60.0 River North Point Junior MezzanineOffice4.30% + LIBOR7/9/202159.0 60.0 
76.1 92.2 Blackstone RioCan Retail Portfolio MezzanineRetail4.65% + LIBOR7/9/202173.7 92.2 
60.0 60.0 SoNo Collection MezzanineRetail6.75% + LIBOR8/6/202160.0 60.0 
124.7 128.6 Project Glacier MezzanineIndustrial4.40% + LIBOR10/9/2021124.7 128.6 
15.6 14.7 Liberty Park MezzanineOffice6.08%11/9/202115.6 14.7 
125.0 125.0 State Street Financial Center MezzanineOffice0.06511/10/2021124.6 124.4 
20.0 20.0 Modera Observatory Park MezzanineApartments4.34% + LIBOR6/10/202219.6 20.0 
16.9 16.2 San Diego Office Portfolio MezzanineOffice2.45% + LIBOR8/9/202215.8 16.1 
50.7 48.2 San Diego Office Portfolio Senior LoanOffice2.45% + LIBOR8/9/202251.2 48.2 
20.8 20.8 Rosemont Towson MezzanineApartments4.15% + LIBOR9/9/202220.6 20.8 
33.8 33.8 Colony New England Hotel Portfolio MezzanineHotel2.80% + LIBOR11/9/202230.5 33.8 
101.4 101.4 Colony New England Hotel Portfolio Senior LoanHotel2.80% + LIBOR11/9/202299.4 101.4 
33.9 33.9 Exo Apartments MezzanineApartments2.30% + LIBOR1/9/202331.8 33.9 
101.6 101.6 Exo Apartments Senior LoanApartments2.30% + LIBOR1/9/2023103.1 101.6 
13.3 — Five Oak MezzanineOffice2.35% + LIBOR4/9/202313.3 — 
29.8 27.5 1330 Broadway MezzanineOffice5.01% + LIBOR8/10/202329.3 27.5 
82.0 82.0 Great Value Storage Portfolio MezzanineStorage7.88%12/6/202373.8 82.0 
85.0 85.0 Park Avenue Tower MezzanineOffice4.35% + LIBOR3/9/202485.0 85.0 
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TIAA REAL ESTATE ACCOUNT
CONSOLIDATED SCHEDULES OF INVESTMENTS
(Dollar values shown in millions)

BorrowerProperty Type
Interest Rate(6)
Maturity DateFair Value at
PrincipalSeptember 30, 2020December 31, 2019
20202019
$70.7 $71.0 BREP VIII Industrial Loan Facility MezzanineIndustrial5.00% + LIBOR3/9/2026$70.7 $71.0 
20.0 20.0 Aspen Lake Office Portfolio MezzanineOffice8.25%3/10/202820.0 20.0 
95.0 95.0 Merritt on the River Office Portfolio MezzanineOffice8.00%8/1/202887.0 95.0 
100.0 100.0 Charles River Plaza North MezzanineOffice6.08%4/6/2029100.0 100.0 
53.0 — Sol y LunaApartments6.55%1/6/203051.4 — 
TOTAL LOANS RECEIVABLE
(Cost $1,533.0 and $1,504.5)
$1,500.2 $1,503.1 
LOANS RECEIVABLE WITH RELATED PARTIES—0.3% and 0.2%
Related PartyProperty Type
Interest Rate(6)
Maturity DateFair Value at
PrincipalSeptember 30, 2020December 31, 2019
20202019
(Unaudited)
$36.5 $36.5 MRA Hub 34 Holding, LLCOffice2.50% + LIBOR9/1/2022$36.5 $36.5 
32.8 32.8 THP Student Housing, LLCApartment3.20%9/1/202432.9 32.5 
TOTAL LOANS RECEIVABLE WITH RELATED PARTIES
    (Cost $69.3 and $69.3)
$69.4 $69.0 
TOTAL INVESTMENTS
    (Cost $22,292.3 and $25,697.4)
$25,984.7 $29,899.0 
(1)The investment has a loan payable outstanding, as indicated in Note 9Loans Payable.
(2)The fair value reflects the Account’s interest in the joint venture and is net of debt.
(3)Properties within this investment are located throughout the United States.
(4)For zero-coupon securities issued at a discount or premium to par, yield represents the annualized yield to maturity. For all other securities, the coupon rate is presented.
(5)A portion of this investment consists of land currently under development.
(6)Fixed interest rate loans are represented with a single rate. Variable interest rate loans are presented with their base spread and the corresponding index rate. All variable interest loans currently held by the Account use the one month LIBOR rate on U.S. dollar deposits as the index rate, as published by ICE Benchmark Administration Limited.
(7)All or a portion of these securities are out on loan. The aggregate value of securities on loan September 30, 2020 and December 31, 2019 were $2.1 million and $25.2 million, respectively.
(8)Credit ratings are sourced from S&P Global Ratings ("S&P"), Moody's Investors Services or Fitch Ratings, Inc. Ratings for sold bonds reflect the credit rating as of the last reporting period.
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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Account’s financial condition and results of operations should be read together with the Consolidated Financial Statements and notes contained in this report and with consideration to the sub-section entitled “Forward-Looking Statements,” which begins below, and the section of the Account’s Annual Report on Form 10-K for the year ended December 31, 2019 (the “Form 10-K”) entitled “Item 1A. Risk Factors.” The past performance of the Account is not indicative of future results.
Forward-looking Statements
Some statements in this Form 10-Q which are not historical facts may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about management’s expectations, beliefs, intentions or strategies for the future, include the assumptions and beliefs underlying these forward-looking statements, and are based on current expectations, estimates and projections about the real estate industry, domestic and global economic conditions, including conditions in the credit and capital markets, the sectors, and markets in which the Account invests and operates, and the transactions described in this Form 10-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:
General Risks of Acquiring and Owning Real Property. The risks associated with acquiring and owning real property, including general economic and real estate market conditions, the availability of, and economic cost associated with, financing the Account’s properties, the risk that the Account’s properties become too concentrated (whether by geography, sector or by tenant mix), competition for acquiring real estate properties, leasing risk (including tenant defaults) and the risk of uninsured losses at properties (including due to terrorism, natural disasters, and acts of violence);
COVID-19 Risks. In response to the ongoing COVID-19 pandemic, governmental authorities throughout the world, including the United States, have continued to take significant measures to inhibit the spread of the disease. Such ongoing measures include 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. While some of these restrictions were eased in the third quarter of 2020, many such restrictions continue to remain and have had an adverse impact on economic and market conditions across the United States during the third quarter. It is possible that public health officials and governmental authorities in the markets in which we own properties may impose additional restrictions, or slow the lifting of existing restrictions, in an effort to further slow the spread of the COVID-19 pandemic or address any rise in infection rates. Such officials may also relax or revoke existing restrictions too quickly, which could, in either case, exacerbate the continued severity of adverse impacts of the pandemic on the economy. The COVID-19 pandemic, including these responsive measures, will likely have an adverse effect on the Account. For example, the negative impact of the COVID-19 pandemic on our tenants may include an immediate reduction in cash flow available to pay rent under our leases which, in turn, could adversely affect our own liquidity, and there can be no guarantee that additional liquidity will be readily available or available on favorable terms and could result in the Account exercising the liquidity guarantee. Moreover, the market volatility and economic uncertainty surrounding the COVID-19 pandemic may negatively impact our liquid investments, such as those in real estate investment trusts ("REIT") securities and mortgage backed securities ("MBS"). These and other consequences of the COVID-19 pandemic are expected to have an adverse effect on the Account’s business and results of operations;
General Risks of Selling Real Estate Investments. The risk that the sales price of a property might differ, perhaps significantly, from its estimated or appraised value, leading to losses or reduced profits to the Account, the risk that the Account might not be able to sell a property at a particular time for a price which management believes represents its fair or full value, the risk of a lack of availability of financing (for potential purchasers of the Account’s properties), risks associated with disruptions in the credit and capital markets, and the risk that
47


the Account may be required to make significant expenditures before the Account is able to market and/or sell a property;
Valuation and Appraisal Risk. The risks associated with property valuations, including the fact that appraisals can be subjective in a number of respects and the fact that the Account’s appraisals are generally obtained on a quarterly basis and there may be periods in between appraisals of a property during which the value attributed to the property for purposes of the Account’s daily accumulation unit value may be more or less than the actual realizable value of the property;
Borrowing Risk. Risks associated with financing the Account’s properties, including the risk of default on loans secured by the Account’s properties (which could lead to foreclosure), the risk of default under unsecured lines of credit or credit facilities underwritten by third-party lenders, the risk associated with high loan-to-value ratios on the Account’s properties (including the fact that the Account may have limited, or zero net value in such a property), the risk that significant sums of cash could be required to make principal and interest payments on the loans and the risk that the Account may not have the ability to obtain financing or refinancing on favorable terms (or at all), which may be aggravated by general disruptions in credit and capital markets;
Investment and Cash Management Risks Associated with Participant Transactions. Investment risk associated with participant transactions, in particular that (i) significant net participant transfers out of the Account may impair our ability to pursue or consummate new investment opportunities that are otherwise attractive to the Account and/ or may result in sales of real estate-related assets to generate liquidity, (ii) significant net participant transfers into the Account may result, on a temporary basis, in our cash holdings and/or holdings in liquid non-real estate-related investments exceeding our long-term targeted holding levels and (iii) high levels of cash and liquid non-real estate-related investments in the Account during times of appreciating real estate values can impair the Account’s overall return;
Joint Venture Investment Risk. The risks associated with joint ventures and real estate funds, including the risk that a co-venturer or fund manager may have interests or goals inconsistent with that of the Account, the risk that a co-venturer or fund manager may have financial difficulties, and the risk that the Account may have limited rights with respect to operation of the property and transfer of the Account’s interest;
Real Estate Regulatory Risk. Uncertainties associated with environmental liability and regulations and other governmental regulatory matters such as zoning laws, rent control laws, and property taxes;
Environmental Risk. The risks that the Account may be liable for damage to the environment or injury to individuals caused by hazardous substances used or found on its properties. Federal and state environmental laws may also impose restrictions on the manner in which a property may be used, impose significant costs for environmental clean-up relating to certain real property investments (including remediating contaminated property), and require the Account to acquire third-party insurance related to environmental risks, all of which could adversely impact the Account’s investment returns;
Uninsurable Loss Risk. Certain catastrophic losses (e.g., from earthquakes, wars, terrorist acts, nuclear accidents, hurricanes, tsunamis, high winds, wildfires, inland or coastal floods, rising sea levels or environmental or industrial hazards or accidents) may be uninsurable or so expensive to insure against that it is economically disadvantageous for the Account to buy insurance to cover such losses. In such an event, the catastrophic losses could adversely impact the Account’s investment returns;
Physical Climate Change Related Financial Risk. Many of the Account’s commercial real estate assets are located within geographical regions in the United States and foreign jurisdictions that currently are, and in the future will continue to be, adversely impacted by increasingly severe and adverse weather conditions across the globe, including, among others, earthquakes, hurricanes, tsunamis, high winds, wildfires, inland or coastal flooding, and rising sea levels. Any resulting losses from such climate-related changes and hazards could adversely impact the Account’s investment returns;
Global Economic Risks. National and regional economies and financial markets have become increasingly interconnected, which has increased the probability that conditions in one country, region or market might adversely impact issuers in a different country, region or market. Events such as war, terrorism, natural and environmental disasters and the spread of infectious illnesses, pandemics or other public health emergencies may adversely affect the global economy and the securities, local commercial real estate markets and issuers in which the Account invests. Recent examples of such events include the COVID-19 pandemic that was first
48


detected in Wuhan, China in December 2019 and has since spread worldwide, resulting in government imposed shutdowns across the globe. These events have and could continue to reduce consumer demand and economic output, result in market closure, travel restrictions or quarantines, and generally have a significant impact on the economy, and, as a result, have an adverse effect on the Account’s business;
ESG Criteria Risk. The risks that the Account’s utilization of environmental, social and governance ("ESG") criteria in its commercial real estate underwriting may result in the Account foregoing some commercial real estate market opportunities that could be beneficial to the Account. Consequently, the Account may underperform other investment vehicles that do not utilize such ESG criteria in selecting portfolio properties;
Foreign Real Property Investment Risk. Foreign commercial real properties, foreign real estate loans, and foreign debt investments may experience unique risks such as changes in currency exchange rates, imposition of market controls or currency exchange controls, seizure, expropriation or nationalization of assets, political, social or diplomatic events or unrest, regulatory and taxation risks and risks associated with enforcing judgments in foreign countries that could cause the Account to lose money. The risks described above often increase in countries with emerging markets;
Risk of Investing in REIT Securities. Investments in REIT securities are subject to many of the same general risks associated with direct real property ownership. In particular, equity REITs may be affected by changes in the value of the underlying properties owned by the entity, while mortgage REITs may be affected by the quality of any credit extended. In addition to these risks, because REIT investments are securities and generally publicly traded, they may be exposed to market risk and potentially significant price volatility due to changing conditions in the financial markets and, in particular, changes in overall interest rates, regardless of the value of the underlying real estate such REIT may own;
Risks of Mortgage-Backed Securities. The Account from time to time has invested in mortgage-backed securities and may in the future invest in such securities. Mortgage-backed securities, such as commercial mortgage-backed securities ("CMBS") and residential mortgage-backed securities ("RMBS"), are subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. The underlying mortgage loans may experience defaults, are subject to prepayment risk or extension risk and are highly sensitive to changes in interest rates, liquidity of the secondary market, economic conditions impacting financial institutions and the credit markets generally, and changes in governmental policies impacting Fannie Mae and Freddie Mac and/or U.S. Government programs related to mortgages that may be implemented in the future;
Risks of Investing in Mortgage Loans and Related Investments. Because the Account’s investment strategy includes investments in mortgage loans (i.e., the Account serving as lender), the Account will be subject to the risks inherent in making mortgage loans, including, among others, (i) borrower default, bankruptcy and insolvency that results in the Account being unable to recover some or all of its original investment, (ii) mechanic’s or tax liens that may have priority over the Account’s security interest, (iii) a deterioration in the financial condition of tenants, (iv) changes in interest rates for the Account’s variable-rate mortgage loans and other debt instruments that may increase or decrease the investment’s yield, (v) the risk that borrowers pay off their mortgage loans earlier or later than expected resulting in a decline in income, and (vii) the costs of hedging strategies for domestic and foreign loans or securities that may increase the Account’s transactions costs and reduce its performance;
Risks of U.S. Government and Government Agency Securities.Risks associated with investment securities issued by U.S. Government agencies and U.S. Government-sponsored entities, including the risk that the issuer may not have their securities backed by the full faith and credit of the U.S. Government, which could adversely affect the pricing and value of such securities. Such securities are also subject market movements, regulatory changes, changes in political or economic conditions or downgrades or threatened downgrades of the credit rating for U.S. Government obligations generally that could negatively impact the value of the securities and the Account’s ability to dispose of the security at a favorable time. U.S. Government securities generally present limited credit risk compared to other types of debt securities but are not free from risk;
Risks of Corporate Obligations. The Account’s investment in corporate obligations (such as commercial paper and other types of corporate debt) may be subject to general dislocations in the finance or credit markets, fluctuations in transaction activity that could impair the Account’s ability to dispose of a corporate debt security
49


at a favorable time, and the risk that the credit quality of the corporate issuer will deteriorate, any of which could have a negative impact on the value of the investment; and
Risks of Liquid, Fixed-Income Investments and Other Securities. Risks associated with investments in liquid, fixed-income investments and real estate-related liquid assets (which could include, from time to time, registered or unregistered REIT securities and CMBS), and non-real estate-related liquid assets, including:
Issuer Risk (Financial risk)-The risk that the issuer will not be able to pay principal and interest when due or that the issuer’s earnings will fall;
Credit Risk (a type of Issuer Risk)-The risk that the issuer of fixed-income investments may not be able or willing to meet interest or principal payments when the payments become due;
Credit Spread Risk-The risk that credit spreads (i.e., the difference in yield between securities that is due to differences in each security’s respective credit quality) may increase when market participants believe that bonds or other fixed-income securities generally have a greater risk of default, which could result in a decline in the market values of the Account’s debt or other fixed-income securities;
Market Volatility, Liquidity and Valuation Risk (types of Market Risk)-The risk that the changing conditions in financial markets may cause the Account’s investments to experience price volatility;
Interest Rate Risk (a type of Market Risk)-The risk that interest rate volatility may affect the Account’s current income from an investment or the pricing of that investment. In general, changing interest rates could have unpredictable effects on the markets and may expose markets to heightened volatility;
Downgrade Risk-The risk that securities are subsequently downgraded should TIAA and/or rating agencies believe the issuer’s business outlook or creditworthiness has deteriorated;
Income Volatility Risk-The risk that the level of current income from a portfolio of fixed-income investments may decline in certain interest rate environments;
Call Risk-The risk that, during periods of falling interest rates, an issuer may call (or repay) a fixed-income security prior to maturity, resulting in a decline in the Account’s income;
Prepayment Risk-The risk that, during periods of falling interest rates, borrowers may pay off their loans sooner than expected, forcing the Account to reinvest the unanticipated proceeds at lower interest rates and resulting in a decline in income;
Extension Risk-The risk that, during periods of rising interest rates, borrowers may pay off their mortgage and other loans later than expected, preventing the Account from reinvesting principal proceeds at higher interest rates and resulting in less income than potentially available;
U.S. Government Securities Risk-Securities issued by the U.S. Government or one of its agencies or instrumentalities may receive varying levels of support from the U.S. Government, which could affect the Account’s ability to recover should they default. To the extent the Account invests significantly in securities issued or guaranteed by the U.S. Government or its agencies or instrumentalities, any market movements, regulatory changes or changes in political or economic conditions that affect the securities of the U.S. Government or its agencies or instrumentalities in which the Account invests may negatively impact the Account’s performance;
State and Municipal Investment Risk-The risk that events affecting states and municipalities, including severe financial difficulties and continued budget deficits, may adversely impact the Account’s investments and its performance;
Foreign Securities Risk-Foreign securities investments may experience unique risks such as changes in currency exchange rates, imposition of market controls or currency exchange controls, seizure, expropriation or nationalization of assets, and political, social or diplomatic events or unrest that could cause the Account to lose money. The risks described above often increase in countries with emerging markets;
Emerging and Frontier Markets Risk-The risk of foreign investment often increases in countries with emerging markets. For example, these countries may have more unstable governments than developed countries, and their economies may be based on only a few industries. Because their financial markets may be very small, share prices of financial instruments in emerging market countries may be volatile and difficult to determine. Financial instruments of issuers in these countries may be less liquid than
50


those of issuers in more developed countries. In addition, foreign investments are subject to a variety of special restrictions in many emerging market countries. Frontier markets are those emerging markets that are considered to be among the smallest, least mature and least liquid, and as a result, the risks of investing in emerging markets are magnified in frontier markets;
Fixed-Income Foreign Investment Risk-Investment in fixed-income securities or financial instruments of foreign issuers involves increased risks due to adverse issuer, political, regulatory, currency, market or economic developments. These developments may impact the ability of a foreign debt issuer to make timely and ultimate payments on its debt obligations to the Account or impair the Account’s ability to enforce its rights against the foreign debt issuer. These risks are heightened in emerging or developing markets. Foreign fixed-income investments may also be less liquid and more difficult to value than fixed-income investments in U.S. issuers;
Sovereign Debt Risk-The risk that the issuer of non-U.S. sovereign debt or the governmental authorities that control the repayment of such debt may be unable or unwilling, due to social, political or economic factors, to repay principal or interest when due, resulting in losses to the Account;
Supranational Debt Risk-The risk that the issuer of multinational or supranational foreign debt (e.g., the European Union or the International Monetary Fund (IMF)) that controls the repayment of such debt may be unable or unwilling, due to social, political or economic factors such as the sudden or gradual disintegration of the multinational or supranational organization, to repay principal or interest when due, resulting in losses to the Account;
Active Management Risk-The risk that the Account’s investment strategy, investment selection or trading execution may cause the Account to underperform relative to a comparison index or accounts or issuers with similar investment objectives;
Currency Risk-The risk that foreign (non-U.S.) currencies may decline in value relative to the U.S. dollar and adversely affect the value of the Account’s investments in foreign currencies, securities denominated in foreign currencies or derivative instruments that provide exposure to foreign currencies;
Derivatives Risk-The risks associated with investing in derivatives and other types of hedging strategies may be different and greater than the risks associated with directly investing in the underlying securities and other instruments. The Account may use futures, options, or forwards, and the Account may also use more complex derivatives such as swaps that might present liquidity, credit and counterparty risk. When investing in derivatives, the Account may lose more than the principal amount invested;
Currency Management Strategies Risk-Currency management strategies, including the use of forward currency contracts and other derivatives, may substantially change the Account’s exposure to currencies and currency exchange rates and could result in losses to the Account if currencies do not perform as anticipated;
Counterparty and Third Party Risk-The Account’s transactions involving a counterparty to a derivative or other instrument, or to a third party responsible for servicing the instrument, are subject to the credit risk of the counterparty or third party, and to the counterparty’s or third party’s ability to perform in accordance with the terms of the transaction;
Regulation S and Rule 144A Securities Risk-The risk that SEC Regulation S and Rule 144A securities may be less liquid, and have less disclosure and investor protections, than publicly traded securities. Such securities may involve a high degree of business and financial risk and may result in losses to the Account;
Illiquid Investments Risk-The risk that illiquid investments may be difficult for the Account to sell for the value at which they are carried, if at all, or at any price within the desired time frame; and
Deposit/Money Market Risk-The risk that the Account could experience losses if banks fail.
More detailed discussions of certain of these risk factors are contained in the section of the Form 10-K entitled “Item 1A. Risk Factors” and "Part II, Item 1A, Risk Factors" in this Report and also in the section below entitled “Quantitative and Qualitative Disclosures About Market Risk.” These risks could cause actual results to differ materially from historical experience or management’s present expectations.
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Caution should be taken not to place undue reliance on management’s forward-looking statements, which represent management’s views only as of the date that this report is filed. Neither management nor the Account undertake any obligation to update publicly or revise any forward-looking statement, whether as a result of new information, changed assumptions, future events or otherwise.
Commercial real estate market statistics discussed in this section are obtained by the Account from sources that management considers reliable, but some of the data are preliminary for the period ended September 30, 2020 and may be subsequently revised. Prior period data may have been adjusted to reflect updated calculations. Investors should not rely exclusively on the data presented below in forming a judgment regarding the current or prospective performance of the commercial real estate market generally.
ABOUT THE TIAA REAL ESTATE ACCOUNT
The Account was established, under the laws of New York, in February 1995 as a separate account of TIAA and interests in the Account were first offered to eligible participants on October 2, 1995. The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.
Investment Objective and Strategy
The Account seeks to generate favorable total returns primarily through the rental income and appreciation of a diversified portfolio of directly held, private real estate investments and real estate-related investments, while offering investors guaranteed, daily liquidity.
Real Estate-Related Investments. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. These investments may consist of:
Direct ownership interests in domestic and foreign real estate;
Direct ownership of real estate through interests in joint ventures; or
Indirect interests in real estate through real estate-related securities, such as:
public and/or privately placed, domestic and foreign, registered and unregistered equity investments in REITs, which investments may consist of registered or unregistered common or preferred stock interests;
private real estate limited partnerships and limited liability companies (collectively, "real estate funds");
investments in equity or debt securities of domestic and foreign companies whose operations involve real estate (i.e., that primarily own, develop or manage real estate) which may not be REITs; and
domestic or foreign loans, including conventional commercial mortgage loans, participating mortgage loans, secured domestic and foreign (including U.K.) mezzanine loans, subordinated loans and collateralized mortgage obligations, including CMBS and other similar investments.
The Account’s principal investment strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail and multi-family properties. The Account is targeted to hold between 65% and 85% of the Account’s net assets in such direct ownership interests.
In addition, the Account is authorized to hold up to 25% of its net assets in liquid real estate-related securities, including publicly traded REITs and CMBS. Management intends that the Account will not hold more than 10% of net assets in such securities on a long-term basis. As of September 30, 2020, publicly traded REIT securities comprised approximately 2.8% of the Account’s net assets, and the Account held no CMBS as of such date.
In making commercial real estate investments within the Account, TIAA seeks to make investments that are suitable from a financial perspective and whose activities are generally consistent with industry recognized ESG criteria. The Account intends to promote awareness of these criteria to its joint venture partners, vendors and other stakeholders in connection with portfolio related activity involving commercial real estate transactions. TIAA
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believes awareness, and, as appropriate, implementation of ESG criteria in commercial real estate holdings is beneficial to total long-term returns for the Account. In its evaluation of commercial real estate opportunities, the Account will take ESG considerations into account as part of the financial assessment of a commercial real estate portfolio asset, and not to achieve a desired outcome or as an investment qualification or screen. Ultimately, the Account will make an investment decision that incorporates ESG criteria only to the extent that the criteria is reasonably expected to enhance the ability to achieve desired returns for the Account.
Liquid, Fixed-Income Investments. The Account will invest the remaining portion of its assets (targeted to be between 15% and 25% of its net assets) in the following types of liquid, fixed income investments;
U.S. Treasury or U.S. Government agency securities;
Intermediate-term or long-term government related instruments, such as bond or other fixed-income securities issued by U.S. Government agencies, U.S. States or municipalities or U.S. Government-sponsored entities as well as foreign governments and their agencies (including those in emerging markets) and supranational or multinational organizations (e.g., the European Union);
Intermediate-term or long-term non-government related instruments, such as corporate debt securities or asset-backed securities (“ABS”) issued by domestic or foreign entities, including domestic or foreign mezzanine or other debt, MBS, RMBS, debt securities of foreign governments, and collateralized debt (“CDO”), collateralized bond (“CBO”) and collateralized loan (“CLO”) obligations, but only if such non-government related instruments are investment-grade securities;
Money market instruments and other cash equivalents. These will usually be high-quality, short-term debt instruments, including U.S. Government or government agency securities, commercial paper, certificates of deposit, bankers’ acceptances, repurchase agreements, interest-bearing time deposits, and corporate debt securities; and
To a limited extent, privately issued (or non-publicly traded) debt securities, including Rule 144A securities, issued by domestic and foreign companies that do not primarily own or manage real estate, but only if such domestic and foreign privately issued debt securities are investment-grade securities.
The Account’s liquid, fixed-income investments may comprise less than 15% (and possibly less than 10%) of its assets (on a net basis), especially during and immediately following periods of significant net participant outflows. In addition, the Account, from time to time and on a temporary basis, may hold in excess of 25% of its net assets in liquid, fixed-income investments, particularly during times of significant inflows into the Account and/or a lack of attractive real estate-related investments available in the market.
Liquid Securities Generally. Primarily due to management’s need to manage fluctuations in cash flows, in particular during and immediately following periods of significant participant net transfer activity into or out of the Account, the Account may, on a temporary basis (i) exceed the upper end of its targeted holdings (currently 35% of the Account’s net assets) in liquid securities of all types, including both publicly traded non-real estate-related liquid investments and liquid real estate-related securities, such as REITs, ABS, RMBS, CMBS and MBS, or (ii) be below the low end of its targeted holdings in such liquid securities (currently 15% of the Account’s net assets).
The portion of the Account’s net assets invested in liquid investments of all types may exceed the upper end of its target, for example, if (i) the Account receives a large inflow of money in a short period of time, in particular due to significant participant transfer activity into the Account, (ii) the Account receives significant proceeds from sales or financings of direct real estate assets, (iii) there is a lack of attractive direct real estate investments available on the market, and/or (iv) the Account anticipates more near-term cash needs, including to acquire or improve direct real estate investments, pay expenses or repay indebtedness.
Foreign Investments. The Account may also make foreign real estate and foreign real estate-related investments and foreign liquid, fixed-income investments. Under the Account’s investment guidelines, investments in direct foreign real estate and real estate loans, together with foreign real estate-related securities and foreign liquid, fixed-income investments may not comprise more than 25% of the Account’s net assets. However, management doesn't intend such foreign investments, in the aggregate, to exceed 10% of the Account's net assets. As of September 30, 2020, the Account did not hold any foreign real estate investments.
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In managing any domestic or foreign mezzanine debt or other domestic or foreign loans or securities, the Account may enter into certain derivatives transactions (including forward currency contracts and swaps, futures contracts, put and call options and other hedging transactions) in order to hedge against the risks of exchange rate uncertainties, interest rate uncertainties and foreign currency or market fluctuations impacting the Account’s domestic or foreign investments. The Account does not intend to speculate in such transactions.
THIRD QUARTER 2020 U.S. ECONOMIC AND COMMERCIAL REAL ESTATE OVERVIEW
The Account invests primarily in high-quality, core real estate in order to meet its investment objective of obtaining favorable long-term returns through rental income and the appreciation of its real estate holdings.
Economic Overview and Outlook
Key Macro Economic Indicators*ActualsForecast
2Q203Q2020202021
Economy(1)
Gross Domestic Product ("GDP")(31.4)%33.1%(3.9)%3.8%
Employment Growth (Contraction) (3)
(13,281)3,926(703)300
Unemployment Rate11.1%7.9%9.1%7.6%
Interest Rates(2)
10 Year Treasury0.7%0.7%0.8%1.1%
Sources: Bloomberg, BEA, Bureau of Labor Statistics, Federal Reserve and Moody’s Analytics
*Data subject to revision
(1)GDP growth rates are annual rates. Quarterly unemployment rates are the reported value for the final month of the quarter while annual values represent a twelve-month average.
(2)Treasury rates are an average over the stated period.
(3)Values presented in thousands.
In the aftermath of the worst economic quarter in U.S. history, the third quarter of 2020 was a story of recovery. Most U.S. states adopted a phased approach in their attempt to minimize the spread of the virus in the second and third quarters of 2020, allowing sectors with lower comparative risk to reopen first. The phased approach has slowed the rate of spread among the population, reducing the risk of a return to full economic shutdown, but it has also served to limit the economic recovery. Most states continue to have strict occupancy limits, restrictions on large gatherings, and mask mandates are frequently required when congregating indoors.
Multiple vaccine candidates currently under development provide some optimism that the spread of the virus can be better mitigated in 2021 if one or more of these candidates prove successful. Moreover, more experience with the virus has standardized treatments and improved patient outcomes. The continuation of the U.S. economic recovery will be highly dependent on the success or failure of these efforts. Restrictions on occupancy as previously described are likely to persist until the spread of the virus is controlled, or the severity of its symptoms more effectively treated. In addition to the uncertainty of the extent of the COVID-19 pandemic's longevity, the U.S. presidential election in November 2020 is an additional variable that will weigh heavily on the fourth quarter of 2020.
The U.S. unemployment rate rebounded consistent with the reopening of the U.S. economy, ending at 7.9% for the third quarter. Certain sectors such as hospitality, tourism and certain retail remain significantly challenged by the pandemic and will continue to be such in the coming months. Continued improvement in the unemployment rate will be contingent on the reopening phases continuing to progress. The economic impact of the COVID-19 pandemic has been especially pronounced on lower-income families. Elementary and secondary students returning to the classroom in some states is a positive development, as lower-income workers may have limited alternative options in regards to childcare. The U.S. Congress may pass additional stimulus to assist American workers, but such stimulus will not occur until after the presidential election. The Federal Reserve has maintained that interest rates are highly unlikely to increase in 2021, and are likely to stay at their current level through 2023.
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Real Estate Market Conditions and Outlook
Since February 2020, commercial real estate prices have fallen 10%, as calculated by the Green Street Advisor Commercial Property Price Index (“CPPI"). Declines have been uneven across sectors due to the disproportionate impact of the COVID-19 pandemic. Sectors highly dependent on social interaction, such as retail, hospitality, and amusements have been most severely impacted, as government restrictions paired with consumer caution has caused demand to sharply decline. Real estate transaction volume is down approximately 36% year-to-date when compared to 2019. Transactions in 2020 have been concentrated in two sectors which comprise more than 60% of total volume, apartments and industrial.
The Account continues to benefit from its ample liquidity resources, which allow the Account to weather economic downturns without liquidating properties at suboptimal pricing.

tiaareal-20200930_g1.jpg
During the second and third quarters of 2020, the Account received approximately 1,050 requests from tenants for rent relief as a result of the COVID-19 pandemic, with an aggregate exposure of $47.8 million of rental income. Relief requests have been almost exclusively rent deferrals, with rent postponed for a brief period (i.e., less than six months) and then repaid over the remaining duration of the lease. Requests are evaluated on a case-by-case basis, with the likelihood of future collection of the deferred balance a key consideration during the evaluation process. As of September 30, 2020, the Account did not have material exposure to tenant defaults or rent concessions. The Account did record modest increases to its allowances for uncollectible rent in the third quarter, most notably among properties within the retail sector. Refer to the Account's Results of Operations for additional commentary in regards to these increases.







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Data for the Account’s top five markets in terms of market value as of September 30, 2020 are provided below. The five markets presented below represent 43.1% of the Account’s total real estate portfolio. Across all markets, the Account’s properties are 90.5% leased.
Top 5 Metro Areas by Fair Market Value(1)
Account % Leased Fair Value Weighted(2)
Number of Property Investments
Metro Area Fair Value as a % of Total RE Portfolio(3)
Metro Area Fair Value as a % of Total Investments
Washington-Arlington-Alexandria, DC-VA-MD-WV82.7%1711.1%9.7%
Los Angeles-Long Beach-Anaheim, CA94.1%1610.2%8.9%
Boston-Cambridge-Newton, MA-NH89.0%87.6%6.6%
New York-Newark-Jersey City, NY-NJ-PA78.1%127.6%6.6%
San Francisco-Oakland-Hayward, CA91.2%106.6%5.8%
(1)The table above has been standardized to depict metropolitan statistical area ("MSA") definitions. Prior iterations of this table presented metropolitan divisions, which represent a subset of the larger MSA.
(2)Weighted by fair value, which differs from the calculations provided for market comparisons to CBRE-EA data and are used here to reflect the fair value of the Account’s monetary investments in those markets.
(3)Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.
Office
The impact of the COVID-19 pandemic remains an open question on the future of the office sector. While many states have opened sufficiently to allow employees back into physical offices, many companies are moving cautiously in returning employees to the office. Companies are continuing to invest in telecommuting options as a result of the pandemic, and the investments made in infrastructure to facilitate remote work (e.g., new hardware, additional data storage) will persist after the pandemic subsides. Companies may require less space due to a reduced on-site employee presence, but companies may also require additional space to better facilitate open-office concepts that incorporate distancing between employees. Lessors that are positioned to provide flexible options to lessees will be best suited to navigate the post-pandemic leasing environment. Moreover, additional capital investment from lessors may be necessary to reposition office spaces to suit the changing needs of companies.
As of September 30, 2020, the Account's rents from office tenants were not materially affected, but the duration of the COVID-19 pandemic remains unknown. Tenants requesting rent relief have generally requested rent deferrals for a limited period of time (i.e., less than six months), with the unpaid rent to be paid over the duration of the remaining lease. If the severity of the COVID-19 pandemic persists throughout 2020 and into 2021, the likelihood that tenants may request additional rent deferrals, rent concessions or default increases. Additionally, if tenants vacate due to lease expirations, redeployment of the vacated space may be challenging in the near term due to unfavorable leasing conditions.
Vacancy nationwide increased from 13.0% in the second quarter of 2020 to 14.0% in the third quarter, as reported by CBRE-EA. New construction effectively stalled with the arrival of the COVID-19 pandemic, but the completion of construction already underway has continued to deliver new supply into a weak leasing environment. The new supply was the main driver behind the national vacancy increase. The vacancy rate of the Account’s office portfolio increased to 14.1% in the third quarter of 2020, as compared to 12.8% in the prior quarter, driven primarily by scheduled lease expirations, most notably in the Boston metro area. The above-average vacancy rate in the New York metro area is driven by two properties currently undergoing redevelopment to increase the long term value of the properties. The vacancy rate in the New York metro will remain elevated over the near term as legacy tenants fully vacate the properties and redevelopment efforts continue.

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Account Square
Foot Weighted
Average Vacancy
Market
Vacancy(2)
Top 5 Office Metropolitan Areas(1)
Total Sector
by Metro Area
($M)
% of Total
Investments
Q3 2020Q2 2020Q3 2020Q2 2020
Account / Nation14.1 %12.8 %14.0 %13.0 %
Washington-Arlington-Alexandria, DC-VA-MD-WV$1,491.3 5.7 %12.4 %12.8 %15.8 %15.2 %
Boston-Cambridge-Newton, MA-NH1,490.5 5.7 %12.7 %10.8 %10.4 %9.6 %
New York-Newark-Jersey City, NY-NJ-PA1,126.3 4.3 %36.3 %32.4 %10.6 %9.2 %
San Francisco-Oakland-Hayward, CA1,033.2 4.0 %4.3 %2.4 %10.1 %8.0 %
Los Angeles-Long Beach-Anaheim, CA821.6 3.2 %4.7 %4.7 %14.3 %12.9 %
(1)The table above has been standardized to depict metropolitan statistical area ("MSA") definitions. Prior iterations of this table presented metropolitan divisions, which represent a subset of the larger MSA.
(2)Source: CBRE-EA. Market vacancy is the percentage of space available for rent. Account vacancy is the square foot-weighted percentage of unleased space.
Industrial
The industrial sector continues to demonstrate resiliency through the COVID-19 pandemic. The pandemic has accelerated consumers' long-term shift to e-commerce, and this shift has allowed demand for industrial space to remain stable. When compared against the other three core real estate sectors, the industrial sector is best positioned to weather the economic uncertainty caused by the COVID-19 pandemic. Investors continue to view the sector favorably, as reflected in the outsized weighting of industrial assets in sales transactions closed in 2020.
As of September 30, 2020, the Account's rents from industrial tenants were not materially affected, but the duration of the COVID-19 pandemic remains unknown. Tenants requesting rent relief have generally requested rent deferrals for a limited period of time (i.e., less than six months), with the unpaid rent to be paid over the duration of the remaining lease. If the severity of the COVID-19 pandemic persists throughout 2020 and into 2021, the likelihood that tenants may request additional rent deferrals, rent concessions or default increases. Additionally, if tenants vacate due to lease expirations, redeployment of the vacated space may be challenging in the near term due to unfavorable leasing conditions, though demand for industrial space has been relatively steady throughout the pandemic.
The national industrial availability rate of 7.6% in the third quarter of 2020 was steady with the prior quarter as reported by CBRE-EA.Vacancies are highest in geographic locations with significant exposure to oil and gas (e.g,. Houston, Dallas). The average vacancy rate of the Account’s industrial properties increased to 9.1% in the third quarter of 2020 from 6.5% in the previous quarter, primarily driven by a scheduled lease expiration at a property in the Riverside-San Bernardino-Ontario metro area. The property is well positioned in the local market, and management expects to redeploy the space relatively quickly due to healthy demand.
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Account Square
Foot Weighted
Average Vacancy
Market
Vacancy(2)
Top 5 Industrial Metropolitan Areas(1)
Total Sector
by Metro Area
($M)
% of Total
Investments
Q3 2020Q2 2020Q3 2020Q2 2020
Account / Nation9.1 %6.5 %7.6 %7.6 %
Riverside-San Bernardino-Ontario, CA$1,011.1 3.9 %13.8 %0.0 %5.8 %6.0 %
Seattle-Tacoma-Bellevue, WA412.3 1.6 %2.9 %3.3 %6.0 %5.5 %
Los Angeles-Long Beach-Anaheim, CA384.6 1.5 %5.7 %5.9 %5.3 %5.5 %
Dallas-Fort Worth-Arlington, TX350.3 1.3 %4.9 %7.9 %8.0 %8.6 %
Miami-Fort Lauderdale-West Palm Beach, FL275.7 1.1 %— %0.6 %8.0 %7.7 %
(1)The table above has been standardized to depict MSA definitions. Prior iterations of this table presented metropolitan divisions, which represent a subset of the larger MSA.
(2)Source: CBRE-EA. Market vacancy is the percentage of space available for rent. Account vacancy is the square foot-weighted percentage of unleased space.
Multi-Family
Apartment demand is driven by a combination of economic and demographic forces including job growth, household formations, and changes in the U.S. homeownership rate. The recovery of the U.S. unemployment rate (from 11.1% at the end of the second quarter to 7.9% at the end of the third quarter) is an encouraging development for the ongoing health of the sector, especially as stimulus programs from the federal government expire. The emergency increase of $600 per week to those collecting unemployment benefits expired in late July. An executive order was issued shortly thereafter, providing a $300 federal supplement to unemployment benefits, but funding for the order was limited and has been substantially exhausted. Additional stimulus efforts by the U.S. Congress, if any, are unlikely to occur until after the completion of the presidential election in November.
As of September 30, 2020, the Account's rents from multifamily tenants were not materially affected, but the duration of the COVID-19 pandemic remains unknown. If the severity of the COVID-19 pandemic persists throughout 2020 and into 2021, the likelihood that tenants may request rent deferrals, rent concessions or default increases. Additionally, if tenants vacate due to lease expirations, redeployment of the vacated space may be challenging in the near term due to unfavorable leasing conditions. Rent concessions for new tenants have moderately increased in recent months, most notably among luxury apartments in densely populated metro areas, as the pandemic has cooled demand for these units.
The national apartment vacancy rate declined from 4.7% in the second quarter of 2020 to 4.3% in the third quarter, as reported by RealPage. The COVID-19 pandemic has impacted the sector unevenly, with apartments in low density areas seeing demand increase or hold steady, but apartments in higher density areas seeing more tempered demand. Student housing properties are likewise challenged by the pandemic, as many universities utilize remote learning options for the 2020-2021 school year. The vacancy rate of the Account’s apartment properties increased to 8.5% in the third quarter of 2020 as compared to 7.9% in the prior quarter. Modest increases in vacancies in the Washington and Los Angeles metro areas are attributed to normal lease expirations paired with a competitive leasing environment to redeploy the vacant units.

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Account Units Weighted
Average Vacancy
Market
Vacancy(2)
Top 5 Apartment Metropolitan Areas(1)
Total Sector
by Metro Area
($M)
% of Total
Investments
Q3 2020Q2 2020Q3 2020Q2 2020
Account / Nation8.5 %7.9 %4.3 %4.7 %
Washington-Arlington-Alexandria, DC-VA-MD-WV$742.0 2.9 %7.6 %6.6 %4.7 %4.3 %
Los Angeles-Long Beach-Anaheim, CA686.1 2.6 %8.9 %7.6 %4.5 %4.7 %
Miami-Fort Lauderdale-West Palm Beach, FL562.1 2.2 %8.3 %10.8 %5.0 %5.0 %
Denver-Aurora-Lakewood, CO413.7 1.6 %7.1 %7.2 %4.7 %5.4 %
New York-Newark-Jersey City, NY-NJ-PA348.9 1.3 %1.3 %1.3 %3.0 %2.5 %
(1)The table above has been standardized to depict MSA definitions. Prior iterations of this table presented metropolitan divisions, which represent a subset of the larger MSA.
(2)Source: RealPage. Market vacancy is the percentage of units vacant. The Account’s vacancy is the percentage of unleased units.
Retail
While all core real estate sectors have been negatively impacted by the COVID-19 pandemic to some degree, the impact to the retail sector has been especially pronounced. Retailers have attempted to find alternative ways to deliver products to customers through e-commerce solutions, but retail is still highly dependent on customer traffic in stores to generate revenue. Most states have reopened sufficiently to allow for customer traffic to return, but some consumers remain hesitant to venture into enclosed spaces, and most states still maintain strict occupancy limits. Traditional retail was facing ongoing challenges from e-commerce platforms long before the COVID-19 pandemic, and the pandemic has accelerated the shift in consumers' preferences from brick-and-mortar retail to digital storefronts. The third quarter saw a number of retailers announce bankruptcy, as declines in revenue have not been commensurate with declines in expenses. Additional bankruptcies are a continued risk as the COVID-19 pandemic persists, especially among retailers with unsustainable debt obligations.
As of September 30, 2020, the Account's rents from retail tenants were not materially affected, but the duration of the COVID-19 pandemic remains unknown. Requests for rent relief were more common among retail tenants than other sectors. Tenants requesting rent relief have generally requested rent deferrals for a limited period of time (i.e., less than six months), with the unpaid rent to be paid over the duration of the remaining lease. If the severity of the COVID-19 pandemic persists throughout 2020 and into 2021, the likelihood that tenants may request additional rent deferrals, rent concessions or default increases. Additionally, if tenants vacate due to lease expirations, redeployment of the vacated space may be challenging in the near term due to unfavorable leasing conditions. Collections of rent from retail tenants not in deferral have notably improved since the second quarter of 2020, but near-term economic prospects for retailers remain especially challenging. The Account is closely monitoring the collectability of accrued rental income and adjusting its allowances for uncollectible rent as needed.
The Account's retail portfolio is composed primarily of high-end lifestyle shopping centers and regional malls in large metropolitan or tourist centers. The retail portfolio is managed to minimize significant exposure to any single retailer. The Account has over 1,100 retailers across its portfolio, with its largest retail exposure comprising less than 3.5% of total retail rentable area. The Account’s retail vacancy increased to 6.9% in the third quarter of 2020 from 6.5% in the prior quarter driven by scheduled lease expirations.

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Account Units Weighted
Average Vacancy
Market
Vacancy
(1)
Total Exposure
($M)
% of Total InvestmentsQ3 2020Q2 2020Q3 2020Q2 2020
All Retail6.9 %6.5 %9.4 %9.0 %
   Lifestyle & Mall$2,154.5 8.3 %7.1 %6.5 %6.5 %5.8 %
   Neighborhood, Community & Strip1,479.7 5.7 %6.7 %6.7 %9.4 %9.0 %
   Power Center(2)
613.8 2.4 %6.5 %5.3 %7.3 %7.1 %
(1)Source: CBRE-EA. Market vacancy is defined as the percentage of space available for rent. The Account’s vacancy is the square foot-weighted percentage of unleased space.
(2)The Power Center designation is reserved for properties with three or more anchor units. Anchor units are leased to large retailers such as department stores, home improvement stores and warehouse clubs. Properties with the Neighborhood, Community and Strip designation consist of two or less anchor units.

Hotel
The impact of the COVID-19 pandemic on the hospitality sector has been especially severe among hotels that cater primarily to business travelers. Business travel has been curtailed significantly, with travel limited primarily to those who must travel for essential reasons. Business travel is likely to continue to be significantly depressed in the coming months, with businesses shifting to virtual meetings and conferences. Leisure travel has partially recovered domestically, benefiting from the inability of American travelers to travel overseas. All hotel operators are faced with rising costs from measures taken to mitigate the spread of the virus, and few operators are experiencing increases in revenue to offset those costs. The duration and severity of the COVID-19 pandemic remains unknown, and its significant impact on travel increases the likelihood that hotel revenues and occupancy rates will continue to be challenged over the near term.
The Account's exposure to the hospitality sector is limited to one hotel in the Dallas metro area. The hotel is located in a business park in the Dallas metro area and caters largely to business travelers. Key metrics to track hotel performance include occupancy, the average daily rate ("ADR") and revenue per available room ("RevPAR"). For the quarter ended September 30, 2020, occupancy of the property increased to 24.8% as compared to 8.1% in the previous quarter. ADR and RevPAR were $115.86 and $28.70, respectively, for the third quarter of 2020, as compared to $105.86 and $8.62, respectively, in the prior quarter.
INVESTMENTS
As of September 30, 2020, the Account held 87.4% of its total investments in real estate and real estate joint ventures. The Account also held investments in loans receivable, including those with related parties, representing 6.0% of total investments, U.S. Treasury securities representing 2.7% of total investments, real estate-related equity securities representing 2.5% of total investments and real estate funds representing 1.4% of total investments.
The outstanding principal on loans payable on the Account’s wholly-owned real estate portfolio as of September 30, 2020 was $2.5 billion. The Account’s proportionate share of outstanding principal on loans payable within its joint venture investments was $2.9 billion, which is netted against the underlying properties when determining the joint venture investment’s fair value presented on the Consolidated Schedules of Investments. Total outstanding principal on the Account’s portfolio as of September 30, 2020, inclusive of loans payable within the joint venture investments and $0.1 billion of loans outstanding on Line of Credit I, was $5.5 billion, which represented a loan-to-value ratio of 18.7%.
Management believes that the Account’s real estate portfolio is diversified by location and property type. The Account does not intend to buy and sell its real estate investments simply to make short-term profits. Rather, the Account’s general strategy in selling real estate investments is to dispose of those assets that management believes (i) have maximized in value, (ii) have underperformed or face deteriorating property-specific or market conditions, (iii) need significant capital infusions in the future, (iv) are appropriate to dispose of in order to remain consistent with the Account’s intent to diversify the Account by property type and geographic location (including reallocating the Account’s exposure to or away from certain property types in certain geographic locations), or (v) otherwise do
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not satisfy the investment objectives of the Account. Management, from time to time, will evaluate the need to manage liquidity in the Account as part of its analysis as to whether to undertake a particular asset sale. The Account may reinvest any sale proceeds that it does not need to pay operating expenses or to meet debt service or redemption requests (e.g., participant withdrawals or benefit payments).
The following table lists the Account's ten largest investments as of September 30, 2020. For information regarding the Account's diversification of real estate assets by region and property type, see Note 3—Concentrations of Risk.
Ten Largest Real Estate Investments
Property Investment NameOwnership PercentageCityStateType
Gross Real Estate Fair Value(1)
Debt Fair Value(2)
Net Real Estate Fair Value(3)
Property as a
% of Total
Real Estate
Portfolio
(4)
Property as a
% of Total
Investments
(5)
Fashion Show50%Las VegasNVRetail$982.6 $426.7 $555.9 3.9%3.4%
The Florida Mall50%OrlandoFLRetail811.6 154.4 657.2 3.2%2.8%
Simpson Housing Portfolio80%VariousU.S.A.Apartment803.0 383.4 419.6 3.1%2.8%
1001 Pennsylvania Avenue100%WashingtonD.C.Office798.4 319.7 478.7 3.1%2.8%
Colorado Center50%Santa MonicaCAOffice618.0 279.7 338.3 2.4%2.1%
99 High Street100%BostonMAOffice545.2 288.0 257.2 2.1%1.9%
Ontario Industrial Portfolio100%OntarioCAIndustrial518.7 — 518.7 2.0%1.8%
Lincoln Centre100%DallasTXOffice434.2 — 434.2 1.7%1.5%
701 Brickell Avenue100%MiamiFLOffice422.6 182.9 239.7 1.7%1.5%
Four Oaks Place51%HoustonTXOffice421.5 85.4 336.1 1.7%1.5%
(1)The Account's share of the fair value of the property investment, gross of debt.
(2)Debt fair values are presented at the Account's ownership interest.
(3)The Account's share of the fair value of the property investment, net of debt.
(4)Total real estate portfolio is the aggregate fair value of the Account's wholly-owned properties and the properties held within a joint venture, gross of debt.
(5)Total investments are the aggregate fair value of all investments held by the Account, gross of debt. Total investments, as calculated within this table, will vary from total investments, as calculated in the Account's Consolidated Schedule of Investments, as joint venture investments are presented in the Consolidated Schedules of Investments at their net equity position in accordance with previously defined GAAP.
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Results of Operations
Three months ended September 30, 2020 compared to three months ended September 30, 2019
Net Investment Income
The following table shows the results of operations for the three months ended September 30, 2020 and 2019 and the dollar and percentage changes for those periods (dollars in millions, unaudited).
 For the Three Months Ended September 30,Change
20202019$%
INVESTMENT INCOME
Real estate income, net:
Rental income$295.0 $282.6 $12.4 4.4 %
Real estate property level expenses:
Operating expenses66.5 64.5 2.0 3.1 %
Real estate taxes53.3 46.9 6.4 13.6 %
Interest expense24.1 27.1 (3.0)(11.1)%
Total real estate property level expenses143.9 138.5 5.4 3.9 %
Real estate income, net151.1 144.1 7.0 4.9 %
Income from real estate joint ventures and funds33.1 61.4 (28.3)(46.1)%
Interest20.7 43.5 (22.8)(52.4)%
Dividends6.0 5.9 0.1 1.7 %
TOTAL INVESTMENT INCOME210.9 254.9 (44.0)(17.3)%
Expenses:
Investment management charges16.4 17.3 (0.9)(5.2)%
Administrative charges10.9 12.1 (1.2)(9.9)%
Distribution charges5.8 7.5