10-Q 1 tiaa-realestate09302019x10q.htm 10-Q Document
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, 2019
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; 333-230322

TIAA REAL ESTATE ACCOUNT
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction
of incorporation or organization)
NOT APPLICABLE
(I.R.S. Employer Identification No.)
C/O TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NEW YORK 10017-3206
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (212) 490-9000
(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 I
Financial Information
 
 
Item 1.
Unaudited Consolidated Financial Statements
 
 
 
3
 
 
4
 
 
5
 
 
6
 
 
7
 
 
29
 
Item 2.
Management's Discussion and Analysis of the Account's Financial Condition and Results of Operations
44
 
Item 3.
Quantitative and Qualitative Disclosures about Market Risk
63
 
Item 4.
Controls and Procedures
64
Part II
Other Information
 
 
Item 1.
Legal Proceedings
65
 
Item 1A.
Risk Factors
65
 
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
65
 
Item 3.
Defaults Upon Senior Securities
65
 
Item 4.
Mine Safety Disclosures
65
 
Item 5.
Other Information
65
 
Item 6.
Exhibits
66
Signatures
 
68


2




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,
 
2019
 
2018
 
(Unaudited)
 
 
 
ASSETS
 
 
 
 
 
Investments, at fair value:
 
 
 
 
 
Real estate properties
(cost: $12,715.4 and $12,687.8)
$
15,719.7

 
 
$
15,531.1

 
       Real estate joint ventures and limited partnerships
(cost: $5,984.5 and $5,207.8)
7,156.3

 
 
6,532.5

 
Marketable securities:
 
 
 
 
 
Real estate-related
(cost: $690.3 and $1,274.7)
852.9

(1) 
 
1,415.1

(1) 
Other
(cost: $4,221.9 and $4,088.9)
4,224.3

 
 
4,088.7

 
Loans receivable
(cost: $1,240.4 and $910.6)
1,239.0

 
 
913.0

 
      Loans receivable with related parties
(cost: $69.3 and $0.0)
68.9

 
 

 
Total investments
(cost: $24,921.8 and $24,169.8)
29,261.1

 
 
28,480.4

 
Cash and cash equivalents
13.6

 
 
3.8

 
Due from investment manager
3.9

 
 
2.2

 
Other
348.4

(2) 
 
331.8

(2) 
TOTAL ASSETS
29,627.0

 
 
28,818.2

 
LIABILITIES
 
 
 
 
 
   Loans payable, at fair value
(principal outstanding: $2,270.2 and $2,688.1)
2,288.5

 
 
2,608.0

 
Accrued real estate property expenses
240.6

 
 
222.4

 
Payable for collateral for securities loaned
2.8

 
 
68.8

 
Other
58.4

 
 
76.4

 
TOTAL LIABILITIES
2,590.3

 
 
2,975.6

 
COMMITMENTS AND CONTINGENCIES

 
 

 
NET ASSETS
 
 
 
 
 
Accumulation Fund
26,494.3

 
 
25,320.1

 
Annuity Fund
542.4

 
 
522.5

 
TOTAL NET ASSETS
$
27,036.7

 
 
$
25,842.6

 
NUMBER OF ACCUMULATION UNITS OUTSTANDING
60.9

 
 
60.7

 
NET ASSET VALUE, PER ACCUMULATION UNIT
$
435.222

 
 
$
417.416

 
(1) Includes securities loaned of $2.7 million at September 30, 2019 and $67.4 million at December 31, 2018.
(2) Includes cash collateral for securities loaned of $2.8 million at September 30, 2019 and $68.8 million at December 31, 2018.



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,
2019
 
2018
 
2019
 
2018
INVESTMENT INCOME
 
 
 
 
 
 
 
Real estate income, net:
 
 
 
 
 
 
 
Rental income
$
282.6

 
$
273.3

 
$
823.6

 
$
822.7

Real estate property level expenses and taxes:
 
 
 
 
 
 
 
Operating expenses
64.5

 
58.5

 
181.8

 
171.7

Real estate taxes
46.9

 
45.4

 
138.9

 
135.3

Interest expense
27.1

 
30.4

 
80.1

 
82.8

Total real estate property level expenses and taxes
138.5

 
134.3

 
400.8

 
389.8

Real estate income, net
144.1

 
139.0

 
422.8

 
432.9

Income from real estate joint ventures and limited partnerships
61.4

 
37.3

 
170.9

 
157.8

Interest
43.5

 
35.1

 
129.7

 
77.6

Dividends
5.9

 
14.7

 
17.5

 
36.7

TOTAL INVESTMENT INCOME
254.9

 
226.1

 
740.9

 
705.0

Expenses:
 
 
 
 
 
 
 
Investment management charges
17.3

 
13.9

 
53.6

 
46.3

Administrative charges
12.1

 
14.3

 
37.6

 
41.0

Distribution charges
7.5

 
6.8

 
24.1

 
20.8

Mortality and expense risk charges
0.3

 
0.3

 
1.0

 
0.9

Liquidity guarantee charges
15.3

 
12.8

 
41.4

 
37.5

TOTAL EXPENSES
52.5

 
48.1

 
157.7

 
146.5

INVESTMENT INCOME, NET
202.4

 
178.0

 
583.2

 
558.5

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND LOANS PAYABLE
 
 
 
 
 
 
 
Net realized gain (loss) on investments:
 
 
 
 
 
 
 
Real estate properties
300.0

 
179.8

 
300.0

 
223.4

Real estate joint ventures and limited partnerships

 
56.8

 
(43.7
)
 
57.0

Marketable securities
27.5

 
3.3

 
280.6

 
10.2

Net realized gain on investments
327.5

 
239.9

 
536.9

 
290.6

Net change in unrealized appreciation (depreciation) on:
 
 
 
 
 
 
 
Real estate properties
(83.2
)
 
(65.2
)
 
161.0

 
(10.5
)
Real estate joint ventures and limited partnerships
(138.0
)
 
(49.3
)
 
(94.3
)
 
43.0

Marketable securities
37.3

 
(6.4
)
 
19.8

 
0.5

Loans receivable
(1.0
)
 
1.0

 
(3.8
)
 
1.0

Loans receivable with related parties
(0.4
)
 

 
(0.4
)
 

Loans payable
(32.1
)
 
(0.8
)
 
(98.4
)
 
54.4

Net change in unrealized appreciation (depreciation) on
investments and loans payable
(217.4
)
 
(120.7
)
 
(16.1
)
 
88.4

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND LOANS PAYABLE
110.1

 
119.2

 
520.8

 
379.0

NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS
$
312.5

 
$
297.2

 
$
1,104.0

 
$
937.5



See notes to the consolidated financial statements

4


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,
2019
 
2018
 
2019
 
2018
FROM OPERATIONS
 
 
 
 
 
 
 
Investment income, net
$
202.4

 
$
178.0

 
$
583.2

 
$
558.5

Net realized gain on investments
327.5

 
239.9

 
536.9

 
290.6

Net change in unrealized appreciation (depreciation) on investments and loans payable
(217.4
)
 
(120.7
)
 
(16.1
)
 
88.4

NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS
312.5

 
297.2

 
1,104.0

 
937.5

FROM PARTICIPANT TRANSACTIONS
 
 
 
 
 
 
 
Premiums
641.6

 
648.2

 
1,990.1

 
1,920.9

Annuity payments
(11.6
)
 
(11.2
)
 
(35.0
)
 
(33.6
)
Withdrawals and death benefits
(638.4
)
 
(600.6
)
 
(1,865.0
)
 
(2,133.3
)
NET INCREASE (DECREASE) IN NET ASSETS
RESULTING FROM PARTICIPANT TRANSACTIONS
(8.4
)
 
36.4

 
90.1

 
(246.0
)
NET INCREASE IN NET ASSETS
304.1

 
333.6

 
1,194.1

 
691.5

NET ASSETS
 
 
 
 
 
 
 
Beginning of period
26,732.6

 
25,300.5

 
25,842.6

 
24,942.6

End of period
$
27,036.7

 
$
25,634.1

 
$
27,036.7

 
$
25,634.1




























See notes to the consolidated financial statements

5


TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions, Unaudited)
 
For the Nine Months Ended September 30,
2019
 
2018
CASH FLOWS FROM OPERATING ACTIVITIES
 
 
 
Net increase in net assets resulting from operations
$
1,104.0

 
$
937.5

Adjustments to reconcile net changes in net assets resulting from operations to net cash provided by (used in) operating activities:
 
 
 
Net realized gain on investments
(536.9
)
 
(290.6
)
Net change in unrealized appreciation (depreciation) on investments
and loans payable
16.1

 
(88.4
)
Purchase of real estate properties
(491.8
)
 
(542.2
)
Capital improvements on real estate properties
(219.4
)
 
(165.5
)
Proceeds from sale of real estate properties
813.0

 
1,223.5

Purchases of long term investments
(1,047.2
)
 
(644.5
)
Proceeds from long term investments
1,145.2

 
629.5

Purchases and originations of loans receivable
(356.9
)
 
(699.6
)
Purchases and originations of loans receivable with related parties
(69.3
)
 

Proceeds from sales of loans receivable

 
78.7

Proceeds from payoffs of loans receivable
27.1

 
65.6

Increase in other investments
(133.0
)
 
(957.3
)
Change in due from investment manager
(1.7
)
 
(5.1
)
(Increase) Decrease in other assets
(14.9
)
 
24.6

(Increase) Decrease in other liabilities
(70.4
)
 
10.3

NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES
163.9

 
(423.5
)
CASH FLOWS FROM FINANCING ACTIVITIES
 
 
 
Mortgage loan proceeds received
47.5

 
712.8

Payments of mortgage loans
(290.0
)
 
(42.1
)
Premiums
1,990.1

 
1,920.9

Annuity payments
(35.0
)
 
(33.6
)
Withdrawals and death benefits
(1,865.0
)
 
(2,133.3
)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES
(152.4
)
 
424.7

NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH
11.5

 
1.2

CASH, CASH EQUIVALENTS AND RESTRICTED CASH
 
 
 
 Beginning of period cash, cash equivalents and restricted cash
47.3

 
54.0

 Net increase in cash, cash equivalents and restricted cash
11.5

 
1.2

 End of period cash, cash equivalents and restricted cash
$
58.8

 
$
55.2

SUPPLEMENTAL DISCLOSURES:
 
 
 
 Cash paid for interest
$
82.2

 
$
80.1

 Mortgage loan assumed as part of real estate acquisition
$
110.0

 
$
105.1

 Mortgage loan assignment as part of real estate disposition
$
(285.4
)
 
$
(216.5
)
 Stock consideration received from the disposition of marketable securities
$


$
6.1

The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the Consolidated Statements of Assets and Liabilities that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows (in millions):
 
As of September 30,
 
2019
 
2018
Cash and cash equivalents
$
13.6

 
$
10.1

Restricted cash(1)
45.2

 
45.1

TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH
$
58.8

 
$
55.2

(1) Restricted cash is included within other assets in the Consolidated Statements of Assets and Liabilities.
See notes to the consolidated financial statements

6


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 limited partnerships, 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, 2019 and for the three and nine months ended September 30, 2019 and 2018 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, 2018.
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. 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 an asset or paid to transfer a liability in an orderly transaction between market participants excluding transaction costs.

7


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 typically motivated;
Both parties are well informed or well advised, and acting in what they consider their best interests;
A reasonable time is allowed for exposure in the open market;
Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and
The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.
Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, capital expenditures, discount rates and capitalization rates. Valuation techniques include discounted cash flow analysis, prevailing market capitalization rates or multiples applied to earnings from the property, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties. Amounts ultimately realized from each investment may vary significantly from the fair value presented.
Real estate properties owned by the Account are initially valued based on an independent third party appraisal, as reviewed by TIAA’s internal appraisal staff and as applicable by the Account’s independent fiduciary at the time of the closing of the purchase. Such initial valuation may result in a potential unrealized gain or loss reflecting the difference between an investment’s fair value (i.e., exit price) and its cost basis (which is inclusive of transaction costs).
Subsequently, each property is appraised each quarter by an independent third party appraiser, reviewed by TIAA’s internal appraisal staff and as applicable the Account’s independent fiduciary. In general, the Account obtains appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments, and thus, adjustments to the valuations of its holdings (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day or month in each period.
Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when the account receives a bona fide bid for the sale of a property held within the Account or one of the Account’s joint ventures. Adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant). Alternatively, adjustments may be made to reflect the execution or renewal of a significant lease. Also, adjustments may be made to reflect factors (such as sales values for comparable properties or local employment rate) bearing uniquely on a particular region in which the Account holds properties. TIAA’s internal appraisal staff oversees the entire appraisal process, in conjunction with the Account’s independent fiduciary (the independent fiduciary is more fully described in the following paragraph). Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).
The Account's independent fiduciary, RERC, LLC, 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

8


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 Limited Partnerships—Limited partnership interests are stated at the fair value of the Account’s ownership in the partnership. Management uses net asset value information provided by limited partners as a practical expedient to estimate fair value. The Account receives estimates from limited partners on a quarterly basis, and audited information is provided annually. Upon receipt of the information, management reviews and concludes on whether the net asset values provided are an appropriate representation of the fair value of the Account's interests in the limited partnerships and makes valuation adjustments as necessary. Valuation of limited partnerships is conducted by management under the direction of the Investment Committee of the Board. Such valuation is also conducted 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.
Debt securities with readily available market quotations, other than money market instruments, are generally valued at the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). Debt securities for which market quotations or values from independent pricing services are not readily available or are not considered reliable, are valued at fair value as determined by management and the Investment Committee of the Board 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.

9


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 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 limited partnerships in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Income distributions from the joint ventures are recorded based on the Account’s proportional interest of the income distributed by the joint ventures. Income and losses incurred but not yet distributed or realized from the Account by the joint ventures are recorded as unrealized gains and losses.
Limited Partnerships—The Account has limited ownership interests in various private real estate funds (primarily limited partnerships) and a private real estate investment trust (collectively, the “limited partnerships”). The Account records its contributions as increases to the investments, and distributions from the investments are treated as income

10


within income from real estate joint ventures and limited partnerships in the Account’s Consolidated Statements of Operations. Distributions that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas distributions identified as capital gains or losses are recorded as realized gains or losses. Unrealized gains and losses are recorded based upon the changes in the net asset values of the limited partnerships as determined from the financial statements of the limited partnerships when received by the Account. Prior to the receipt of the financial statements from the limited partnerships, the Account estimates the value of its interest using information provided by the limited partners. Changes in value based on such estimates are recorded by the Account as unrealized
gains and losses.
Marketable Securities—Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. Dividend income is recorded on the ex-dividend date within dividend income. Dividends that are identified as returns of capital are recorded as a reduction to the cost basis of the investment, whereas dividends identified as capital gains or losses are recorded as realized gains or losses. Realized gains and losses on securities transactions are accounted for on the specific identification method.
Loans Receivable—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 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 joint venture or limited partnership. 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, Limited Partnerships 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 Limited Partnerships sections above.
Net Assets—The Account’s net assets as of the close of each valuation day are valued by taking the sum of:
the value of the Account’s cash, cash equivalents, and short-term and other debt instruments;
the value of the Account’s other securities and other non-real estate assets;
the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;
an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non-real estate-related investments (including short-term marketable securities) since the end of the prior valuation day; and

11


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.
Cash and Cash Equivalents: Cash and cash equivalents are balances held by the Account in bank deposit accounts which, at times, exceed federally insured limits. The Account’s management monitors these balances to mitigate the exposure of risk due to concentration and has not experienced any losses from such concentration.
Other Assets and Other Liabilities: Other assets and other liabilities consist of operating assets and liabilities utilized
and held at each individual real estate property investment. Other assets consist of, amongst other items, cash, tenant receivables and prepaid expenses; whereas other liabilities primarily consist of security deposits. Other assets also include cash collateral held for securities on loan.
Federal Income Taxes: Based on provisions of the Internal Revenue Code, Section 817, the Account is taxed as a segregated asset account of TIAA and as such, the Account incurs no material federal income tax attributable to the net investment activity of the Account. The Account’s federal income tax return is generally subject to examination for a period of three years after filed. State and local tax returns may be subject to examination for an additional period of time depending on the jurisdiction. Management has analyzed the Account’s tax positions taken for all open federal income tax years and has concluded that no provision for federal income tax is required in the Account’s Consolidated
Financial Statements.
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.

12


As of September 30, 2019, 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 Pronouncements
Adopted
In February 2016, the FASB issued Accounting Standards Update 2016-02 Leases (Topic 842) (“ASU 2016-02”) which supersedes Topic 840, Leases. ASU 2016-02 applies to all entities that enter into leases. Lessees are required to report assets and liabilities that arise from leases. Lessor accounting has largely remained unchanged; however, certain refinements were made to conform with revenue recognition guidance in the FASB issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"), specifically related to the allocation and recognition of contract consideration earned from lease and non-lease revenue components. ASU 2016-02 contains certain practical expedients, which the Account has elected. The Account's exposure to ASU 2016-02 is primarily as a lessor. The Account's exposure to ASU 2016-02 from the perspective of a lessee is limited to ground leases. The Account adopted ASU 2016-02 as of January 1, 2019. New disclosures required by ASC 2016-02 are included in the Notes to the Consolidated Financial Statements, refer to Note 4—Leases.
The Account has elected the transition package of practical expedients permitted within the new standard. This practical expedient permits the Account to carryforward the historical lease classification and not to reassess initial direct costs for any existing leases.
In addition, the Account has elected the practical expedient that allows lessors to avoid separating lease and non-lease components within a contract if certain criteria are met. The lessor’s practical expedient election is limited to circumstances in which (i) the timing and pattern of revenue recognition are the same for the non-lease component and the related lease component and (ii) the combined single lease component would be classified as an operating lease. This practical expedient allows the Account the ability to combine the lease and non-lease components if the underlying asset meets the two criteria above.
In February 2019, the FASB issued ASU 2019-01, Leases (Topic 842) Codification Improvements (“ASU 2019-01”). ASU 2019-01 addresses two lessor implementation issues and clarifies an exemption for lessors and lessees from a certain interim disclosure requirement associated with adopting the new lease accounting standard. This guidance is effective for fiscal years beginning after December 15, 2019 and interim periods within those fiscal years. The Account adopted ASU 2019-01 as of January 1, 2019 and concluded that the adoption did not have a material impact on the Consolidated Financial Statements.
Pending Adoption
In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement: Disclosure FrameworkChanges to the Disclosure Requirements for Fair Value Measurements. ASU 2018-13 modifies the disclosures required for fair value measurements. This guidance is effective for fiscal years beginning after December 15, 2019. Management has concluded the guidance will not materially impact the Account's Notes to the Consolidated Financial Statements.
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.

13


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 Account’s independent fiduciary. TIAA also provides various portfolio accounting and related services for the Account.
The Account is a party to the Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account (the “Distribution Agreement”), dated January 1, 2008, by and among TIAA, for itself and on behalf of the Account, and TIAA-CREF Individual and Institutional Services, LLC (“Services”), a wholly-owned subsidiary of TIAA and a registered broker-dealer and a member of the Financial Industry Regulatory Authority. Pursuant to the Distribution Agreement, Services performs distribution services for the Account which include, among other things, (i) distributing 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. 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.
The liquidity guarantee ensures that sufficient funds are available to meet participant transfer and cash withdrawal requests in the event that the Account’s cash flows and liquid investments are insufficient to fund such requests.
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, 2019. 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 (unaudited):
 
 
Related Party
 
Equity Ownership Interest
 
Interest Rate
 
Maturity Date
 
Fair Value at
Principal
 
 
 
 
 
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
36.5

 

 
MRA Hub 34 Holding, LLC
 
95.00%
 
2.50% + LIBOR
 
9/1/2022
 
$
36.5

 
$

32.8

 

 
THP Student Housing, LLC
 
97.00%
 
3.200%
 
9/1/2024
 
32.4

 

TOTAL LOANS RECEIVABLE WITH RELATED PARTIES
 
$
68.9

 
$

Note 3—Concentrations of Risk
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, 2019, the Account had no significant concentrations of tenants as no single tenant had annual contract rent that made up more than 3% of the rental income of the Account. Moreover, the Account's tenants have

14


no notable concentration present in any one industry. There are no significant lease expirations scheduled to occur over the next twelve months.
The Account’s wholly-owned real estate investments and investments in joint ventures are located in the United States. The following table represents the diversification of the Account’s portfolio by region and property type as of September 30, 2019 (unaudited):
Diversification by Fair Value(1)
 
 
 
 
 
 
 
 
 
 
 
West
 
East
 
South
 
Midwest
 
Total
Office
11.9
%
 
19.0
%
 
5.3
%
 
%
 
36.2
%
Apartment
9.1
%
 
7.3
%
 
7.6
%
 
1.0
%
 
25.0
%
Retail
6.9
%
 
3.3
%
 
7.9
%
 
0.9
%
 
19.0
%
Industrial
9.1
%
 
1.5
%
 
4.8
%
 
0.5
%
 
15.9
%
Other(2)
0.6
%
 
3.1
%
 
0.2
%
 
%
 
3.9
%
Total
37.6
%
 
34.2
%
 
25.8
%
 
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 fee interest encumbered by a ground lease real estate investment and land.
Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY.
Properties in the “East” region are located in: CT, DC, DE, KY, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV.
Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX.
Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI.
Note 4—Leases
The Account’s wholly-owned real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2090. 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, 2019 (unaudited) and December 31, 2018 are as follows (millions):
 
Years Ended December 31,
 
As of
 
As of
 
September 30, 2019
 
December 31, 2018
2019
$
139.1

(1) 
$
535.2

2020
540.5

 
497.7

2021
489.2

 
431.5

2022
424.4

 
366.9

2023
362.8

 
307.8

Thereafter
3,078.8

 
2,701.8

Total
$
5,034.8

 
$
4,840.9

(1) Representative of minimum rents owed for the remaining months of the calendar year ending December 31, 2019.
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.

15


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, unaudited):
 
 
September 30, 2019
Assets:
 
 
  Right-of-use assets, at fair value
 
$
25.7

Liabilities:
 
 
  Ground lease liabilities, at fair value
 
$
25.7

Key Terms
 
 
  Weighted-average remaining lease term (years)
 
84.6

  Weighted-average discount rate(1)
 
6.15
%
(1) Discount rates are reflective of the rates utilized during the most recent appraisal of the associated real estate investments.
For the nine months ended September 30, 2019, operating lease costs related to ground leases were $0.9 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, unaudited):
 
Years Ended December 31,
 
As of
 
As of
 
September 30, 2019
 
December 31, 2018
2019(1)
$
0.3

(1) 
$
1.2

2020
1.2

 
1.2

2021
1.2

 
1.2

2022
1.3

 
1.3

2023
1.3

 
1.3

Thereafter
388.0

 
388.0

Total
$
393.3

 
$
394.2

(1) Representative of minimum rents owed for the remaining months of the calendar year ending December 31, 2019.
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. Limited partnership 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 1 - Organization and Significant Accounting Policies for further discussion regarding the use of a practical expedient for the valuation of limited partnerships.
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

16


spreads, and currency rates. Valuation adjustments will be made to reflect changes in credit quality, counterparty’s creditworthiness, the Account’s creditworthiness, liquidity, and other observable and unobservable inputs that are applied consistently over time.
The methods described above are considered to produce fair values that represent 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; there may be circumstances in the interim in which the true realizable value of a property is not reflected in the Account’s daily net asset value calculation or in the Account’s periodic Consolidated Financial Statements. This disparity may be more apparent when the commercial and/or residential real estate markets experience an overall and possibly dramatic decline (or increase) in property values in a relatively short period of time between appraisals.
The following tables show the major categories of assets and liabilities measured at fair value on a recurring basis as of September 30, 2019 (unaudited) and December 31, 2018, 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):
Description
 
Level 1: Quoted Prices in Active Markets for Identical Assets
 
Level 2: Significant Other Observable Inputs
 
Level 3: Significant Unobservable Inputs
 
Fair Value Using Practical Expedient
 
Total at
September 30, 2019
Real estate properties
 
$

 
$

 
$
15,719.7

 
$

 
$
15,719.7

Real estate joint ventures
 

 

 
6,955.2

 

 
6,955.2

Limited partnerships
 

 

 

 
201.1

 
201.1

Marketable securities:
 
 
 
 
 
 
 
 
 
 
Real estate-related
 
852.9

 

 

 

 
852.9

Government agency notes
 

 
557.2

 

 

 
557.2

United States Treasury securities
 

 
2,512.3

 

 

 
2,512.3

Corporate bonds
 
 
 
1,154.8

 
 
 
 
 
1,154.8

Loans receivable (1)
 

 

 
1,307.9

 

 
1,307.9

Total Investments at
September 30, 2019
 
$
852.9

 
$
4,224.3

 
$
23,982.8

 
$
201.1

 
$
29,261.1

Loans payable
 
$

 
$

 
$
(2,288.5
)
 
$

 
$
(2,288.5
)

(1) Amount shown is reflective of loans receivable and loans receivable with related parties.

17


Description
 
Level 1: Quoted Prices in Active Markets for Identical Assets
 
Level 2: Significant Other Observable Inputs
 
Level 3: Significant Unobservable Inputs
 
Fair Value Using Practical Expedient
 
Total at December 31, 2018
Real estate properties
 
$

 
$

 
$
15,531.1

 
$

 
$
15,531.1

Real estate joint ventures
 

 

 
6,356.6

 

 
6,356.6

Limited partnerships
 

 

 

 
175.9

 
175.9

Marketable securities:
 
 
 
 
 
 
 
 
 
 
Real estate-related
 
1,415.1

 

 

 

 
1,415.1

Government agency notes
 

 
2,050.7

 

 

 
2,050.7

United States Treasury securities
 

 
2,038.0

 

 

 
2,038.0

Loans receivable
 

 

 
913.0

 

 
913.0

Total Investments at December 31, 2018
 
$
1,415.1

 
$
4,088.7

 
$
22,800.7

 
$
175.9

 
$
28,480.4

Loans payable
 
$

 
$

 
$
(2,608.0
)
 
$

 
$
(2,608.0
)

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, 2019 and 2018 (millions, unaudited):
 
 
Real Estate
Properties
 
Real Estate
Joint Ventures
 
Loans
Receivable
(3)
 
Total
Level 3
Investments
 
Loans
Payable
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 assets
 
216.8

 
(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
)
 
 
Real Estate
Properties
 
Real Estate
Joint Ventures
 
Loans
Receivable
(3)
 
Total
Level 3
Investments
 
Loans
Payable
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 assets
 
461.0

 
(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
)



18


 
 
Real Estate
Properties
 
Real Estate
Joint Ventures
 
Loans
Receivable
 
Total
Level 3
Investments
 

Loans
Payable
For the three months ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
Beginning balance July 1, 2018
 
$
16,042.7

 
$
5,915.3

 
$
618.3

 
$
22,576.3

 
$
(2,891.4
)
Total realized and unrealized gains included in changes in net assets
 
114.6

 
7.5

 
1.0

 
123.1

 
(0.8
)
    Purchases(1)
 
253.7

 
242.1

 
380.1

 
875.9

 
(72.0
)
    Sales
 
(1,065.1
)
 

 

 
(1,065.1
)
 

    Settlements(2)
 

 
(369.6
)
 
(144.3
)
 
(513.9
)
 
221.0

Ending balance September 30, 2018
 
$
15,345.9

 
$
5,795.3

 
$
855.1

 
$
21,996.3

 
$
(2,743.2
)
 
 
Real Estate
Properties
 
Real Estate
Joint Ventures
 
Loans
Receivable
 
Total
Level 3
Investments
 

Loans
Payable
For the nine months ended September 30, 2018
 
 
 
 
 
 
 
 
 
 
Beginning balance January 1, 2018
 
$
15,742.7

 
$
5,860.6

 
$
298.8

 
$
21,902.1

 
$
(2,238.3
)
Total realized and unrealized gains (losses) included in changes in net assets
 
212.9

 
99.1

 
1.0

 
313.0

 
54.4

    Purchases(1)
 
830.3

 
325.9

 
699.6

 
1,855.8

 
(817.9
)
    Sales
 
(1,440.0
)
 

 

 
(1,440.0
)
 

    Settlements(2)
 

 
(490.3
)
 
(144.3
)
 
(634.6
)
 
258.6

Ending balance September 30, 2018
 
$
15,345.9

 
$
5,795.3

 
$
855.1

 
$
21,996.3

 
$
(2,743.2
)
(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.

19


The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of September 30, 2019 (unaudited).
Type
Asset Class
Valuation
Technique(s)
Unobservable
Inputs
Range (Weighted Average)
Real Estate Properties and Joint Ventures
Office
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.5% - 8.5% (6.6%)
4.0% - 7.5% (5.5%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
3.9% - 7.0% (5.0%)
 
Industrial
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.3% - 9.3% (6.7%)
4.3% - 8.3% (5.4%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
3.9% - 7.8% (4.9%)
 
Apartment
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.3% - 7.8% (6.5%)
4.3% - 6.8% (5.1%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
3.8% - 6.0% (4.6%)
 
Retail
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.0% - 11.7% (6.6%)
4.3% - 9.2% (5.4%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
3.3% - 11.0% (4.9%)
Loans Payable
Office and Industrial
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
31.6% - 59.9% (46.6%)
3.2% - 4.4% (3.6%)
 
 
Net Present Value
Loan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
31.6% - 59.9% (46.6%)
1.2 - 1.4 (1.3)
 
Apartment
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
30.5% - 61.2% (47.3%)
3.2% - 3.6% (3.4%)
 
 
Net Present Value
Loan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
30.5% - 61.2% (47.3%)
1.2 - 1.5 (1.3)
 
Retail
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
32.1% - 63.3% (40.9%)
3.2% - 4.4% (3.6%)
 
 
Net Present Value
Loan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
32.1% - 63.3% (40.9%)
1.2 - 1.5 (1.3)
Loans Receivable
Office, Industrial, Apartment, Retail and Storage
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
49.7% - 86.2% (75.6%)
3.6% - 8.7% (6.8%)





20


The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of September 30, 2018 (unaudited).
Type
Asset Class
Valuation
Technique(s)
Unobservable
Inputs
Range (Weighted Average)
Real Estate Properties and Joint Ventures
Office
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.5% - 8.6% (6.5%)
4.0% - 7.5% (5.5%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
4.0% - 7.0% (4.9%)
 
Industrial
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.5% - 8.9% (6.8%)
4.5% - 8.0% (5.6%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
4.0% - 7.5% (5.0%)
 
Apartment
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.3% - 7.8% (6.3%)
3.8% - 6.3% (5.0%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
3.3% - 5.8% (4.5%)
 
Retail
Income Approach—Discounted Cash Flow
Discount Rate
Terminal Capitalization Rate
5.0% - 10.5% (6.4%)
4.3% - 8.8% (5.2%)
 
 
Income Approach—Direct Capitalization
Overall Capitalization Rate
3.8% - 10.5% (4.6%)
Loans Payable
Office and Industrial
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
37.7% - 70.7% (43.2%)
3.7% - 6.0% (4.4%)
 
 
Net Present Value
Loan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
37.7% - 70.7% (43.2%)
1.2 - 1.5 (1.3)
 
Apartment
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
32.3% - 63.9% (47.2%)
4.0% - 4.4% (4.2%)
 
 
Net Present Value
Loan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
32.3% - 63.9% (47.2%)
1.2 - 1.4 (1.3)
 
Retail
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
17.6% - 55.3% (33.2%)
4.1% - 5.2% (4.4%)
 
 
Net Present Value
Loan to Value Ratio
Weighted Average Cost of Capital Risk
Premium Multiple
17.6% - 55.3% (33.2%)
1.1 - 1.3 (1.2)
Loans Receivable
Office, Retail and Storage
Discounted Cash Flow
Loan to Value Ratio
Equivalency Rate
70.8% - 79.2% (75.8%)
4.2% - 8.3% (5.7%)

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, 2019 and 2018, 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, 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
)
For the three months ended September 30, 2018
$
48.1

 
$
(18.1
)
 
$
1.1

 
$
31.1

 
$
4.8

For the nine months ended September 30, 2018
$
158.8

 
$
73.5

 
$
1.1

 
$
233.4

 
$
60.0

(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, 2019, the Account held investments in joint ventures with ownership interest percentages that ranged from 33.3% to 97.0%. Certain joint ventures are subject to adjusted distribution percentages when earnings in the investment reach a pre-determined 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,
 
2019
 
2018
 
2019
 
2018
Operating Revenue and Expenses
 
 
 
 
 
 
 
Revenues
$
287.7

 
$
237.2

 
$
825.6

 
$
694.2

Expenses
151.7

 
122.8

 
446.4

 
381.0

Excess of revenues over expenses
$
136.0

 
$
114.4

 
$
379.2

 
$
313.2

Note 7—Investments in Limited Partnerships
Taconic New York City GP Fund, LP prohibits redemptions from the fund prior to liquidation. Liquidation of the fund is estimated to begin no earlier than 2024. The partnership allows the Account to sell its interest in the fund, subject to the consent and approval of the general partner.
LCS SHIP Venture I, LLC prohibits redemptions from the fund prior to liquidation. Liquidation of the fund is estimated to begin no earlier than 2025. The Account is permitted to sell or transfer its interest in the fund with the consent and approval of the manager.
Veritas Trophy VI, LLC prohibits redemptions from the fund prior to liquidation. The Account is not permitted to sell or transfer its interest in the fund until August 2, 2022. After this date, the Account can sell or transfer its interest in the fund with the consent and approval of the manager.
SP V - II, LLC prohibits redemptions from the fund prior to liquidation. Liquidation of the fund is estimated to begin no earlier than 2022. The Account is permitted to sell or transfer its interest in the fund with the consent and approval of the manager.


22


Note 8—Loans Receivable
The Account’s loan receivable portfolio is primarily comprised of mezzanine loans secured by the borrower’s direct and indirect interest in commercial real estate. Mezzanine loans are subordinate to first mortgages on the underlying real estate collateral. The following property types represent the underlying real estate collateral for the Account's mezzanine loans (millions):
 
 
September 30, 2019
 
 
 
 
(unaudited)
 
December 31, 2018
 
 
Fair Value
 
%
 
Fair Value
 
%
Office(1)
 
$
751.1

 
57.4
%
 
$
512.1

 
56.2
%
Industrial
 
223.3

 
17.1
%
 
176.4

 
19.3
%
Retail
 
158.5

 
12.1
%
 
101.6

 
11.1
%
Storage
 
82.0

 
6.3
%
 
63.2

 
6.9
%
Apartments(1)
 
93.0

 
7.1
%
 
59.7

 
6.5
%
 
 
$
1,307.9

 
100.0
%
 
$
913.0

 
100.0
%
(1) Includes loans receivable with related parties.
The Account monitors the risk profile of the loan receivable portfolio with the assistance of a third-party rating service that models the loans and assigns risk ratings based on 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 a AAA designation representing debt with the lowest level of credit risk and C representing a greater risk of default or principal loss. Mezzanine debt in good health is typically reflective of a risk rating in the B range (e.g., BBB, BB, B), as these ratings reflect borrowers' having adequate financial resources to service their financial commitments, but also acknowledging that adverse economic conditions, should they occur, would likely impede on a borrowers' ability to pay.
The following table presents the fair values of the Account's loan portfolio based on the risk ratings as of September 30, 2019 (unaudited), listed in order of the strength of the risk rating (from strongest to weakest):
 
 
Number of Loans
 
Fair Value
 
%
AA
 
1
 
47.5

 
3.6
%
BBB
 
3
 
179.1

 
13.7
%
BB
 
7
 
336.1

 
25.8
%
B
 
8
 
670.0

 
51.2
%
NR(1)
 
3
 
75.2

 
5.7
%
 
 
22
 
$
1,307.9

 
100.0
%
(1) "NR" designates loans not assigned an internal credit rating. As of September 30, 2019, this is comprised of two loans with related parties and one loan to an unaffiliated entity. The loans are collateralized by equity interests in real estate investments.
The Account had no loans in non-performing status as of September 30, 2019.


23


Note 9—Loans Payable
At September 30, 2019, 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, 2019 (unaudited)
 
December 31, 2018
 
Mass Court
 
2.88% paid monthly
 

 
90.2

 
September 1, 2019
Red Canyon at Palomino Park(4)
 
5.34% paid monthly
 
27.1

 
27.1

 
August 1, 2020
Green River at Palomino Park(4)
 
5.34% paid monthly
 
33.2

 
33.2

 
August 1, 2020
Blue Ridge at Palomino Park(4)
 
5.34% paid monthly
 
33.4

 
33.4

 
August 1, 2020
Ashford Meadows Apartments
 
5.17% paid monthly
 
44.6

 
44.6

 
August 1, 2020
The Knoll(1)
 
3.98% paid monthly
 
16.5

 
16.9

 
December 5, 2020
Ascent at Windward
 
3.51% paid monthly
 
34.6

 
34.6

 
January 1, 2022
The Palatine(1)
 
4.25% paid monthly
 
76.3

 
77.4

 
January 10, 2022
The Forum at Carlsbad(1)
 
4.25% paid monthly
 
86.1

 
87.3

 
March 1, 2022
Fusion 1560
 
3.42% paid monthly
 
37.4

 
37.4

 
June 10, 2022
San Diego Office Portfolio
 
3.62% paid monthly
 
47.5

 

 
August 15, 2022
The Colorado(1)
 
3.69% paid monthly
 
88.6

 
89.9

 
November 1, 2022
The Legacy at Westwood(1)
 
3.69% paid monthly
 
45.1

 
45.8

 
November 1, 2022
Regents Court(1)
 
3.69% paid monthly
 
38.3

 
38.8

 
November 1, 2022
Fourth & Madison
 
3.75% paid monthly
 

 
198.2

 
June 1, 2023
Fourth & Madison
 
4.17% paid monthly
 

 
90.0

 
June 1, 2023
1001 Pennsylvania Avenue(1)
 
3.70% paid monthly
 
322.3

 
327.0

 
June 1, 2023
Biltmore at Midtown
 
3.94% paid monthly
 
36.4

 
36.4

 
July 5, 2023
Cherry Knoll
 
3.78% paid monthly
 
35.3

 
35.3

 
July 5, 2023
Lofts at SoDo
 
3.94% paid monthly
 
35.1

 
35.1

 
July 5, 2023
1401 H Street, NW
 
3.65% paid monthly
 
115.0

 
115.0

 
November 5, 2024
The District on La Frontera(1)
 
3.84% paid monthly
 
39.4

 

 
December 1, 2024
The District on La Frontera(1)
 
4.96% paid monthly
 
4.4

 

 
December 1, 2024
Circa Green Lake
 
3.71% paid monthly
 
52.0

 
52.0

 
March 5, 2025
Union - South Lake Union
 
3.66% paid monthly
 
57.0

 
57.0

 
March 5, 2025
Holly Street Village
 
3.65% paid monthly
 
81.0

 
81.0

 
May 1, 2025
Township Apartments
 
3.65% paid monthly
 

 
49.0

 
May 1, 2025
32 South State Street
 
4.48% paid monthly
 
24.0

 
24.0

 
June 6, 2025
Vista Station Office Portfolio(1)
 
4.00% paid monthly
 
20.6

 

 
July 1, 2025
780 Third Avenue
 
3.55% paid monthly
 
150.0

 
150.0

 
August 1, 2025
780 Third Avenue
 
3.55% paid monthly
 
20.0

 
20.0

 
August 1, 2025
Vista Station Office Portfolio(1)
 
4.20% paid monthly
 
45.0

 

 
November 1, 2025
701 Brickell Avenue
 
3.66% paid monthly
 
184.0

 
184.0

 
April 1, 2026
55 Second Street
 
3.74% paid monthly
 

 
137.5

 
October 1, 2026
1900 K Street, NW
 
3.93% paid monthly
 
163.0

 
163.0

 
April 1, 2028
99 High Street
 
3.90% paid monthly
 
277.0

 
277.0

 
March 1, 2030
Total Principal Outstanding
 
 
 
$
2,270.2

 
$
2,688.1

 
 
Fair Value Adjustment(3)
 
 
 
18.3

 
(80.1
)
 
 
Total Loans Payable
 
 
 
$
2,288.5

 
$
2,608.0

 
 
(1) 
The mortgage is adjusted monthly for principal payments.
(2) 
Interest rates are fixed. Some mortgages held by the Account are structured to begin principal and interest payments after an initial interest only period.
(3) 
The fair value adjustment consists of the difference (positive or negative) between the principal amount of the outstanding debt and the fair value of the outstanding debt. See Note 1—Organization and Significant Accounting Policies.
(4) 
Represents mortgage loans on individual properties held within the Palomino Park portfolio.


24


Note 10—Line of Credit
On September 20, 2018, the Account entered into a $500.0 million unsecured revolving credit agreement (“Line of Credit”) syndicated across four national banks (“Lenders”), with each Lender providing a $125.0 million commitment. Access to the Line of Credit expires on September 20, 2021, with an option to extend the Line of Credit for two consecutive twelve months terms at the Account’s election. The Account may request an additional $250.0 million in commitments from the Lenders at any time; however, this request is subject to approval at the sole discretion of the Lenders and is not a guarantee that an expansion beyond the original $500.0 million commitment will be granted. Draws against the Line of Credit can take the form of Eurodollar Loans or Alternate Base Rate Loans (“ABR Loans”). Eurodollar Loans and ABR Loans both require a minimum funding of $5.0 million. The Account is charged a fee of 0.20% per annum on the unused portion of the Line of Credit. For the nine months ended September 30, 2019, $0.8 million was charged to the Account for expenses related to the Line of Credit.
Eurodollar Loans are issued for a term of twelve months or less and bear interest during the period (“Interest Period”) at a rate equal to the Adjusted London Interbank Offer Rate (“Adjusted LIBOR”) plus a spread ranging between 0.85%-1.05% per annum (the “Applicable Rate”), with the spread dependent upon the leverage ratio of the Account. The Adjusted LIBOR Rate is calculated by multiplying the Statutory Reserve Rate, as determined by the Federal Reserve Board for Eurodollar liabilities, by the LIBOR rate, as determined by the Intercontinental Exchange on the date of issuance that corresponds to the length of the Interest Period of the Eurodollar Loan. The Account may prepay Eurodollar Loans at any time during the life of the loan without penalty. The Account is limited to five active Eurodollar Loans through the Line of Credit; however, the Account may retire and initiate new Eurodollar Loans without restriction so long as the total number of loans in active status never exceeds the limit.
ABR Loans are issued for a specific length of time and bear interest at a rate equal to the highest rate among the following calculations plus the Applicable Rate: a) the Prime Rate on the date of issuance, with the Prime Rate being defined as the rate of interest last quoted by the Wall Street Journal as the Prime Rate; b) the Federal Reserve Bank of New York (“NYFRB”) Rate as provided by the NYFRB on the date of issuance plus 0.5%; or c) the Adjusted LIBOR Rate plus 1.0%. The Account may prepay ABR Loans at any time during the life of the loan without penalty.
As of September 30, 2019, the Account had no loans outstanding on the Line of Credit. The Account is in compliance with all covenants required by the Line of Credit.

25


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, 2019
 
Years Ended December 31,
2018
 
2017
 
2016
 
(Unaudited)
 
 
 
 
 
 
Per Accumulation Unit Data:
 
 
 
 
 
 
 
Rental income
$
13.546

 
$
17.757

 
$
17.132

 
$
16.433

Real estate property level expenses and taxes
6.592

 
8.548

 
7.722

 
7.534

Real estate income, net
6.954

 
9.209

 
9.410

 
8.899

Other income
5.232

 
6.162

 
4.762

 
3.594

Total income
12.186

 
15.371

 
14.172

 
12.493

Expense charges(1)
2.594

 
3.161

 
3.318

 
3.290

Investment income, net
9.592

 
12.210

 
10.854

 
9.203

Net realized and unrealized gain on investments and loans payable
8.214

 
6.877

 
5.839

 
9.660

Net increase in Accumulation Unit Value
17.806

 
19.087

 
16.693

 
18.863

Accumulation Unit Value:
 
 
 
 
 
 
 
Beginning of period
417.416

 
398.329

 
381.636

 
362.773

End of period
$
435.222

 
$
417.416

 
$
398.329

 
$
381.636

Total return(3)
4.27
%
 
4.79
%
 
4.37
%
 
5.20
%
Ratios to Average net assets(2):
 
 
 
 
 
 
 
Expenses(1)
0.80
%
 
0.76
%
 
0.83
%
 
0.86
%
Investment income, net
2.94
%
 
2.95
%
 
2.72
%
 
2.41
%
Portfolio turnover rate(3):
 
 
 
 
 
 
 
Real estate properties(4)
4.8
%
 
11.8
%
 
2.7
%
 
1.3
%
Marketable securities(5)
23.3
%
 
5.1
%
 
5.7
%
 
3.5
%
Accumulation Units outstanding at end of period (millions)
60.9

 
60.7

 
61.3

 
62.4

Net assets end of period (millions)
$
27,036.7

 
$
25,842.6

 
$
24,942.6

 
$
24,304.7

(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, 2019 are annualized.
(3) 
Percentages for the nine months ended September 30, 2019 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 joint venture and limited partnership 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.


26


Note 12—Accumulation Units
Changes in the number of Accumulation Units outstanding were as follows (in millions):
 
For the Nine Months Ended September 30, 2019
 
For the Year Ended December 31, 2018
 
(Unaudited)
 
 
Outstanding:
 
 
 
Beginning of period
60.7

 
61.3

Credited for premiums
4.7

 
6.5

Annuity, other periodic payments, withdrawals and death benefits
(4.5
)
 
(7.1
)
End of period
60.9

 
60.7

Note 13—Commitments and Contingencies
Commitments—As of September 30, 2019 and December 31, 2018, the Account had the following immediately callable commitments to purchase additional interests in its real estate limited partnerships or provide additional funding through its loan receivable investments:
 
 
Commitment Expiration
 
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
Limited Partnerships(1)
 
 
 
 
 
 
Taconic New York City GP Fund
Nov 2020
 
$
13.7

 
$
26.0

 
LCS SHIP Venture I, LLC
Dec 2019
 
47.4

 
75.0

 
Veritas Trophy VI, LLC(2)
Feb 2020
 
37.0

 

 
SP V - II, LLC
Sept 2022
 
94.6

 

 
 
 
 
192.7

 
101.0

Loans Receivable(3)
 
 
 
 
 
 
311 South Wacker Mezzanine
Jun 2020
 
7.9

 
11.9

 
Rosemont Towson Mezzanine
Sept 2022
 
1.4

 
2.3

 
1330 Broadway Mezzanine
Sept 2022
 
14.6

 
14.8

 
SCG Oakland Portfolio Mezzanine
Mar 2021
 
7.2

 

 
BREP VIII Industrial Mezzanine
Mar 2026
 
14.1

 

 
San Diego Office Portfolio Senior Loan
Aug 2022
 
10.7

 

 
San Diego Office Portfolio Mezzanine
Aug 2022
 
3.6

 

 
MRA Hub 34 Holding, LLC

Sept 2022
 
1.4

 

 
 
 
 
60.9

 
29.0

 
 
 
 
 
 
 
 
TOTAL COMMITMENTS
 
 
$
253.6

 
$
130.0

(1) 
Additional capital can be called during the commitment period at any time. The commitment period can only be extended by the manager with the consent of the Account. The commitment expiration date is reflective of the most recent signed agreement between the Account and the fund manager, including any side letter agreements.
(2) 
The fund manager is granted 18 months from the initial contribution date, August 2019, to make its first capital call. If none have occurred, the Account's commitment will be reduced by $15.0 million. If a capital call occurs during the initial 18 month window, the commitment period will be modified to three years from the first capital call date.
(3) 
Additional advances from the Account can be requested during the commitment period at any time. The commitment expiration date is reflective of the most recent signed agreement between the Account and the borrower, including any side letter agreements. Certain loans contain extension clauses on the term of the loan that do not require the Account's prior consent. If elected, the Account's commitment may be extended through the extension term.



27


Contingencies—In the normal course of business, the Account may be named, from time to time, as a defendant or may be involved in various legal actions, including arbitrations, class actions and other litigation.
The Account establishes an accrual for all litigation and regulatory matters when it believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted, as appropriate, in light of additional information. The amount of loss ultimately incurred in relation to those matters may be higher or lower than the amounts accrued for those matters.
As of the date of this 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.

28

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


REAL ESTATE PROPERTIES—53.8% and 54.5%
Location/Description
 
Type
 
Fair Value at
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
 
Alabama:
 
 
 
 
 
 
 
 
Riverchase Village
 
Retail
 
$
40.4

 
 
$
40.0

 
Arizona:
 
 
 
 
 
 
 
 
Camelback Center
 
Office
 
49.3


 
63.4

 
Riverside 202 Industrial
 
Industrial
 
29.5

 
 

 
California:
 
 
 
 
 
 
 
 
55 Second Street
 
Office
 


 
368.2

(1) 
88 Kearny Street
 
Office
 
201.7


 
189.1

 
200 Middlefield Road
 
Office
 
68.1


 
61.8

 
12910 Mulberry Drive Industrial
 
Industrial
 
25.8

 
 
21.7

 
30700 Russell Ranch
 
Office
 
38.9


 
34.6

 
Allure at Camarillo
 
Apartments
 
62.8


 
61.8

 
Almond Avenue
 
Land
 
8.9

 
 

 
BLVD63
 
Apartments
 
165.1


 
164.0

 
Bridgepointe Shopping Center
 
Retail
 
127.0


 
125.0

 
Centre Pointe and Valley View
 
Industrial
 
60.4


 
51.2

 
Cerritos Industrial Park
 
Industrial
 
164.1


 
153.1

 
Charleston Plaza
 
Retail
 
99.9


 
100.0

 
Frontera Industrial Business Park
 
Industrial
 
86.3


 
74.0

 
Great West Industrial Portfolio
 
Industrial
 
189.3


 
178.5

 
Holly Street Village
 
Apartments
 
158.4

(1) 
 
152.1

(1) 
Larkspur Courts
 
Apartments
 
151.0


 
146.0

 
Northern CA RA Industrial Portfolio
 
Industrial
 
108.1


 
93.3

 
Oakmont IE West Portfolio
 
Industrial
 
109.2


 
103.5

 
Oceano at Warner Center
 
Apartments
 
93.9


 
89.3

 
Ontario Industrial Portfolio
 
Industrial
 
500.0


 
421.8

 
Ontario Mills Industrial Portfolio
 
Industrial
 
64.9


 
61.8

 
Otay Mesa Industrial Portfolio
 
Industrial
 
33.3

 
 
29.4

 
Pacific Plaza
 
Office
 
111.4


 
116.5

 
Rancho Cucamonga Industrial Portfolio
 
Industrial
 
82.7


 
76.2

 
Rancho Del Mar
 
Apartments
 
94.8

 
 
92.5

 
Regents Court
 
Apartments
 
105.0

(1) 
 
104.0

(1) 
Southern CA RA Industrial Portfolio
 
Industrial
 
150.8


 
143.4

 
Stella
 
Apartments
 
183.7


 
183.7

 
Stevenson Point
 
Industrial
 
64.5


 
61.3

 
The Forum at Carlsbad
 
Retail
 
224.0

(1) 
 
225.0

(1) 
The Legacy at Westwood
 
Apartments
 
149.0

(1) 
 
144.0

(1) 
Township Apartments
 
Apartments
 


 
90.5

(1) 
West Lake North Business Park
 
Office
 
61.5


 
62.6

 
Westcreek
 
Apartments
 
56.6


 
55.0

 
Westwood Marketplace
 
Retail
 
142.0


 
142.0

 
Wilshire Rodeo Plaza
 
Office
 
336.7


 
312.4

 
Colorado:
 
 
 
 
 
 
 
 
1600 Broadway
 
Office
 
115.0

 
 

 
Palomino Park
 
Apartments
 
363.0

(1) 
 
348.0

(1) 
South Denver Marketplace
 
Retail
 
71.0


 
72.7

 

29

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


Location/Description
 
Type
 
Fair Value at
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
 
Connecticut:
 
 
 
 
 
 
 
 
Wilton Woods Corporate Campus
 
Office
 
$
115.2


 
$
121.0

 
Florida:
 
 
 
 
 
 
 
 
5 West
 
Apartments
 
59.6

 
 
62.2

 
701 Brickell Avenue
 
Office
 
410.1

(1) 
 
394.3

(1) 
Broward Industrial Portfolio
 
Industrial
 
66.2


 
59.1

 
Casa Palma
 
Apartments
 
102.0


 
102.0

 
Fusion 1560
 
Apartments
 
82.4

(1) 
 
82.0

(1) 
Lofts at SoDo
 
Apartments
 
64.8

(1) 
 
66.7

(1) 
Orion on Orpington
 
Apartments
 
51.3


 
49.2

 
Publix at Weston Commons
 
Retail
 
74.6


 
74.6

 
Seneca Industrial Park
 
Industrial
 
125.7


 
117.5

 
Sole at Brandon
 
Apartments
 
78.8


 

 
South Florida Apartment Portfolio
 
Apartments
 
111.7


 
108.7

 
The Manor Apartments
 
Apartments
 
51.5


 
52.9

 
The Manor at Flagler Village
 
Apartments
 
138.1


 
137.1

 
The Residences at the Village of Merrick Park
 
Apartments
 
72.1


 
72.7

 
Weston Business Center
 
Industrial
 
102.4


 
97.8

 
Georgia:
 
 
 
 
 
 
 
 
Ascent at Windward
 
Apartments
 
68.1

(1) 
 
68.4

(1) 
Atlanta Industrial Portfolio
 
Industrial
 
40.2


 
35.5

 
Biltmore at Midtown
 
Apartments
 
73.5

(1) 
 
70.4

(1) 
Glen Lake
 
Apartments
 
54.7

 
 

 
Shawnee Ridge Industrial Portfolio
 
Industrial
 
99.3


 
89.2

 
Illinois:
 
 
 
 
 
 
 
 
32 South State Street
 
Retail
 
51.2

(1) 
 
50.4

(1) 
803 Corday
 
Apartments
 
93.3


 
94.2

 
Chicago Caleast Industrial Portfolio
 
Industrial
 
86.3


 
82.8

 
Chicago Industrial Portfolio
 
Industrial
 
29.6


 
28.7

 
Maryland:
 
 
 
 
 
 
 
 
Cherry Knoll
 
Apartments
 
59.7

(1) 
 
59.2

(1) 
Landover Logistics Center
 
Industrial
 
44.6


 
44.3

 
The Shops at Wisconsin Place
 
Retail
 
70.5


 
76.9

 
Massachusetts:
 
 
 
 
 
 
 
 
99 High Street
 
Office
 
540.7

(1) 
 
506.4

(1) 
Fort Point Creative Exchange Portfolio
 
Office
 
270.3


 
247.1

 
Northeast RA Industrial Portfolio
 
Industrial
 
42.7


 
42.0

 
One Beeman Road
 
Industrial
 
34.4


 
34.0

 
Minnesota:
 
 
 
 
 
 
 
 
The Bridges
 
Apartments
 
66.6


 
64.9

 
The Knoll
 
Apartments
 
36.8

(1) 
 
36.1

(1) 
New Jersey:
 
 
 
 
 
 
 
 
10 New Maple Avenue
 
Industrial
 
21.1


 
18.0

 
200 Milik Street
 
Industrial
 
56.0


 
54.0

 
Marketfair
 
Retail
 
105.6


 
104.3

 
South River Road Industrial
 
Industrial
 
118.8


 
102.5

 
New York:
 
 
 
 
 
 
 
 
21 Penn Plaza
 
Office
 
338.9


 
317.8

 

30

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


Location/Description
 
Type
 
Fair Value at
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
 
250 North 10th Street
 
Apartments
 
$
138.0


 
$
151.0

 
425 Park Avenue
 
Ground Lease
 
599.0


 
461.0

 
780 Third Avenue
 
Office
 
387.0

(1) 
 
418.7

(1) 
837 Washington Street
 
Office
 
232.0


 
222.0

 
The Colorado
 
Apartments
 
261.0

(1) 
 
254.9

(1) 
North Carolina:
 
 
 
 
 
 
 
 
Centric Gateway
 
Apartments
 
74.0


 
70.0

 
Oregon:
 
 
 
 
 
 
 
 
The Cordelia
 
Apartments
 
42.8


 
41.7

 
Pennsylvania:
 
 
 
 
 
 
 
 
1619 Walnut Street
 
Retail
 
23.3


 
24.1

 
South Carolina:
 
 
 
 
 
 
 
 
Greene Crossing
 
Apartments
 
79.8


 
75.1

 
Tennessee:
 
 
 
 
 
 
 
 
Southside at McEwen
 
Retail
 
48.7


 
48.6

 
Texas:
 
 
 
 
 
 
 
 
3131 McKinney
 
Office
 
45.8


 
49.7

 
Beltway North Commerce Center
 
Industrial
 
30.2


 
26.3

 
Carrington Park
 
Apartments
 
66.8


 
65.1

 
Churchill on the Park
 
Apartments
 
73.0


 
71.3

 
Cliffs at Barton Creek
 
Apartments
 
46.2


 
46.7

 
Dallas Industrial Portfolio
 
Industrial
 
233.0


 
222.3

 
District on La Frontera
 
Apartments
 
76.3

(1) 
 

 
Houston Apartment Portfolio
 
Apartments
 
162.1


 
164.4

 
Lincoln Centre
 
Office
 
402.3


 
372.6

 
Northwest Houston Industrial Portfolio
 
Industrial
 
76.9


 
75.6

 
Park 10 Distribution
 
Industrial
 
10.9


 
10.0

 
Pinnacle Industrial Portfolio
 
Industrial
 
65.1


 
51.2

 
Pinto Business Park
 
Industrial
 
147.2


 
144.9

 
The Maroneal
 
Apartments
 
54.9


 
56.1

 
Utah:
 
 
 
 
 
 
 
 
Vista Station Office Portfolio
 
Office
 
114.2

(1) 
 

 
Virginia:
 
 
 
 
 
 
 
 
8270 Greensboro Drive
 
Office
 
49.3


 
47.5

 
Ashford Meadows Apartments
 
Apartments
 
105.3

(1) 
 
107.1

(1) 
Plaza America
 
Retail
 
113.3


 
116.3

 
The Ellipse at Ballston
 
Office
 
83.4


 
82.4

 
The Palatine
 
Apartments
 
125.1

(1) 
 
122.0

(1) 
Washington:
 
 
 
 
 
 
 
 
Circa Green Lake
 
Apartments
 
102.0

(1) 
 
98.2

(1) 
Fourth and Madison
 
Office
 


 
580.0

(1) 
Northwest RA Industrial Portfolio
 
Industrial
 
49.5


 
43.0

 
Pacific Corporate Park
 
Industrial
 
60.0


 
52.8

 
Prescott Wallingford Apartments
 
Apartments
 
68.9


 
66.5

 
Rainier Corporate Park
 
Industrial
 
158.9


 
141.6

 
Regal Logistics Campus
 
Industrial
 
121.0


 
109.1

 
Union - South Lake Union
 
Apartments
 
112.0

(1) 
 
114.0

(1) 

31

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


Location/Description
 
Type
 
Fair Value at
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
 
Washington D.C.:
 
 
 
 
 
 
 
 
1001 Pennsylvania Avenue
 
Office
 
$
799.8

(1) 
 
$
782.8

(1) 
1401 H Street, NW
 
Office
 
210.9

(1) 
 
209.5

(1) 
1900 K Street, NW
 
Office
 
340.8

(1) 
 
342.1

(1) 
Mass Court
 
Apartments
 
166.1


 
166.1

(1) 
The Ashton
 
Apartments
 
30.6


 
30.5

 
The Louis at 14th
 
Apartments
 
159.2


 
162.0

 
The Woodley
 
Apartments
 
181.0


 
196.0

 
Various:
 
 
 
 
 
 
 
 
Colony Industrial Portfolio
 
Industrial
 
134.7

(3) 
 

 
TOTAL REAL ESTATE PROPERTIES
 
 
 
 
 
 
 
(Cost $12,715.4 and $12,687.8)
 
 
 
$
15,719.7

 
 
$
15,531.1

 
REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS—24.5% and 22.9%
REAL ESTATE JOINT VENTURES—23.8% and 22.3%
Location/Description
 
Type
 
Fair Value at
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
 
California:
 
 
 
 
 
 
CA—Colorado Center LP
Colorado Center (50% Account Interest)
 
Office
 
$
379.8

(2) 
 
$
376.2

(2) 
PC Borrower, LLC
Pacific City (70% Account Interest)
 
Retail
 
58.9

(2) 
 
59.5

(2) 
TREA 9625 Towne Center, LLC
9625 Towne Centre Drive (49.9% Account Interest)
 
Land
 
51.9


 
45.5

 
TREA Campus Pointe 1, LLC
Campus Pointe 1 (45% Account Interest)
 
Office
 
159.5


 
153.7

 
TREA Campus Pointe 2 & 3, LLC
Campus Pointe 2 & 3 (45% Account Interest)
 
Office (5)
 
140.7


 
132.8

 
TREA Campus Pointe 4, LLC
Campus Pointe 4 (45% Account Interest)
 
Office
 
9.6


 
9.2

 
TREA Campus Pointe 5, LLC
Campus Pointe 5 (45% Account Interest)
 
Office
 
36.6

 
 

 
ARE-SD Regions NO. 58, LLC
Campus Pointe 6 (45% Account Interest)
 
Office
 
114.7

 
 

 
T-C 1500 Owens, LLC
1500 Owens Street (49.9% Account Interest)
 
Office
 
81.0


 
78.8

 
T-C Foundry Square II Venture LLC
Foundry Square II (50.1% Account Interest)
 
Office
 
312.0


 
290.1

 
T-C Illinois Street, LLC
409-499 Illinois Street (40% Account Interest)
 
Office
 
233.3


 
223.9

 
Valencia Town Center Associates LP
Valencia Town Center (50% Account Interest)
 
Retail
 
132.3

(2) 
 
140.5

(2) 
Florida:
 
 
 
 
 
 
Florida Mall Associates, Ltd
The Florida Mall (50% Account Interest)
 
Retail
 
771.4

(2) 
 
769.7

(2) 
TREA Florida Retail, LLC
Florida Retail Portfolio (80% Account Interest)
 
Retail
 
157.1


 
156.0

 

32

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


Location/Description
 
Type
 
Fair Value at
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
 
West Dade County Associates
Miami International Mall (50% Account Interest)
 
Retail
 
$
166.3

(2) 
 
$
170.3

(2) 
Maryland:
 
 
 
 
 
 
WP Project Developer
The Shops at Wisconsin Place (33.33% Account Interest)
 
Retail
 
23.4


 
20.4

 
Massachusetts:
 
 
 
 
 
 
One Boston Place REIT
One Boston Place (50.25% Account Interest)
 
Office
 
245.4


 
239.1

 
T-C 225 Binney, LLC
225 Binney Street (70% Account Interest)
 
Office
 
227.1


 
220.2

 
T-C 501 Boylston Street Member, LLC
501 Boylston (50.1% Account Interest)
 
Office
 
201.3

(2) 
 
195.6

(2) 
Nevada:
 
 
 
 
 
 
 
 
Fashion Show Holding I, LLC
Fashion Show (50% Account Interest)
 
Retail
 
717.4

(2) 
 
819.1

(2) 
New York:
 
 
 
 
 
 
401 West 14th Street, LLC
401 West 14th Street (42.19% Account Interest)
 
Retail
 
43.9

(2) 
 
48.4

(2) 
440 Ninth Avenue Owner, LLC
440 Ninth Avenue (88.52% Account Interest)
 
Office
 
125.2

(2) 
 
121.4

(2) 
817 Broadway Owner, LLC
817 Broadway (61.46% Account Interest)
 
Office
 
37.8

(2) 
 
28.0

(2) 
MRA Hub 34 Holding, LLC
The Hub (95% Account Interest)
 
Office
 
76.2

(2) 
 
59.2

(2) 
RGM 42, LLC
MiMA (70% Account Interest)
 
Apartments
 
113.6

(2) 
 
118.4

(2) 
TREA 35th Street LIC Investor Member, LLC
Commerce LIC (97.5% Account Interest)
 
Industrial
 


 
0.6

 
North Carolina:
 
 
 
 
 
 
 
 
CC 101 North Tryon, LLC 101 N. Tryon Street (85% Account Interest)
 
Office
 
46.0

(2) 
 

 
Tennessee:
 
 
 
 
 
 
West Town Mall, LLC
West Town Mall (50% Account Interest)
 
Retail
 
145.8

(2) 
 
154.3

(2) 
Texas:
 
 
 
 
 
 
Four Oaks Venture LP
Four Oaks Place LP (51% Account Interest)
 
Office
 
349.9

(2) 
 
344.6

(2) 
TREA I-35 Logistics Investor Member, LLC I-35 Logistics Center (95% Account Interest)
 
Land
 
6.6


 

 
Washington:
 
 
 
 
 
 
 
 
TREA 4th and Madison Investor Member, LLC
Fourth and Madison (51% Account Interest)
 
Office
 
158.1

(2) 
 

 
Various:
 
 
 
 
 
 
DDRTC Core Retail Fund, LLC
SITE Centers Joint Venture (85% Account Interest)
 
Retail
 
782.0

(2,3) 
 
655.8

(2,3) 
Simpson Housing LLP
Simpson Housing Portfolio (80% Account Interest)
 
Apartments
 
412.4

(2,3) 
 
400.1

(2,3) 
THP Student Housing, LLC
THP Student Housing Portfolio (97% Account Interest)
 
Apartments
 
181.8

(2,3) 
 
112.4

 
Storage Portfolio I, LLC
Storage Portfolio I (66.02% Account Interest)
 
Storage
 
93.0

(2,3) 
 
92.4

(2,3) 

33

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


Location/Description
 
Type
 
Fair Value at
September 30, 2019
 
December 31, 2018
 
 
 
 
(Unaudited)
 
 
 
Storage Portfolio II, LLC
Storage Portfolio II (90% Account Interest)
 
Storage
 
$
126.9

(2,3) 
 
$
120.4

(2,3) 
Storage Portfolio III, LLC
Storage Portfolio III (90% Account Interest)
 
Storage
 
36.3

(3) 
 

 
TOTAL REAL ESTATE JOINT VENTURES
(Cost $5,784.1 and $5,030.9)
 
 
 
$
6,955.2

 
 
$
6,356.6

 
 
 
 
 
 
 
 
 
 
LIMITED PARTNERSHIPS—0.7% and 0.6%
 
 
 
 
Clarion Gables Multi-Family Trust LP (0.00% Account Interest)
 
$

 
 
$
30.1

 
LCS SHIP Venture I, LLC (90% Account Interest)
 
165.1

 
 
129.7

 
SP V - II, LLC (79.220% Account Interest)
 
5.4

 
 

 
Taconic New York City GP Fund, LP (60% Account Interest)
 
27.6

 
 
15.7

 
Transwestern Mezz Realty Partners III, LLC (11.715% Account Interest)
 

 
 
0.4

 
Veritas - Trophy VI, LLC (90% Account Interest)
 
3.0

 
 

 
TOTAL LIMITED PARTNERSHIPS
(Cost $200.4 and $176.9)
 
 
 
$
201.1

 
 
$
175.9

 
TOTAL REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS
(Cost $5,984.5 and $5,207.8)
 
$
7,156.3

 
 
$
6,532.5

 
MARKETABLE SECURITIES—17.3% and 19.4%
REAL ESTATE-RELATED MARKETABLE SECURITIES—2.9% and 5.0%
Shares
 
Issuer
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
(Unaudited)
 
 
 
24,729

 
110,762

 
Acadia Realty Trust
 
$
0.7


 
$
2.6

 
77,213

 
46,535

 
Agree Realty Corporation
 
5.6


 
2.8

 
20,424

 
94,479

 
Alexander & Baldwin, Inc.
 
0.5


 
1.7

 
635

 
2,986

 
Alexander's, Inc.
 
0.2


 
0.9

 
114,421

 
146,953

 
Alexandria Real Estate Equities, Inc.
 
17.6


 
16.9

 
14,387

 
52,670

 
American Assets Trust, Inc.
 
0.7


 
2.1

 
40,898

 
188,889

 
American Campus Communities, Inc.
 
2.0


 
7.8

 
31,822

 
75,276

 
American Financial Trust, Inc.
 
0.4

(7) 
 
1.0

(7) 
241,918

 
357,614

 
American Homes 4 Rent
 
6.3


 
7.1

 
286,313

 
606,653

 
American Tower Corp.
 
63.1


 
96.0

 
277,312

 
118,616

 
Americold Realty Trust
 
10.3


 
3.0

 
44,204

 
213,704

 
Apartment Investment and Management Company
 
2.3


 
9.4

 
62,827

 
301,399

 
Apple Hospitality Inc.
 
1.0


 
4.3

 
15,666

 
69,576

 
Armada Hoffler Properties Inc.
 
0.3


 
1.0

 
26,793

 
108,956

 
Ashford Hospitality Trust, Inc.
 
0.1


 
0.4

 
106,700

 
190,742

 
Avalonbay Communities, Inc.
 
22.9


 
33.2

 
7,650

 
30,596

 
Bluerock Residential Growth, Inc.
 
0.1


 
0.3

 
110,302

 
213,492

 
Boston Properties, Inc.
 
14.3


 
24.0

 
8,938

 
39,766

 
Braemar Hotels & Resorts, Inc.
 
0.1


 
0.4

 
52,132

 
243,776

 
Brandywine Realty Trust
 
0.8


 
3.1

 
88,801

 
418,058

 
Brixmore Property Group Inc
 
1.8


 
6.1

 
22,065

 
173,572

 
Brookfield Property REIT
 
0.4


 
2.8

 
2,900

 
12,485

 
BRT Apartments Corporation
 
0.1


 
0.1

 
27,938

 
123,044

 
Camden Property Trust
 
3.1


 
10.8

 

34

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


Shares
 
Issuer
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
(Unaudited)
 
 
 
28,420

 
115,194

 
CareTrust REIT Inc.
 
$
0.7


 
$
2.1

 
14,592

 
64,018

 
Catchmark Timber Trust, Inc.
 
0.2


 
0.5

 
50,454

 
239,329

 
CBL & Associates Properties, Inc.
 
0.1

(7) 
 
0.5

 
25,522

 
112,105

 
Cedar Shopping Centers, Inc.
 
0.1


 
0.4

 
13,659

 
65,187

 
Chatham Lodging Trust
 
0.2


 
1.2

 

 
80,952

 
Chesapeake Lodging Trust
 


 
2.0

 
11,538

 
47,817

 
City Office REIT Inc.
 
0.2


 
0.5

 
5,192

 
21,288

 
Clipper Realty, Inc.
 
0.1


 
0.3

 
492,974

 
661,676

 
Colony Capital, Inc.
 
3.0


 
3.1

 
34,825

 
163,866

 
Columbia Property Trust Inc.
 
0.7


 
3.2

 
5,492

 
23,436

 
Community Healthcare Trust, Inc.
 
0.2


 
0.7

 
35,462

 
162,853

 
CoreCivic, Inc.
 
0.6


 
2.9

 
3,830

 
16,269

 
Corenergy Infrastructure Trust, Inc.
 
0.2

(7) 
 
0.5

 
11,903

 
57,463

 
Corepoint Lodging, Inc.
 
0.1


 
0.7

 
10,972

 
50,118

 
CoreSite Realty Corporation
 
1.3


 
4.4

 
33,505

 
142,696

 
Corporate Office Properties Trust
 
1.0


 
3.0

 
43,565

 
580,413

 
Cousins Properties, Inc.
 
1.6


 
4.6

 
247,302

 
572,594

 
Crown Castle International Corporation
 
34.3


 
62.2

 
57,474

 
255,847

 
Cubesmart
 
2.0


 
7.3

 
103,485

 
144,491

 
CyrusOne Inc.
 
8.2


 
7.6

 
59,944

 
284,793

 
DiamondRock Hospitality Company
 
0.6


 
2.6

 
110,225

 
284,543

 
Digital Realty Trust, Inc.
 
14.3


 
30.3

 
49,622

 
222,742

 
Douglas Emmett, Inc.
 
2.1


 
7.6

 
242,591

 
493,225

 
Duke Realty Corporation
 
8.2


 
12.8

 
23,426

 
86,054

 
Easterly Government Properties, Inc.
 
0.5


 
1.3

 
41,045

 
48,463

 
EastGroup Properties, Inc.
 
5.1


 
4.4

 
44,235

 
196,612

 
Empire State Realty Trust
 
0.6


 
2.8

 
23,023

 
102,222

 
EPR Properties
 
1.8


 
6.5

 
60,621

 
110,827

 
Equinix Inc.
 
34.9


 
39.1

 
135,941

 
118,255

 
Equity Lifestyle Properties, Inc.
 
18.2


 
11.5

 
279,559

 
495,921

 
Equity Residential
 
24.0


 
32.7

 
187,627

 
47,818

 
Essential Properties Realty
 
4.3


 
0.7

 
62,593

 
90,861

 
Essex Property Trust, Inc.
 
20.4


 
22.3

 
107,005

 
168,808

 
Extra Space Storage, Inc.
 
12.5


 
15.3

 
8,142

 
39,335

 
Farmland Partners, Inc.
 
0.1

 
 
0.2

 
71,336

 
100,845

 
Federal Realty Investment Trust
 
9.7


 
11.9

 
37,538

 
171,124

 
First Industrial Realty Trust, Inc.
 
1.5


 
4.9

 
20,389

 
95,288

 
Four Corners Property Trust
 
0.6


 
2.5

 
30,896

 
148,193

 
Franklin Street Properties Corp.
 
0.3


 
0.9

 
14,739

 
66,846

 
Front Yard Residential Corp.
 
0.2


 
0.6

 
180,543

 
279,615

 
Gaming and Leisure Properties, Inc.
 
6.9


 
9.0

 
160,000

 

 
GDS Holdings LTD ADR
 
3.9


 

 
35,427

 
164,774

 
GEO Group Inc./The
 
0.6

 
 
3.2

 
9,933

 
45,390

 
Getty Realty Corp.
 
0.3


 
1.3

 
9,121

 
40,600

 
Gladstone Commercial Corporation
 
0.2


 
0.7

 
6,226

 
17,897

 
Gladstone Land Corporation
 
0.1


 
0.2

 
9,380

 
27,913

 
Global Medical REIT, Inc.
 
0.1


 
0.2

 
25,120

 
97,753

 
Global Net Lease, Inc.
 
0.5


 
1.7

 

 
134,722

 
Government Properties Income Trust
 


 
0.9

 

35

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


Shares
 
Issuer
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
(Unaudited)
 
 
 
472,248

 
651,177

 
HCP, Inc.
 
$
16.8


 
$
18.2

 
38,088

 
170,298

 
Healthcare Realty Trust Inc.
 
1.3


 
4.8

 
60,957

 
285,255

 
Healthcare Trust of America
 
1.8


 
7.2

 
10,385

 
50,946

 
Hersha Hospitality Trust
 
0.2


 
0.9

 
30,535

 
140,879

 
Highwoods Properties, Inc.
 
1.4


 
5.5

 

 
225,198

 
Hospitality Properties Trust
 


 
5.4

 
626,604

 
1,014,135

 
Host Hotels & Resorts, Inc.
 
10.8


 
16.9

 
275,440

 
213,134

 
Hudson Pacific Properties, Inc.
 
9.2


 
6.2

 
26,784

 
123,683

 
Independence Realty Trust, Inc.
 
0.4


 
1.1

 
19,292

 
88,878

 
Industrial Logics Properties
 
0.4


 
1.7

 
55,000

 

 
Interxion Holding NV
 
2.2

 
 

 
3,467

 
16,729

 
Investors Real Estate Trust
 
0.3


 
0.8

 
522,733

 
414,132

 
Invitation Homes, Inc.
 
15.5


 
8.3

 
85,292

 
393,221

 
Iron Mountain Inc.
 
2.8


 
12.7

 
370,420

 
1,500,000

 
iShares Dow Jones US Real Estate Index Fund
 
34.6

 
 
112.4

(7) 
36,559

 
144,518

 
JBG Smith Properties
 
1.4


 
5.0

 
94,618

 
136,455

 
Kilroy Realty Corporation
 
7.4


 
8.6

 
120,796

 
563,416

 
Kimco Realty Corporation
 
2.5


 
8.3

 
24,663

 
113,467

 
Kite Realty Group Trust
 
0.4


 
1.6

 
25,456

 
116,496

 
Lamar Advertising Corporation
 
2.1


 
8.1

 
68,192

 
293,991

 
Lexington Realty Trust
 
0.7


 
2.4

 
46,597

 
204,392

 
Liberty Property Trust
 
2.4


 
8.6

 
13,885

 
63,299

 
Life Storage, Inc.
 
1.5


 
5.9

 
11,718

 
54,350

 
LTC Properties, Inc.
 
0.6


 
2.3

 
25,783

 
123,992

 
Mack-Cali Realty Corporation
 
0.6


 
2.4

 

 
44,471

 
Medequities Realty Trust, Inc.
 


 
0.3

 
132,480

 
503,539

 
Medical Properties Trust, Inc.
 
2.6


 
8.1

 
98,997

 
157,147

 
Mid-America Apartment Communities, Inc.
 
12.9


 
15.0

 
27,502

 
121,059

 
Monmouth Real Estate Investment Corporation
 
0.4


 
1.5

 
12,460

 
56,533

 
National Health Investors, Inc.
 
1.0


 
4.3

 
48,498

 
219,159

 
National Retail Properties, Inc.
 
2.7


 
10.6

 
17,663

 
78,758

 
National Storage Affiliates Trust
 
0.6


 
2.1

 
24,918

 
97,013

 
New Senior Investment Group
 
0.2


 
0.4

 
5,632

 
25,395

 
Nexpoint Residential Trust, Inc.
 
0.3


 
0.9

 

 
60,527

 
NorthStar Realty Europe Corp.
 


 
0.9

 
14,200

 

 
Office Properties Income Trust, Inc.
 
0.4

 
 

 
63,931

 
273,749

 
Omega Healthcare Investors, Inc.
 
2.7


 
9.6

 
4,628

 
21,786

 
One Liberty Properties, Inc.
 
0.1


 
0.5

 
42,727

 
192,190

 
Outfront Media Inc.
 
1.2

 
 
3.5

 
60,247

 
289,253

 
Paramount Group Inc.
 
0.8


 
3.6

 
71,359

 
276,143

 
Park Hotels & Resorts, Inc.
 
1.8


 
7.2

 
158,713

 
186,399

 
Pebblebrook Hotel Trust
 
4.4


 
5.3

 
20,665

 
96,360

 
Pennsylvania Real Estate Investment Trust
 
0.1

(7) 
 
0.6

 
55,271

 
250,372

 
Physicians Realty Trust
 
1.0


 
4.0

 
37,274

 
177,784

 
Piedmont Office Realty Trust, Inc.
 
0.8


 
3.0

 
19,688

 
91,285

 
Potlatch Corporation
 
0.8


 
2.9

 
13,220

 
54,653

 
Preferred Apartment Communities, Inc.
 
0.2


 
0.8

 
473,166

 
865,465

 
ProLogis
 
40.3


 
50.8

 
5,958

 
27,314

 
PS Business Parks, Inc.
 
1.1


 
3.6

 

36

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


Shares
 
Issuer
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
(Unaudited)
 
 
 
82,353

 
205,162

 
Public Storage, Inc.
 
$
20.2


 
$
41.5

 
92,290

 
69,517

 
QTS Realty Trust, Inc.
 
4.7


 
2.6

 
38,741

 
178,720

 
Rayonier, Inc.
 
1.1


 
4.9

 
195,329

 
408,129

 
Realty Income Corporation
 
15.0


 
25.7

 
196,775

 
210,244

 
Regency Centers Corporation
 
13.7


 
12.3

 
33,519

 
155,276

 
Retail Opportunity Investment
 
0.6


 
2.5

 
63,727

 
298,353

 
Retail Properties of America
 
0.8


 
3.2

 
4,440

 
21,416

 
Retail Value, Inc.
 
0.2


 
0.6

 
372,611

 
126,860

 
Rexford Industrial Realty Inc.
 
16.4


 
3.7

 
51,255

 
239,679

 
RLJ Lodging Trust
 
0.9


 
3.9

 
23,246

 
113,496

 
RPT Realty
 
0.3


 
1.4

 
13,660

 
61,126

 
Ryman Hospitality Properties
 
1.1


 
4.1

 
56,240

 
244,568

 
Sabra Health Care REIT Inc.
 
1.3


 
4.0

 
3,168

 

 
Safe Hold, Inc.
 
0.1

 
 

 

 
10,996

 
Safety Income and Growth, Inc
 


 
0.2

 
3,537

 
16,999

 
Saul Centers, Inc.
 
0.2


 
0.9

 
77,086

 
154,833

 
SBA Communications Corporation
 
18.6


 
25.1

 

 
121,549

 
Select Income Real Estate Investment Trust
 


 
0.9

 
70,465

 
326,164

 
Senior Housing Properties Trust
 
0.7


 
3.8

 
48,715

 

 
Service Properties Trust
 
1.3


 

 
201,101

 
426,117

 
Simon Property Group, Inc.
 
31.3


 
71.6

 
216,796

 
209,816

 
Site Centers Corporation
 
3.3


 
2.3

 
100,577

 
113,961

 
SL Green Realty Corp.
 
8.2


 
9.0

 

 
59,766

 
Spirit MTA REIT
 


 
0.4

 
26,804

 
117,972

 
Spirit Realty Capital Inc.
 
1.3


 
4.3

 
38,100

 
135,097

 
Stag Industrial, Inc.
 
1.1


 
3.4

 
40,000

 

 
Starwood Property Trust, Inc.
 
3.3


 

 
228,060

 
264,895

 
STORE Capital Corporation
 
8.5


 
7.5

 
30,813

 
141,848

 
Summit Hotel Properties, Inc.
 
0.4


 
1.4

 
134,502

 
116,162

 
Sun Communities, Inc.
 
20.0


 
11.8

 
66,821

 
313,714

 
Sunstone Hotel Investors, L.L.C.
 
0.9

 
 
4.1

 
27,198

 
126,963

 
Tanger Factory Outlet Centers, Inc.
 
0.4

(7) 
 
2.6

 
39,475

 
81,759

 
Taubman Centers, Inc.
 
1.6

 
 
3.8

 
139,208

 
80,363

 
Terreno Realty Corporation
 
7.1


 
2.8

 
42,266

 
188,118

 
The Macerich Company
 
1.3

(7) 
 
8.1

 

 
73,743

 
Tier Inc.
 


 
1.5

 
86,844

 
366,433

 
UDR, Inc.
 
4.2


 
14.5

 
10,668

 
46,595

 
UMH Properties, Inc.
 
0.2


 
0.6

 
55,082

 
231,999

 
UNITI Group, Inc.
 
0.4


 
3.6

 
3,816

 
18,151

 
Universal Health Realty Income Trust
 
0.4


 
1.1

 
34,264

 
150,757

 
Urban Edge Properties
 
0.7


 
2.5

 
8,803

 
42,533

 
Urstadt Biddle Properties, Inc.
 
0.2


 
0.9

 
110,000

 

 
Vanguard Real Estate ETF
 
10.3


 

 
209,521

 
491,993

 
Ventas, Inc.
 
15.3


 
28.8

 
316,093

 
1,342,240

 
VEREIT, Inc.
 
3.1


 
9.6

 
378,200

 
554,541

 
Vici Properties, Inc.
 
8.6


 
10.4

 
51,735

 
238,674

 
Vornado Realty Trust
 
3.3

 
 
14.8

 
55,611

 
257,311

 
Washington Prime Group, Inc.
 
0.2

(7) 
 
1.3

 
23,876

 
110,436

 
Washington Real Estate Investment Trust
 
0.7


 
2.5

 

37

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


Shares
 
Issuer
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
(Unaudited)
 
 
 
36,198

 
165,849

 
Weingarten Realty Investors
 
$
1.1


 
$
4.1

 
284,389

 
514,421

 
Welltower Inc.
 
25.8


 
35.7

 
413,061

 
1,035,575

 
Weyerhaeuser Company
 
11.4


 
22.6

 
11,404

 
54,425

 
Whitestone Real Estate Investment Trust B
 
0.2


 
0.7

 
50,601

 
219,891

 
WP Carey Inc.
 
4.5


 
14.4

 
33,741

 
154,344

 
Xenia Hotels & Resorts, Inc.
 
0.7


 
2.7

 
TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES
(Cost $690.3 and $1,274.7)
 
$
852.9

 
 
$
1,415.1

 
OTHER MARKETABLE SECURITIES—14.4% and 14.4%
GOVERNMENT AGENCY NOTES—1.9% and 7.2%
Principal
 
Issuer
 
Yield(4)
 
Maturity
Date
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
$

 
$
20.0

 
Fannie Mae Discount Notes
 
2.270%
 
1/9/2019
 
$

 
$
20.0


 
3.6

 
Fannie Mae Discount Notes
 
2.350%
 
2/6/2019
 

 
3.5


 
22.6

 
Fannie Mae Discount Notes
 
2.390%
 
2/13/2019
 

 
22.5


 
17.6

 
Fannie Mae Discount Notes
 
2.350%
 
3/1/2019
 

 
17.5

20.0

 

 
Fannie Mae Discount Notes
 
1.910%
 
10/28/2019
 
20.0

 


 
6.0

 
Farmer Mac Discount Notes
 
2.440%
 
3/15/2019
 

 
6.0


 
9.1

 
Federal Farm Credit Bank Discount Notes
 
2.380%
 
3/18/2019
 

 
9.0


 
18.0

 
Federal Farm Credit Bank Discount Notes
 
2.490%
 
5/2/2019
 

 
17.9


 
20.0

 
Federal Farm Credit Bank Discount Notes
 
2.540%
 
5/23/2019
 

 
19.8


 
33.0

 
Federal Home Loan Bank Discount Notes
 
2.167%-2.195%
 
1/11/2019
 

 
33.0


 
37.6

 
Federal Home Loan Bank Discount Notes
 
2.220%
 
1/14/2019
 

 
37.6


 
36.2

 
Federal Home Loan Bank Discount Notes
 
2.220%
 
1/15/2019
 

 
36.2


 
35.0

 
Federal Home Loan Bank Discount Notes
 
2.220%
 
1/16/2019
 

 
35.0


 
40.9

 
Federal Home Loan Bank Discount Notes
 
2.189%-2.197%
 
1/18/2019
 

 
40.9


 
29.5

 
Federal Home Loan Bank Discount Notes
 
2.190%
 
1/23/2019
 

 
29.5


 
25.6

 
Federal Home Loan Bank Discount Notes
 
2.330%
 
1/28/2019
 

 
25.6


 
12.0

 
Federal Home Loan Bank Discount Notes
 
2.250%
 
1/29/2019
 

 
12.0


 
40.0

 
Federal Home Loan Bank Discount Notes
 
2.260%-2.265%
 
1/30/2019
 

 
39.9


 
14.3

 
Federal Home Loan Bank Discount Notes
 
2.290%
 
2/8/2019
 

 
14.3


 
30.0

 
Federal Home Loan Bank Discount Notes
 
2.300%-2.319%
 
2/11/2019
 

 
29.9


 
24.7

 
Federal Home Loan Bank Discount Notes
 
2.340%
 
2/15/2019
 

 
24.6


 
35.0

 
Federal Home Loan Bank Discount Notes
 
2.331%-2.353%
 
2/19/2019
 

 
34.9


 
36.8

 
Federal Home Loan Bank Discount Notes
 
2.235%-2.353%
 
2/20/2019
 

 
36.6


 
45.0

 
Federal Home Loan Bank Discount Notes
 
2.294%-2.314%
 
2/22/2019
 

 
44.8


 
14.1

 
Federal Home Loan Bank Discount Notes
 
2.330%
 
2/25/2019
 

 
14.0


 
40.0

 
Federal Home Loan Bank Discount Notes
 
2.330%
 
2/26/2019
 

 
39.9


 
21.5

 
Federal Home Loan Bank Discount Notes
 
2.330%
 
2/27/2019
 

 
21.4


 
26.4

 
Federal Home Loan Bank Discount Notes
 
2.310%
 
3/1/2019
 

 
26.3


 
31.5

 
Federal Home Loan Bank Discount Notes
 
2.316%-2.355%
 
3/6/2019
 

 
31.4


 
40.0

 
Federal Home Loan Bank Discount Notes
 
2.370%
 
3/8/2019
 

 
39.8


 
37.3

 
Federal Home Loan Bank Discount Notes
 
2.432%-2.437%
 
3/11/2019
 

 
37.2


 
40.0

 
Federal Home Loan Bank Discount Notes
 
2.420%
 
3/12/2019
 

 
39.8


 
40.0

 
Federal Home Loan Bank Discount Notes
 
2.400%
 
3/13/2019
 

 
39.8


 
10.0

 
Federal Home Loan Bank Discount Notes
 
2.360%
 
3/15/2019
 

 
10.0


38

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


Principal
 
Issuer
 
Yield(4)
 
Maturity
Date
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
$

 
$
30.0

 
Federal Home Loan Bank Discount Notes
 
2.360%
 
3/19/2019
 
$

 
$
29.8


 
12.0

 
Federal Home Loan Bank Discount Notes
 
2.430%
 
3/21/2019
 

 
11.9


 
22.4

 
Federal Home Loan Bank Discount Notes
 
2.410%
 
3/26/2019
 

 
22.2


 
25.3

 
Federal Home Loan Bank Discount Notes
 
2.370%
 
3/27/2019
 

 
25.1


 
40.0

 
Federal Home Loan Bank Discount Notes
 
2.460%
 
4/5/2019
 

 
39.7


 
40.0

 
Federal Home Loan Bank Discount Notes
 
2.470%
 
4/8/2019
 

 
39.7


 
50.0

 
Federal Home Loan Bank Discount Notes
 
2.440%
 
4/10/2019
 

 
49.7


 
24.1

 
Federal Home Loan Bank Discount Notes
 
2.440%
 
4/12/2019
 

 
23.9


 
14.1

 
Federal Home Loan Bank Discount Notes
 
2.440%-2.500%
 
4/24/2019
 

 
14.0


 
10.6

 
Federal Home Loan Bank Discount Notes
 
2.450%-2.500%
 
4/26/2019
 

 
10.5


 
87.0

 
Federal Home Loan Bank Discount Notes
 
2.470%-2.510%
 
4/29/2019
 

 
86.3


 
24.0

 
Federal Home Loan Bank Discount Notes
 
2.470%-2.510%
 
5/3/2019
 

 
23.8


 
18.5

 
Federal Home Loan Bank Discount Notes
 
2.440%-2.550%
 
5/15/2019
 

 
18.3


 
40.5

 
Federal Home Loan Bank Discount Notes
 
2.520%
 
5/17/2019
 

 
40.1


 
30.0

 
Federal Home Loan Bank Discount Notes
 
2.530%
 
5/22/2019
 

 
29.7

39.7

 

 
Federal Home Loan Bank Discount Notes
 
1.902%-2.053%
 
10/11/2019
 
39.7

 

10.0

 

 
Federal Home Loan Bank Discount Notes
 
1.980%
 
10/18/2019
 
10.0

 

10.0

 

 
Federal Home Loan Bank Discount Notes
 
1.860%
 
10/21/2019
 
10.1

 

50.0

 

 
Federal Home Loan Bank Discount Notes
 
2.050%
 
10/23/2019
 
50.0

 

149.8

 

 
Federal Home Loan Bank Discount Notes
 
2.053%
 
10/24/2019
 
149.8

 

50.0

 

 
Federal Home Loan Bank Discount Notes
 
1.940%
 
11/6/2019
 
49.9

 

110.0

 

 
Federal Home Loan Bank Discount Notes
 
1.993%-1.994%
 
11/8/2019
 
110.0

 

55.5

 

 
Federal Home Loan Bank Discount Notes
 
1.987%
 
11/15/2019
 
55.4

 

42.2

 

 
Federal Home Loan Bank Discount Notes
 
1.940%
 
11/18/2019
 
42.1

 

10.0

 

 
Federal Home Loan Bank Discount Notes
 
1.970%
 
11/19/2019
 
10.0

 

0.3

 

 
Federal Home Loan Bank Discount Notes
 
1.880%
 
12/10/2019
 
0.2

 

10.0

 

 
Federal Home Loan Bank Discount Notes
 
1.970%
 
12/11/2019
 
10.0

 


 
25.0

 
Freddie Mac Discount Notes
 
2.130%
 
1/2/2019
 

 
25.0


 
32.4

 
Freddie Mac Discount Notes
 
2.146%-2.174%
 
1/4/2019
 

 
32.4


 
35.1

 
Freddie Mac Discount Notes
 
2.146%-2.175%
 
1/7/2019
 

 
35.1


 
35.0

 
Freddie Mac Discount Notes
 
2.130%
 
1/8/2019
 

 
35.0


 
40.0

 
Freddie Mac Discount Notes
 
2.130%
 
1/9/2019
 

 
40.0


 
36.1

 
Freddie Mac Discount Notes
 
2.179%-2.217%
 
1/22/2019
 

 
36.1


 
40.0

 
Freddie Mac Discount Notes
 
2.190%
 
1/25/2019
 

 
39.9


 
16.0

 
Freddie Mac Discount Notes
 
2.200%
 
1/28/2019
 

 
15.9


 
15.0

 
Freddie Mac Discount Notes
 
2.200%
 
1/29/2019
 

 
15.0


 
39.9

 
Freddie Mac Discount Notes
 
2.190%
 
2/1/2019
 

 
39.8


 
25.9

 
Freddie Mac Discount Notes
 
2.240%
 
2/4/2019
 

 
25.8


 
35.0

 
Freddie Mac Discount Notes
 
2.240%
 
2/5/2019
 

 
34.9


 
30.0

 
Freddie Mac Discount Notes
 
2.240%
 
2/6/2019
 

 
29.9


 
39.3

 
Freddie Mac Discount Notes
 
2.300%
 
2/12/2019
 

 
39.1


 
15.0

 
Freddie Mac Discount Notes
 
2.250%
 
2/20/2019
 

 
15.0


 
21.3

 
Freddie Mac Discount Notes
 
2.290%
 
3/4/2019
 

 
21.3


 
17.1

 
Freddie Mac Discount Notes
 
2.330%
 
3/5/2019
 

 
17.1


 
23.8

 
Freddie Mac Discount Notes
 
2.380%
 
3/20/2019
 

 
23.6


 
19.5

 
Freddie Mac Discount Notes
 
2.390%
 
3/22/2019
 

 
19.4


 
25.9

 
Freddie Mac Discount Notes
 
2.380%
 
3/25/2019
 

 
25.8


 
30.0

 
Freddie Mac Discount Notes
 
2.410%
 
4/1/2019
 

 
29.8


39

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


Principal
 
Issuer
 
Yield(4)
 
Maturity
Date
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
$

 
$
16.1

 
Freddie Mac Discount Notes
 
2.380%-2.430%
 
4/2/2019
 
$

 
$
16.0


 
20.1

 
Freddie Mac Discount Notes
 
2.430%
 
4/3/2019
 

 
20.0


 
40.0

 
Freddie Mac Discount Notes
 
2.460%
 
4/17/2019
 

 
39.7


 
24.1

 
Freddie Mac Discount Notes
 
2.520%
 
5/20/2019
 

 
23.8

TOTAL GOVERNMENT AGENCY NOTES
(Cost $557.2 and $2,050.8)
 
$
557.2

 
$
2,050.7

UNITED STATES TREASURY SECURITIES—8.6% and 7.2%
Principal
 
Issuer
 
Yield / Coupon Rate(4)
 
Maturity
Date
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
$

 
$
33.8

 
United States Treasury Bills
 
2.147%-2.334%
 
 
1/3/2019
 
$

 
$
33.8


 
50.0

 
United States Treasury Bills
 
2.330%
 
 
1/8/2019
 

 
50.0


 
189.9

 
United States Treasury Bills
 
2.162%-2.321%
 
 
1/10/2019
 

 
189.8


 
82.1

 
United States Treasury Bills
 
2.279%-2.316%
 
 
1/15/2019
 

 
82.0


 
150.1

 
United States Treasury Bills
 
2.204%-2.315%
 
 
1/17/2019
 

 
149.9


 
153.0

 
United States Treasury Bills
 
2.226%-2.332%
 
 
1/24/2019
 

 
152.8


 
50.0

 
United States Treasury Bills
 
2.370%
 
 
1/29/2019
 

 
49.9


 
67.3

 
United States Treasury Bills
 
2.235%-2.405%
 
 
1/31/2019
 

 
67.2


 
100.0

 
United States Treasury Bills
 
2.254%
 
 
2/7/2019
 

 
99.8


 
61.9

 
United States Treasury Bills
 
2.391%-2.401%
 
 
2/12/2019
 

 
61.7


 
108.0

 
United States Treasury Bills
 
2.253%-2.334%
 
 
2/14/2019
 

 
107.7


 
20.0

 
United States Treasury Bills
 
2.410%
 
 
2/19/2019
 

 
19.9


 
84.4

 
United States Treasury Bills
 
2.276%-2.277%
 
 
2/21/2019
 

 
84.1


 
18.0

 
United States Treasury Bills
 
2.440%
 
 
2/26/2019
 

 
17.9


 
31.8

 
United States Treasury Bills
 
2.298%-2.331%
 
 
2/28/2019
 

 
31.7


 
73.7

 
United States Treasury Bills
 
2.309%-2.379%
 
 
3/7/2019
 

 
73.4


 
130.0

 
United States Treasury Bills
 
2.339%-2.372%
 
 
3/14/2019
 

 
129.4


 
50.0

 
United States Treasury Bills
 
2.340%
 
 
3/21/2019
 

 
49.7


 
100.0

 
United States Treasury Bills
 
2.415%
 
 
3/28/2019
 

 
99.4


 
89.9

 
United States Treasury Bills
 
2.360%-2.450%
 
 
4/4/2019
 

 
89.3


 
99.5

 
United States Treasury Bills
 
2.420%-2.460%
 
 
4/11/2019
 

 
98.8


 
110.3

 
United States Treasury Bills
 
2.460%-2.470%
 
 
4/18/2019
 

 
109.5


 
57.1

 
United States Treasury Bills
 
2.390%-2.490%
 
 
4/25/2019
 

 
56.7


 
33.7

 
United States Treasury Bills
 
2.470%
 
 
5/2/2019
 

 
33.4


 
38.4

 
United States Treasury Bills
 
2.430%-2.500%
 
 
5/9/2019
 

 
38.1


 
62.7

 
United States Treasury Bills
 
2.430%-2.510%
 
 
5/16/2019
 

 
62.1

22.0

 

 
United States Treasury Bills
 
1.964%
 
 
10/8/2019
 
22.0

 

45.2

 

 
United States Treasury Bills
 
1.938%-2.477%
 
 
10/10/2019
 
45.2

 

254.8

 

 
United States Treasury Bills
 
1.796%-1.998%
 
 
10/15/2019
 
254.8

 

158.9

 

 
United States Treasury Bills
 
2.024%-2.031%
 
 
10/22/2019
 
158.9

 

49.9

 

 
United States Treasury Bills
 
1.980%
 
 
11/5/2019
 
49.9

 

66.6

 

 
United States Treasury Bills
 
2.479%-2.484%
 
 
11/7/2019
 
66.7

 

20.1

 

 
United States Treasury Bills
 
1.970%
 
 
11/21/2019
 
20.1

 

49.8

 

 
United States Treasury Bills
 
1.960%
 
 
11/29/2019
 
49.9

 

121.7

 

 
United States Treasury Bills
 
1.940%-1.967%
 
 
12/5/2019
 
121.7

 

219.0

 

 
United States Treasury Bills
 
1.789%-1.821%
 
 
3/19/2020
 
219.0

 


40

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


Principal
 
Issuer
 
Yield / Coupon Rate(4)
 
Maturity
Date
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
$
99.6

 
$

 
United States Treasury Notes
 
1.375%
 
 
5/31/2020
 
$
99.7

 
$

100.6

 

 
United States Treasury Notes
 
2.625%
 
 
7/31/2020
 
100.5

 

249.2

 

 
United States Treasury Notes
 
1.500%
 
 
8/15/2020
 
249.3

 

654.3

 

 
United States Treasury Notes
 
2.625%
 
 
8/15/2020
 
654.3

 

199.3

 

 
United States Treasury Notes
 
1.625%
 
 
6/30/2021
 
199.8

 

99.9

 

 
United States Treasury Notes
 
1.750%
 
 
7/31/2021
 
100.1

 

100.0

 

 
United States Treasury Notes
 
1.750%
 
 
7/15/2022
 
100.4

 

TOTAL UNITED STATES TREASURY SECURITIES
(Cost $2,511.1 and $2,038.1)
 
$
2,512.3

 
$
2,038.0

CORPORATE BOND SECURITIES—3.9% and 0.0%
Principal
 
Issuer
 
Coupon Rate
 
Credit Rating(8)
 
Maturity
Date
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
$
11.5

 
$

 
Air Lease Corporation
 
2.250%
 
BBB
 
1/15/2023
 
$
11.4

 
$

13.8

 

 
American Honda Finance
 
1.700%
 
A
 
9/9/2021
 
13.7

 

19.7

 

 
American Honda Finance
 
2.050%
 
A
 
1/10/2023
 
19.6

 

27.7

 

 
Apple, Inc.
 
1.700%
 
AA+
 
9/11/2022
 
27.7

 

29.2

 

 
Banco Santander SA
 
3.500%
 
A-
 
4/11/2022
 
30.0

 

7.0

 

 
Bank of American Corporation
 
2.151%
 
A-
 
11/9/2020
 
7.0

 

12.0

 

 
Bank of American Corporation
 
2.369%
 
A-
 
7/21/2021
 
12.0

 

21.6

 

 
Bank of American Corporation
 
2.503%
 
A-
 
10/21/2022
 
21.8

 

29.5

 

 
Bank of New York Mellon Corporation
 
1.950%
 
A
 
8/23/2022
 
29.5

 

8.1

 

 
BB+T Corporation
 
2.150%
 
A-
 
2/1/2021
 
8.1

 

3.5

 

 
Berkshire Hathaway Energy
 
2.400%
 
A-
 
2/1/2020
 
3.5

 

10.0

 

 
Boeing Co.
 
1.650%
 
A
 
10/30/2020
 
9.9

 

28.9

 

 
Boeing Co.
 
2.300%
 
A
 
8/1/2021
 
29.0

 

10.9

 

 
BPCE SA
 
2.750%
 
A+
 
12/2/2021
 
11.0

 

8.0

 

 
Canadian National Railway
 
2.400%
 
A
 
2/3/2020
 
8.0

 

21.8

 

 
Capital One, NA
 
2.150%
 
BBB+
 
9/6/2022
 
21.7

 

4.8

 

 
Caterpillar Financial Service
 
1.850%
 
A
 
9/4/2020
 
4.7

 

42.5

 

 
Caterpillar Financial Service
 
2.412%
 
A
 
3/8/2021
 
42.5

 

12.0

 

 
Centerpoint Energy Resource
 
4.500%
 
BBB+
 
1/15/2021
 
12.3

 

27.0

 

 
Columbia Pipeline Group
 
3.300%
 
Baa1
 
6/1/2020
 
27.2

 

24.5

 

 
Diageo Capital PLC
 
4.828%
 
A-
 
7/15/2020
 
25.0

 

34.5

 

 
Exxon Mobil Corporation
 
1.902%
 
AA+
 
8/16/2022
 
34.6

 

14.0

 

 
Fifth Third Bank
 
2.875%
 
BBB+
 
7/27/2020
 
14.1

 

5.0

 

 
Fifth Third Bank
 
2.250%
 
A-
 
6/14/2021
 
5.0

 

4.0

 

 
General Dynamics Corporation
 
2.875%
 
A+
 
5/11/2020
 
4.0

 

2.3

 

 
Georgia Power Company
 
2.000%
 
A-
 
3/30/2020
 
2.3

 

15.0

 

 
Georgia Power Company
 
2.000%
 
A-
 
9/8/2020
 
15.0

 

8.0

 

 
Georgia Power Company
 
2.400%
 
A-
 
4/1/2021
 
8.0

 

30.7

 

 
Goldman Sachs Group, Inc.
 
2.550%
 
BBB+
 
10/23/2019
 
30.7

 

17.8

 

 
Goldman Sachs Group, Inc.
 
2.300%
 
BBB+
 
12/13/2019
 
17.8

 

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

 


41

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


Principal
 
Issuer
 
Coupon Rate
 
Credit Rating(8)
 
Maturity
Date
 
Fair Value at
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
$
25.0

 
$

 
Goldman Sachs Group, Inc.
 
2.350%
 
BBB+
 
11/15/2021
 
$
25.0

 
$

11.1

 

 
Honeywell International
 
1.400%
 
A
 
10/30/2019
 
11.1

 

3.3

 

 
Honeywell International
 
1.800%
 
A
 
10/30/2019
 
3.2

 

10.5

 

 
HSBC Bank USA, NA
 
4.875%
 
A
 
8/24/2020
 
10.8

 

11.7

 

 
John Deere Capital Corporation
 
1.950%
 
A
 
6/13/2022
 
11.8

 

25.0

 

 
JP Morgan Chase Bank, NA
 
2.604%
 
A+
 
2/1/2021
 
25.0

 

20.0

 

 
JP Morgan Chase Bank, NA
 
3.086%
 
A+
 
4/26/2021
 
20.1

 

65.0

 

 
Mitsubishi UFJ Financial Group
 
2.190%
 
A-
 
9/13/2021
 
64.9

 

9.2

 

 
Morgan Stanley
 
2.650%
 
BBB+
 
1/27/2020
 
9.3

 

20.0

 

 
Morgan Stanley
 
2.800%
 
BBB+
 
6/16/2020
 
20.1

 

8.3

 

 
Morgan Stanley
 
2.500%
 
BBB+
 
4/21/2021
 
8.4

 

7.0

 

 
Morgan Stanley
 
2.625%
 
BBB+
 
11/17/2021
 
7.1

 

18.4

 

 
MPLX LP
 
3.002%
 
BBB
 
9/9/2021
 
18.5

 

50.8

 

 
Nextera Energy Capital
 
2.403%
 
BBB+
 
9/1/2021
 
51.1

 

20.0

 

 
Occidental Petroleum Corporation
 
3.137%
 
BBB
 
2/8/2021
 
20.1

 

14.9

 

 
Occidental Petroleum Corporation
 
2.600%
 
BBB
 
8/13/2021
 
15.0

 

9.1

 

 
Occidental Petroleum Corporation
 
2.700%
 
BBB
 
8/15/2022
 
9.1

 

35.0

 

 
Omnicom GP/Omnicom CAP
 
4.450%
 
BBB+
 
8/15/2020
 
35.7

 

20.0

 

 
Oracle Corporation
 
1.900%
 
A+
 
9/15/2021
 
20.0

 

11.6

 

 
Paccar Financial Corporation
 
2.000%
 
A+
 
9/26/2022
 
11.6

 

19.3

 

 
Paypal Holdings, Inc.
 
2.200%
 
BBB+
 
9/26/2022
 
19.3

 

10.0

 

 
Progress Energy, Inc.
 
4.875%
 
BBB+
 
12/1/2019
 
10.0

 

38.7

 

 
S+P Global, Inc
 
3.300%
 
A3
 
8/14/2020
 
39.2

 

20.0

 

 
Skandinaviska Enskilda
 
1.875%
 
A+
 
9/13/2021
 
19.9

 

5.0

 

 
Sumitomo Mitsui Financial Group
 
2.934%
 
A-
 
3/9/2021
 
5.0

 

5.0

 

 
Sumitomo Mitsui Financial Group
 
2.058%
 
A-
 
7/14/2021
 
5.0

 

23.0

 

 
The Walt Disney Company
 
2.362%
 
A
 
9/1/2021
 
23.0

 

17.1

 

 
Toronto Dominion Bank
 
2.500%
 
AA-
 
12/14/2020
 
17.3

 

14.5

 

 
Toronto Dominion Bank
 
2.409%
 
A
 
3/17/2021
 
14.5

 

20.0

 

 
United Technologies Corporation
 
1.900%
 
BBB+
 
5/4/2020
 
20.0

 

14.0

 

 
Wells Fargo Bank, NA
 
2.150%
 
A+
 
12/6/2019
 
14.0

 

12.8

 

 
Wells Fargo Bank, NA
 
3.325%
 
A+
 
7/23/2021
 
12.9

 

30.0

 

 
Wells Fargo Bank, NA
 
2.082%
 
A+
 
9/9/2022
 
30.0

 

TOTAL CORPORATE BOND SECURITIES
(Cost $1,153.6 and $0.0)
 
$
1,154.8

 
$

TOTAL OTHER MARKETABLE SECURITIES
(Cost $4,221.9 and $4,088.9)
 
$
4,224.3

 
$
4,088.7

TOTAL MARKETABLE SECURITIES
(Cost $4,912.2 and $5,363.6)
 
 
 
$
5,077.2

 
$
5,503.8

LOANS RECEIVABLE—4.2% and 3.2%
 
 
Borrower
 
Property Type
 
Interest Rate(6)
 
Maturity Date
 
Fair Value at
Principal
 
 
 
 
 
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)

 
 
$
6.3

 
$
6.3

 
DJM Capital Partners Mezzanine
 
Retail
 
5.00%
 
7/12/2019
 
$
6.3

 
$
6.3

87.2

 
83.2

 
311 South Wacker Mezzanine
 
Office
 
4.70% + LIBOR
 
6/7/2020
 
86.5

 
83.2


42

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


 
 
Borrower
 
Property Type
 
Interest Rate(6)
 
Maturity Date
 
Fair Value at
Principal
 
 
 
 
 
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
$
92.2

 
$
95.2

 
Blackstone RioCan Retail Portfolio Mezzanine
 
Retail
 
4.65% + LIBOR
 
6/9/2020
 
$
92.2

 
$
95.3

60.0

 
60.0

 
River North Point Junior Mezzanine
 
Office
 
4.30% + LIBOR
 
7/9/2020
 
60.0

 
60.0

152.3

 
176.4

 
Project Glacier Mezzanine
 
Industrial
 
4.40% + LIBOR
 
11/9/2020
 
152.3

 
176.4

53.6

 

 
SCG Oakland Portfolio
 
Office
 
4.25% + LIBOR
 
3/1/2021
 
53.6

 

20.0

 
20.0

 
Crest at Las Colinas Station Mezzanine
 
Apartment
 
5.11% + LIBOR
 
5/10/2021
 
20.0

 
20.0

60.0

 

 
SoNo Collection Mezzanine
 
Retail
 
6.75% + LIBOR
 
8/6/2021
 
60.0

 

125.0

 
125.0

 
State Street Financial Center Mezzanine
 
Office
 
6.50%
 
11/10/2021
 
124.2

 
125.3

20.0

 
20.0

 
Modera Observatory Park Mezzanine
 
Apartment
 
4.34% + LIBOR
 
6/10/2022
 
20.0

 
20.0

47.5

 

 
San Diego Office Portfolio Mezzanine
 
Office
 
2.45% + LIBOR
 
8/9/2022
 
47.5

 

15.9

 

 
San Diego Office Portfolio Mezzanine
 
Office
 
2.45% + LIBOR
 
8/9/2022
 
15.9

 

20.6

 
19.7

 
Rosemont Towson Mezzanine
 
Apartment
 
4.15% + LIBOR
 
9/9/2022
 
20.6

 
19.7

26.9

 
26.7

 
1330 Broadway Mezzanine
 
Office
 
5.01% + LIBOR
 
8/10/2023
 
26.9

 
26.8

82.0

 
63.0

 
Great Value Storage Portfolio Mezzanine
 
Storage
 
7.88%
 
12/6/2023
 
82.0

 
63.2

85.0

 

 
Park Avenue Tower Mezzanine
 
Office
 
4.35% + LIBOR
 
3/9/2024
 
85.0

 

71.0

 

 
BREP VIII Industrial Loan Facility Mezzanine
 
Industrial
 
5.00% + LIBOR
 
3/9/2026
 
71.0

 

20.0

 
20.0

 
Aspen Lake Office Portfolio Mezzanine
 
Office
 
8.25%
 
3/10/2028
 
20.0

 
20.2

95.0

 
95.0

 
Merritt on the River Office Portfolio Mezzanine
 
Office
 
8.00%
 
8/1/2028
 
95.0

 
95.7

100.0

 
100.0

 
Charles River Plaza North Mezzanine
 
Office
 
6.08%
 
4/6/2029
 
100.0

 
100.9

TOTAL LOANS RECEIVABLE
(Cost $1,240.4 and $910.6)
 
 
 
 
$
1,239.0

 
$
913.0

LOANS RECEIVABLE WITH RELATED PARTIES—0.2% and 0.0%
 
 
Related Party
 
Property Type
 
Interest Rate(6)
 
Maturity Date
 
Fair Value at
Principal
 
 
 
 
 
September 30, 2019
 
December 31, 2018
2019
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)

 
 
$
36.5

 
$

 
MRA Hub 34 Holding, LLC
 
Office
 
2.50% + LIBOR
 
9/1/2022
 
$
36.5

 
$

32.8

 

 
THP Student Housing, LLC
 
Apartment
 
3.20%
 
9/1/2024
 
32.4

 

TOTAL LOANS RECEIVABLE WITH RELATED PARTIES
(Cost $69.3 and $0.0)
 
 
 
 
$
68.9

 
$

TOTAL INVESTMENTS
(Cost $24,921.8 and $24,169.8)
 
 
 
 
$
29,261.1

 
$
28,480.4

(1) 
The investment has a mortgage loan payable outstanding, as indicated in Note 9 - Loans 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 London Interbank Offered Rate ("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 at September 30, 2019 and December 31, 2018 were $2.7 million and $67.4 million, respectively.
(8) 
Credit ratings are sourced from Standard & Poor's ("S&P"), Moody's or Fitch. Ratings are presented using the S&P rating tier definition.

43


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, 2018 (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:
Acquiring and Owning Real Estate: 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);
Selling Real Estate: The risk that the sales price of a property may differ, perhaps significantly, from its estimated or appraised value, leading to losses or reduced profits to the Account, the risk that the Account might not be able to sell a property at a particular time for a price which management believes represents its fair or full value, the risk of a lack of availability of financing (for potential purchasers of the Account’s properties), risks associated with disruptions in the credit and capital markets, and the risk that the Account may be required to make significant expenditures before the Account is able to market and/or sell a property;
Valuation: 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 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: 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 associated with high loan to value ratios on the Account’s properties (including the fact that the Account may have limited, or no net value in such a property), the risk that significant sums of cash could be required to make principal and interest payments on the loans and the risk that the Account may not have the ability to obtain financing or refinancing on favorable terms (or at all), which may be aggravated by general disruptions in credit and capital markets;
Participant Transactions and Cash Management: 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 real estate-related investments exceeding our long-term targeted holding levels and (iii) high levels of cash and liquid non-real estate-related

44


investments in the Account during times of appreciating real estate values can impair the Account’s overall return;
Joint Venture Investments: The risks associated with joint ventures organized as limited partnerships or limited liability companies, as applicable, including the risk that a co-venturer may have interests or goals inconsistent with those of the Account, that a co-venturer 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;
Regulatory Matters: Uncertainties associated with environmental liability and regulations and other governmental regulatory matters such as zoning laws, rent control laws, and property taxes;
Foreign Investments: The risks associated with purchasing, owning and disposing foreign investments (primarily foreign real estate properties, foreign real estate loans, and foreign mezzanine and other debt), including political risk, the risk associated with foreign currency fluctuations (whether hedged or not), regulatory and taxation risks and risks of enforcing judgments;
Conflicts of Interest: Conflicts of interest associated with TIAA serving as investment manager of the Account and provider of the liquidity guarantee at the same time as TIAA and its affiliates are serving as an investment manager to other real estate accounts or funds, including conflicts associated with satisfying its fiduciary duties to all such accounts and funds associated with purchasing, selling and leasing of properties;
Required Property Sales: The risk that, if TIAA were to own too large a percentage of the Account’s accumulation units through funding the liquidity guarantee (as determined by the independent fiduciary), the independent fiduciary could require the sales of properties to reduce TIAA’s ownership interest, which sales could occur at times and at prices that depress the sale proceeds to the Account;
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, and that transaction activity may fluctuate significantly from time to time, which could negatively impact the value of the securities and the Account’s ability to dispose of a security at a favorable time; and
Liquid Assets and Securities: Risks associated with investments in real estate-related liquid assets (which could include, from time to time, registered or unregistered real estate investment trust (“REIT”) securities and commercial mortgage-backed securities (“CMBS”)), and non-real estate-related liquid assets (which could include, from time to time, commercial paper and investment-grade corporate bonds), including:
Financial/credit risk—Risks that the issuer will not be able to pay principal and interest when due or that the issuer’s earnings will fall;
Market volatility risk—Risk that the changing conditions in financial markets may cause the Account’s investments to experience price volatility;
Interest rate volatility risk—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; and
Deposit/money market risk—Risks 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 in this section below 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.
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, 2019 and may be subsequently revised. Prior period data may have been adjusted to reflect updated calculations. Investors

45


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 in February 1995 as an insurance 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 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 registered and unregistered equity investments in REITs, which investments may consist of common or preferred stock interests;
real estate limited partnerships and limited liability companies;
investments in equity or debt securities of companies whose operations involve real estate (i.e., that primarily own or manage real estate) which may not be REITs; and
conventional commercial mortgage loans, participating mortgage loans, secured domestic and foreign (including U.K.) mezzanine loans, subordinated loans and collateralized mortgage obligations, including commercial mortgage-backed securities ("CMBS") and other asset-backed securities.
The Account’s principal investment strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail and multi-family residential properties. The Account is targeted to hold between 65% and 85% of the Account’s net assets in such direct ownership interests.
In addition, while the Account is authorized to hold up to 25% of its net assets in liquid real estate-related securities, such as REITs and CMBS, management intends that the Account will not hold more than 10% of its net assets in such securities on a long-term basis. Traditionally, less than 10% of the Account’s net assets have been comprised of interests in these securities; although, the Account has held approximately 10% of its net assets in equity REIT securities at times. In addition, under the Account’s current investment guidelines, the Account is authorized to hold up to 10% of its net assets in CMBS. As of September 30, 2019, REIT securities comprised approximately 3.2% of the Account’s net assets, and the Account held no CMBS as of such date.
Non-Real Estate-Related Investments. The Account will invest the remaining portion of its assets (targeted to be between 15% and 25% of its net assets) in publicly traded, liquid investments; namely:
Short-term government-related instruments, including U.S. Treasury bills;
Long-term government-related instruments, such as securities issued by U.S. government agencies or U.S. government-sponsored entities;
Short-term non-government-related instruments, such as money market instruments, commercial paper, and investment grade corporate debt securities with maturities less than one year;
Intermediate-term non-government-related instruments, such as investment grade corporate debt securities with maturities greater than one year; and
Stock of companies that do not primarily own or manage real estate.

46



However, from time to time, the Account’s non-real estate-related liquid investments may comprise less than 15% (and possibly less than 10%) of its assets (on a net basis and/or a gross basis), especially during and immediately following periods of significant net participant outflows, in particular due to significant participant transfer activity. In addition, the Account, from time to time and on a temporary basis, may hold in excess of 25% of its net assets in non-real estate-related liquid 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 and CMBS, or (ii) be below the low end of its targeted holdings in such liquid securities (currently 15% of the Account’s net assets).
The portion of the Account’s net assets invested in liquid investments of all types may exceed the upper end of its target, for example, if (i) the Account receives a large inflow of money in a short period of time, in particular due to significant participant transfer activity into the Account, (ii) the Account receives significant proceeds from sales or financings of direct real estate assets, (iii) there is a lack of attractive direct real estate investments available on the market, and/or (iv) the Account anticipates more near-term cash needs, including to apply to acquire direct real estate investments, pay expenses or repay indebtedness.
Foreign Investments. The Account from time to time will also make foreign real estate investments. Under the Account’s investment guidelines, investments in direct foreign real estate, together with foreign real estate-related securities and foreign non-real estate-related liquid investments, may not comprise more than 25% of the Account’s net assets. As of September 30, 2019, the Account did not hold any foreign real estate investments.
THIRD QUARTER 2019 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
Actuals
 
Forecast
2Q19
 
3Q19
 
2019
 
2020
Economy(1)
 
 
 
 
 
 
 
Gross Domestic Product ("GDP")
2.3%
 
1.9%
 
2.3%
 
1.7%
Employment Growth (Thousands)
456
 
470
 
1,884
 
1,464
Unemployment Rate
3.7%
 
3.5%
 
3.7%
 
3.8%
Interest Rates(2)
 
 
 
 
 
 
 
10 Year Treasury
2.3%
 
1.8%
 
1.7%
 
1.9%
Sources: Blue Chip Economic Indicators, Blue Chip Financial Forecasts, 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.
According to the Bureau of Labor Statistics, the U.S. economy added 470,000 jobs during the third quarter of 2019, with an average of 157,000 jobs per month over the past three months, trailing the 12-month average of 179,000. The unemployment rate dropped to 3.5% in the third quarter, maintaining the lowest U.S. unemployment rate in over fifty years. The strength of the labor market paired with steady consumer confidence continue to serve as the key drivers behind U.S. economic growth.


47


The Federal Open Market Committee ("Committee") lowered rates twice in the third quarter and once more in October, with the target range moving to 1.50%-1.75%. Uncertainty caused by international trade tensions between the United States and its key trading partners has slowed business investment and manufacturing, with the Committee also acknowledging the yield curve inversion that emerged in the third quarter which has historically predicated recessionary activity. Their economic outlook on growth is mixed, as favorable indicators such as a tight domestic labor market and strong American consumption still exist, but the headwinds from trade tensions will be a considerable drag on growth over the near term.
Real Estate Market Conditions and Outlook
Commercial real estate conditions remained steady throughout the third quarter of 2019. According to the Green Street Advisor Commercial Property Price Index (“CPPI”), property prices rose 0.5% during the third quarter and 1.8% on a year-over-year basis. According to preliminary estimates from Real Capital Analytics, sales of office, industrial, retail, and multi-family properties totaled $133.5 billion during the third quarter of 2019, a 5.4% decrease from the same period one year earlier.
For the quarter ending September 30, 2019, the NCREIF Fund Index Open-End Diversified Core Equity (NFI-ODCE) Equal Weight total return, net of fees, increased to 1.18%, from 1.12% in the second quarter. The Account's real estate assets generated a 1.26% total return during the third quarter. Total returns were positive for the 38th consecutive quarter.

chart-78c304f091d1571aa08.jpg
Occupancy in the Account’s properties averaged 93.0% for the third quarter of 2019 as compared to 92.7% in the previous quarter. Data for the Account’s top five markets in terms of fair value as of September 30, 2019 are provided below. These five markets represent nearly half of the Account’s total real estate portfolio.
Top 5 Metro Areas by Fair Market Value
Account % Leased Fair Value Weighted*
Number of Property Investments
Metro Area Fair Value as a % of Total RE Portfolio**
Metro Area Fair Value as a % of Total Investments
New York-Jersey City-White Plains, NY-NJ
91.0%
14
11.2%
8.7%
Washington-Arlington-Alexandria, DC-VA-MD-WV
89.2%
13
10.6%
8.2%
Los Angeles-Long Beach-Glendale, CA
94.4%
15
9.5%
7.4%
Boston, MA
89.6%
6
6.0%
4.6%
San Diego-Carlsbad, CA
93.2%
13
5.7%
4.4%
*
Weighted by fair value, which differs from the calculations provided for market comparisons to CBRE-EA data and are used here to reflect the fair value of the Account’s monetary investments in those markets.
**
Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.

48


Office
Leasing is historically driven by companies involved in the professional and business services sector, with technology-related companies included within this classification. This sector added 114,000 jobs during the third quarter of 2019, with the financial services sector contributing an additional 37,000 jobs. Driven by declines in both suburban and downtown vacancy rates, vacancy nationwide decreased from 12.2% in the second quarter of 2019 to 12.1% in the third quarter of 2019, as reported by CB Richard Ellis Econometric Advisors ("CBRE-EA"). Vacancies continue to trend lowest in cities with significant technology or research exposure (e.g., San Francisco, Seattle), but the largest vacancy declines in recent months have been present in non-primary metro areas (i.e., metropolitan areas with less than five million people). The vacancy rate of the Account’s office portfolio increased to 13.1% in the third quarter as compared to 13.0% in the prior quarter, driven by scheduled lease expirations at some of the Account's properties in the Boston metro area. The vacancy rate is now above the Boston market average, but demand for the vacated space is strong and the Account expects to have new tenants under contract before the end of the year. 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.
 
 
 
 
 
 
Account Square
Foot Weighted
Average Vacancy
 
Market
Vacancy*
Top 5 Office Metropolitan Areas
 
Total Sector
by Metro Area
($M)
 
% of Total
Investments
 
2019 Q3
 
2019 Q2
 
2019 Q3
 
2019 Q2
Account / Nation
 
 
 
 
 
13.1
%
 
13.0
%
 
12.1
%
 
12.2
%
Washington-Arlington-Alexandria, DC-VA-MD-WV
 
$
1,484.0

 
5.1
%
 
13.0
%
 
14.7
%
 
13.9
%
 
14.2
%
Boston, MA
 
1,257.7

 
4.3
%
 
11.8
%
 
9.1
%
 
8.6
%
 
8.5
%
New York-Jersey City-White Plains, NY-NJ
 
1,197.3

 
4.1
%
 
27.3
%
 
25.3
%
 
8.6
%
 
9.0
%
San Francisco-Redwood City-South San Francisco, CA
 
896.1

 
3.1
%
 
5.1
%
 
4.3
%
 
4.9
%
 
5.1
%
Los Angeles-Long Beach-Glendale, CA
 
778.1

 
2.7
%
 
1.9
%
 
2.5
%
 
11.9
%
 
12.5
%
*
Source: CBRE-EA. Market vacancy is defined as the percentage of space vacant. The Account’s vacancy is defined as the square foot-weighted percentage of unleased space.
Industrial
Industrial market conditions are primarily influenced by GDP growth, international trade, and consumer spending, especially e-commerce sales. The national industrial availability rate increased for the second consecutive quarter from 7.1% in the prior quarter to 7.2% in the third quarter of 2019, as reported by CBRE-EA. Completions have been steady throughout 2019, but demand has largely absorbed new construction as it becomes available. While most of the completions in the sector have been build-to-suit, speculative projects in the pipeline are increasing, a reflection of the strong demand that continues to characterize the industrial sector. U.S. protectionist trade policies remain a notable headwind for the sector, but overall fundamentals of the sector remain healthy. The average vacancy rate of the Account’s industrial properties decreased to 4.5% in the third quarter of 2019 from 4.9% in the previous quarter, primarily driven by the acquisition of a 100% occupied property in the Phoenix metro area.

49


 
 
 
 
 
 
Account Square
Foot Weighted
Average Vacancy
 
Market
Vacancy*
Top 5 Industrial Metropolitan Areas
 
Total Sector
by Metro Area
($M)
 
% of Total
Investments
 
2019 Q3
 
2019 Q2
 
2019 Q3
 
2019 Q2
Account / Nation
 
 
 
 
 
4.5
%
 
4.9
%
 
7.2
%
 
7.1
%
Riverside-San Bernardino-Ontario, CA
 
$
946.0

 
3.2
%
 
0.0
%
 
0.0
%
 
5.7
%
 
5.8
%
Los Angeles-Long Beach-Glendale, CA
 
401.1

 
1.4
%
 
2.8
%
 
3.2
%
 
4.3
%
 
3.9
%
Tacoma-Lakewood, WA
 
389.5

 
1.3
%
 
2.9
%
 
1.4
%
 
5.7
%
 
5.8
%
Dallas-Plano-Irving, TX
 
298.1

 
1.0
%
 
5.3
%
 
6.6
%
 
8.4
%
 
8.8
%
Fort Lauderdale-Pompano Beach-Deerfield Beach, FL
 
294.3

 
1.0
%
 
0.5
%
 
1.1
%
 
6.8
%
 
6.9
%
*
Source: CBRE-EA. Market availability is the percentage of space available for rent. Account vacancy is the square foot-weighted percentage of unleased space. CBRE-EA considers Tacoma part of the Seattle industrial market. Market vacancy rates reflect the Seattle-Tacoma total.
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 national apartment vacancy rate decreased from 4.1% in the prior quarter to 3.7% in third quarter of 2019, as reported by RealPage. The national vacancy rate is the lowest since the first quarter of 2001. The sector continues to benefit from strong fundamentals, such as a tight labor market, but the sector is also the beneficiary of long-term U.S. housing trends, such as first-time buyers delaying home ownership and renting for longer than historical precedent. The sector is fundamentally sound but at the peak of its cycle, and conditions may soften moderately in the near-term. The vacancy rate of the Account’s apartment properties decreased to 6.1% in the third quarter of 2019 as compared to 6.6% in the prior quarter. Renovations are proceeding at several properties in the Account's portfolio, including some in the Washington, Los Angeles and Denver metro areas. The renovation efforts are expected to enhance the long-term value of the impacted properties, but vacancy in these metro areas may persist above the market averages in the near-term while renovations continue.
 
 
 
 
 
 
Account Units Weighted
Average Vacancy
 
Market
Vacancy*
Top 5 Apartment Metropolitan Areas
 
Total Sector
by Metro Area
($M)
 
% of Total
Investments
 
2019 Q3
 
2019 Q2
 
2019 Q3
 
2019 Q2
Account / Nation
 
 
 
 
 
6.1
%
 
6.6
%
 
3.7
%
 
4.1
%
Washington-Arlington-Alexandria, DC-VA-MD-WV
 
$
767.3

 
2.6
%
 
7.3
%
 
7.0
%
 
3.3
%
 
3.7
%
Los Angeles-Long Beach-Glendale, CA
 
703.9

 
2.4
%
 
8.3
%
 
9.0
%
 
3.2
%
 
3.5
%
New York-Jersey City-White Plains, NY-NJ
 
512.7

 
1.8
%
 
1.7
%
 
4.1
%
 
2.2
%
 
2.7
%
Denver-Aurora-Lakewood, CO
 
421.7

 
1.4
%
 
9.0
%
 
9.4
%
 
4.0
%
 
4.4
%
San Diego-Carlsbad, CA
 
323.4

 
1.1
%
 
4.0
%
 
3.4
%
 
3.2
%
 
3.3
%
*
Source: RealPage. Market vacancy is the percentage of units vacant. The Account’s vacancy is the percentage of unleased units.
Retail
Retail demand in the Account's portfolio is driven by U.S. consumers, whose willingness to spend directly correlates with retailers' need for domestic rental space. Preliminary data from the U.S. Census Bureau indicate that retail sales excluding motor vehicles and parts increased 1.4% in the third quarter of 2019 and 3.7% on a year-over-year basis. The retail leasing market is increasingly competitive, as the pool of retailers leasing space shrinks due to the long-term trend of consumers moving to digital platforms for retail spending instead of through traditional brick-and-mortar outlets. Retail properties that are older, located in suboptimal locations, or have significant exposure to low quality tenants are especially compromised as the market evolves, but well-positioned properties have shown resiliency due to continued demand for premier retail space. The Account's retail portfolio is composed primarily of high-end lifestyle

50


shopping centers and regional malls in large metropolitan or tourist centers. Moreover, the retail portfolio is managed to minimize significant exposure to any single retailer. The Account’s retail vacancy increased to 6.8% in the third quarter of 2019 from 6.7% in the prior quarter. Vacancy is at or below market averages in each of the retail subcategories.
 
 
 
 
 
 
Account Units Weighted
Average Vacancy
 
Market
Vacancy*
 
 
Total Sector
by Metro Area
($M)
 
% of Total
Sector
 
2019 Q3
 
2019 Q2
 
2019 Q3
 
2019 Q2
All Retail
 
 
 
 
 
6.8
%
 
6.7
%
 
6.1
%
 
6.2
%
   Lifestyle & Mall
 
$
2,415.7

 
57.7
%
 
5.4
%
 
4.5
%
 
5.4
%
 
5.3
%
   Neighborhood, Community & Strip
 
1,179.3

 
28.1
%
 
8.8
%
 
8.9
%
 
8.7
%
 
8.8
%
   Power Center**
 
595.1

 
14.2
%
 
2.7
%
 
4.6
%
 
7.0
%
 
7.1
%
* 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.
** 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.
INVESTMENTS
As of September 30, 2019, the Account held 77.6% of its total investments in real estate and real estate joint ventures. The Account also held investments in U.S. Treasury securities representing 8.6% of total investments, loans receivable including those with related parties representing 4.4% of total investments, corporate bonds representing 3.9% of total investments, real estate-related equity securities representing 2.9% of total investments, government agency notes representing 1.9% of total investments, and real estate limited partnerships representing 0.7% of total investments.
The outstanding principal on loans payable on the Account’s wholly-owned real estate portfolio as of September 30, 2019 was $2.3 billion. The Account’s proportionate share of outstanding principal on loans payable within its joint venture investments was $3.2 billion, which is netted against the underlying properties when determining the joint venture investment’s fair value presented on the Consolidated Schedules of Investments. When the loans payable within the joint venture investments are considered, total outstanding principal on the Account’s portfolio as of September 30, 2019 was $5.5 billion, which represented a loan to value ratio of 16.7%. The Account has no active loans outstanding on the Line of Credit as of September 30, 2019.
Management believes the Account’s real estate portfolio is diversified by location and property type. The Account’s largest investment, Fashion Show, located in Las Vegas, Nevada, represented 4.4% of total real estate investments and 3.5% of total investments. As discussed in the Account’s prospectus, the Account does not intend to buy and sell its real estate investments simply to make short-term profits. Rather, the Account’s general strategy in selling real estate investments is to dispose of those assets that management believes (i) have maximized in value, (ii) have underperformed or face deteriorating property-specific or market conditions, (iii) need significant capital infusions in the future, (iv) are appropriate to dispose of in order to remain consistent with the Account’s intent to diversify the Account by property type and geographic location (including reallocating the Account’s exposure to or away from certain property types in certain geographic locations), or (v) otherwise do not satisfy the investment objectives of the Account. Management, from time to time, will evaluate the need to manage liquidity in the Account as part of its analysis as to whether to undertake a particular asset sale. The Account could 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).





51


The following table lists the Account's ten largest investments as of September 30, 2019. 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 Name
 
Ownership Percentage
 
City
 
State
 
Type
 
Gross Real Estate Fair Value(1)
 
Debt Fair Value(2)
 
Net Real Estate Fair Value(3)
 
Property as a
% of Total
Real Estate
Portfolio
(4)
 
Property as a
% of Total
Investments
(5)
Fashion Show
 
50%
 
Las Vegas
 
NV
 
Retail
 
$
1,128.6

 
$
424.8

 
$
703.8

 
4.4%
 
3.5%
SITE Centers Corp
 
85%
 
Various
 
U.S.A.
 
Retail
 
1,023.3

 
254.9

 
768.4

 
4.0%
 
3.2%
The Florida Mall
 
50%
 
Orlando
 
FL
 
Retail
 
925.5

 
157.9

 
767.6

 
3.6%
 
2.9%
Simpson Housing Portfolio
 
80%
 
Various
 
U.S.A.
 
Apartment
 
802.4

 
400.1

 
402.3

 
3.1%
 
2.5%
1001 Pennsylvania Avenue
 
100%
 
Washington
 
D.C.
 
Office
 
799.8

 
323.2

 
476.6

 
3.1%
 
2.5%
Colorado Center
 
50%
 
Santa Monica
 
CA
 
Office
 
630.0

 
273.3

 
356.7

 
2.4%
 
1.9%
425 Park Avenue
 
100%
 
New York City
 
NY
 
Ground Lease
 
599.0

 

 
599.0

 
2.3%
 
1.8%
99 High Street
 
100%
 
Boston
 
MA
 
Office
 
540.7

 
283.4

 
257.3

 
2.1%
 
1.7%
Ontario Industrial Portfolio
 
100%
 
Ontario
 
CA
 
Industrial
 
499.9

 

 
499.9

 
1.9%
 
1.5%
Four Oaks Place
 
51%
 
Houston
 
TX
 
Office
 
430.8

 
85.8

 
345.0

 
1.7%
 
1.3%
(1) 
The Account's share of the fair value of the property investment, gross of debt.
(2) 
Debt fair values are presented at the Account's ownership interest.
(3) 
The Account's share of the fair value of the property investment, net of debt.
(4) 
Total real estate portfolio is the aggregate fair value of the Account's wholly-owned properties and the properties held within a joint venture, gross of debt.
(5) 
Total investments are the aggregate fair value of all investments held by the Account, gross of debt. Total investments, as calculated within this table, will vary from total investments, as calculated in the Account's 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.


52


Results of Operations
Nine months ended September 30, 2019 compared to nine months ended September 30, 2018
Net Investment Income
The following table shows the results of operations for the nine months ended September 30, 2019 and 2018 and the dollar and percentage changes for those periods (dollars in millions, unaudited).
 
 
For the Nine Months Ended September 30,
 
Change
2019
 
2018
 
$
 
%
INVESTMENT INCOME
 
 
 
 
 
 
 
 
Real estate income, net:
 
 
 
 
 
 
 
 
Rental income
 
$
823.6

 
$
822.7

 
$
0.9

 
0.1
 %
Real estate property level expenses:
 
 
 
 
 
 
 
 
Operating expenses
 
181.8

 
171.7

 
10.1

 
5.9
 %
Real estate taxes
 
138.9

 
135.3

 
3.6

 
2.7
 %
Interest expense
 
80.1

 
82.8

 
(2.7
)
 
(3.3
)%
Total real estate property level expenses
 
400.8

 
389.8

 
11.0

 
2.8
 %
Real estate income, net
 
422.8

 
432.9

 
(10.1
)
 
(2.3
)%
Income from real estate joint ventures and limited partnerships
 
170.9

 
157.8

 
13.1

 
8.3
 %
Interest
 
129.7

 
77.6

 
52.1

 
67.1
 %
Dividends
 
17.5

 
36.7

 
(19.2
)
 
(52.3
)%
TOTAL INVESTMENT INCOME
 
740.9

 
705.0

 
35.9

 
5.1
 %
Expenses:
 
 
 
 
 
 
 
 
Investment management charges
 
53.6

 
46.3

 
7.3

 
15.8
 %
Administrative charges
 
37.6

 
41.0

 
(3.4
)
 
(8.3
)%
Distribution charges
 
24.1

 
20.8

 
3.3

 
15.9
 %
Mortality and expense risk charges
 
1.0

 
0.9

 
0.1

 
11.1
 %
Liquidity guarantee charges
 
41.4

 
37.5

 
3.9

 
10.4
 %
TOTAL EXPENSES
 
157.7

 
146.5

 
11.2

 
7.6
 %
INVESTMENT INCOME, NET
 
$
583.2

 
$
558.5

 
$
24.7

 
4.4
 %
The following table illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the nine months ended September 30, 2019 and 2018. The comparative increases or decreases associated with the acquisition and disposition of properties made in either period is compared to "same property" (dollars in millions, unaudited).
 
 
Rental Income
 
Operating Expenses
 
Real Estate Taxes
 
Change
 
 
Change
 
 
Change
2019
2018
$
%
 
2019
2018
$
%
 
2019
2018
$
%
Same Property
 
$
691.1

$
685.8

$
5.3

0.8
%
 
$
149.7

$
143.3

$
6.4

4.5
%
 
$
117.8

$
115.2

$
2.6

2.3
%
Properties Acquired
 
79.0

21.3

57.7

N/M

 
19.6

5.4

14.2

N/M

 
14.3

4.0

10.3

N/M

Properties Sold
 
53.5

115.6

(62.1
)
N/M

 
12.5

23.0

(10.5
)
N/M

 
6.8

16.1

(9.3
)
N/M

Impact of Properties Acquired/Sold
 
132.5

136.9

(4.4
)
N/M

 
32.1

28.4

3.7

N/M

 
21.1

20.1

1.0

N/M

Total Property Portfolio
 
$
823.6

$
822.7

$
0.9

0.1
%
 
$
181.8

$
171.7

$
10.1

5.9
%
 
$
138.9

$
135.3

$
3.6

2.7
%
N/M—Not meaningful

53


Rental Income:
Rental income increased by $0.9 million, or 0.1%. Rental income of properties held through both comparative periods increased $5.3 million, or 0.8%, driven by a reduction in rental concessions paired with higher rents from new and renewing leases, most notably among industrial and office properties in in the Account's primary markets (e.g., San Francisco, Boston, New York). Net disposition activity was an offsetting factor to the overall increase.
Operating Expenses:
Operating expenses increased $10.1 million, or 5.9%, primarily driven by rising utility costs and higher pricing from vendors providing services to the Account's properties. Continued tightening in the U.S. labor market is moving wages upward, driving price increases for services such as maintenance, groundskeeping, and security services.
Real Estate Taxes:
Real estate taxes increased $3.6 million, or 2.7%, driven by rising property values across the portfolio, most notably within the office sector.
Interest Expense:
Interest expense decreased $2.7 million, or 3.3%, as a result of lower average outstanding principal balances on loans payable, as compared to the same period in 2018.
Income from Real Estate Joint Ventures and Limited Partnerships:
Income from real estate joint ventures and limited partnerships increased $13.1 million, or 8.3%, which was attributed to a larger portfolio of joint ventures.
Interest and Dividend Income:
Interest income increased $52.1 million due to interest earned on a larger loan receivable portfolio in 2019 as compared to the same period in 2018 paired with an increase in interest earned on the Account's debt securities due to higher interest rates. Dividend income decreased $19.2 million in line with associated decreases in the Account's REIT portfolio as compared to the same period in 2018.
Expenses:
Investment management, administrative and distribution charges are costs charged to the Account associated with managing the Account. Investment management charges are comprised primarily of fixed components, but fluctuate based on the size of the Account’s portfolio of investments, whereas administrative and distribution charges are comprised of more variable components that generally correspond with movements in net assets. These expenses increased $7.2 million from the comparable period of 2018 as result of increased costs related to asset management, primarily driven by an increase in the level of transaction activity by the Account (e.g., real estate purchases and sales).
Mortality and expense risk and liquidity guarantee expenses are contractual charges to the Account from TIAA for TIAA’s assumption of these risks and provision of the liquidity guarantee. The rate for these charges is established annually and are charged at a fixed rate based on the Account’s net assets. These expenses increased $4.0 million as a result of an increase in the net assets of the Account from the comparative period paired with a four basis point increase to the expense charge for the liquidity guarantee effective August 1, 2019.

54


Net Realized and Unrealized Gains and Losses on Investments and Loans Payable
The following table shows the net realized and unrealized gains and losses on investments and loans payable for the nine months ended September 30, 2019 and 2018 and the dollar and percentage changes for those periods (dollars in millions, unaudited).
 
 
For the Nine Months Ended September 30,
 
Change
2019
 
2018
 
$
 
%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND LOANS PAYABLE
 
 
 
 
 
 
 
 
Net realized gain (loss) on investments:
 
 
 
 
 
 
 
 
Real estate properties
 
$
300.0

 
$
223.4

 
$
76.6

 
34.3
%
Real estate joint ventures and limited partnerships
 
(43.7
)
 
57.0

 
(100.7
)
 
N/M

Marketable securities
 
280.6

 
10.2

 
270.4

 
N/M

Total realized gain on investments:
 
536.9

 
290.6

 
246.3

 
84.8
%
Net change in unrealized appreciation (depreciation) on:
 
 
 
 
 
 
 
 
Real estate properties
 
161.0

 
(10.5
)
 
171.5

 
N/M

Real estate joint ventures and limited partnerships
 
(94.3
)
 
43.0

 
(137.3
)
 
N/M

Marketable securities
 
19.8

 
0.5

 
19.3

 
N/M

Loans receivable
 
(3.8
)
 
1.0

 
(4.8
)
 
N/M

Loan receivable with related parties
 
(0.4
)
 

 
(0.4
)
 
N/M

Loans payable
 
(98.4
)
 
54.4

 
(152.8
)
 
N/M

Net change in unrealized appreciation (depreciation) on investments and loans payable
 
(16.1
)
 
88.4

 
(104.5
)
 
N/M

NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND LOANS PAYABLE
 
$
520.8

 
$
379.0

 
$
141.8

 
37.4
%
N/M—Not meaningful
Real Estate Properties, Joint Ventures and Limited Partnerships:
Net realized gains in the Account are primarily attributed to the sale of wholly-owned investments. See the Recent Transactions section herein for additional disclosure regarding the sale of the Account’s real estate property investments in the third quarter of 2019.
Real Estate Properties:
Wholly-owned real estate investments experienced net realized and unrealized gains of $461.0 million during the nine months ended September 30, 2019 compared to $212.9 million during the comparable period of 2018. Appreciation is primarily concentrated within the industrial and office sectors, with the most notable gains occurring in California and New York. Gateway cities, such as New York City and San Francisco, continue to be favored by domestic and foreign institutional investors, as these cities have limited opportunities for new construction in favorable locations. Demand in the office and industrial sectors continues to outpace supply in these cities, and the widening imbalance between supply and demand has allowed market rents and property values to reach new heights.
Real Estate Joint Ventures and Limited Partnerships:
Real estate joint ventures and limited partnerships generated net realized and unrealized losses of $138.0 million for the nine months ended September 30, 2019, compared to net gains of $100.0 million during the comparable period of 2018. Similar to the wholly-owned portfolio, joint venture office investments in California have been the strongest performers in 2019; however, the appreciation generated by these investments has been more than offset by declines in the fair values of the Account's retail joint ventures. Rising investor caution to overexposure in retail is tempering pricing among the largest investments in the sector. Moreover, market rents in the retail sector are leveling as lessors navigate an increasingly competitive market for high-quality tenants.

55


Marketable Securities:
The Account’s marketable securities experienced net realized and unrealized gains of $300.4 million during the nine months ended September 30, 2019 compared to net realized and unrealized gains of $10.7 million during the comparable period of 2018, primarily attributed to the performance of the Account's real-estate related securities. The performance of the Account's REIT portfolio was in line with the FTSE NAREIT All Equity REITs Index in both periods. U.S. Treasuries, government agency notes and corporate bonds had a nominal impact in both periods due to the short and intermediate-term nature of these investments, respectively.
Loans Receivable, including those with related parties:
Loans receivable, including loans receivable with related parties, experienced an unrealized loss of $4.2 million during the nine months ended September 30, 2019 compared to a $1.0 million gain during the comparable period of 2018. The changes in both periods were minimal as there were no significant changes in the credit quality of the underlying collateral of the debt investments in either period.
Loans Payable:
Loans payable experienced an unrealized loss of $98.4 million during the nine months ended September 30, 2019 compared to a $54.4 million unrealized gain during the comparable period of 2018. The changes in both periods were consistent with the directional movement of U.S. Treasury rates.
Three months ended September 30, 2019 compared to three months ended September 30, 2018
Net Investment Income
The following table shows the results of operations for the three months ended September 30, 2019 and 2018 and the dollar and percentage changes for those periods (dollars in millions, unaudited).
 
 
For the Three Months Ended September 30,
 
Change
2019
 
2018
 
$
 
%
INVESTMENT INCOME
 
 
 
 
 
 
 
 
Real estate income, net:
 
 
 
 
 
 
 
 
Rental income
 
$
282.6

 
$
273.3

 
$
9.3

 
3.4
 %
Real estate property level expenses:
 
 
 
 
 
 
 
 
Operating expenses
 
64.5

 
58.5

 
6.0

 
10.3
 %
Real estate taxes
 
46.9

 
45.4

 
1.5

 
3.3
 %
Interest expense
 
27.1

 
30.4

 
(3.3
)
 
(10.9
)%
Total real estate property level expenses
 
138.5

 
134.3

 
4.2

 
3.1
 %
Real estate income, net
 
144.1

 
139.0

 
5.1

 
3.7
 %
Income from real estate joint ventures and limited partnerships
 
61.4

 
37.3

 
24.1

 
64.6
 %
Interest
 
43.5

 
35.1

 
8.4

 
23.9
 %
Dividends
 
5.9

 
14.7

 
(8.8
)
 
(59.9
)%
TOTAL INVESTMENT INCOME
 
254.9

 
226.1

 
28.8

 
12.7
 %
Expenses:
 
 
 
 
 
 
 
 
Investment management charges
 
17.3

 
13.9

 
3.4

 
24.5
 %
Administrative charges
 
12.1

 
14.3

 
(2.2
)
 
(15.4
)%
Distribution charges
 
7.5

 
6.8

 
0.7

 
10.3
 %
Mortality and expense risk charges
 
0.3

 
0.3

 

 
 %
Liquidity guarantee charges
 
15.3

 
12.8

 
2.5

 
19.5
 %
TOTAL EXPENSES
 
52.5

 
48.1

 
4.4

 
9.1
 %
INVESTMENT INCOME, NET
 
$
202.4

 
$
178.0

 
$
24.4

 
13.7
 %


56


The following table illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the three months ended September 30, 2019 and 2018. The comparative increases or decreases associated with the acquisition and disposition of properties made in either period is compared to "same property" (dollars in millions, unaudited).
 
 
Rental Income
 
Operating Expenses
 
Real Estate Taxes
 
Change
 
 
Change
 
 
Change
2019
2018
$
%
 
2019
2018
$
%
 
2019
2018
$
%
Same Property
 
$
236.7

$
233.7

$
3.0

1.3
%
 
$
53.3

$
49.4

$
3.9

7.9
%
 
$
39.4

$
38.5

$
0.9

2.3
%
Properties Acquired
 
30.5

12.9

17.6

N/M

 
7.8

3.5

4.3

N/M

 
5.5

2.4

3.1

N/M

Properties Sold
 
15.4

26.7

(11.3
)
N/M

 
3.4

5.6

(2.2
)
N/M

 
2.0

4.5

(2.5
)
N/M

Impact of Properties Acquired/Sold
 
45.9

39.6

6.3

N/M

 
11.2

9.1

2.1

N/M

 
7.5

6.9

0.6

N/M

Total Property Portfolio
 
$
282.6

$
273.3

$
9.3

3.4
%
 
$
64.5

$
58.5

$
6.0

10.3
%
 
$
46.9

$
45.4

$
1.5

3.3
%
N/M—Not meaningful
Rental Income:
Rental income increased by $9.3 million, or 3.4%, due to net acquisition activity paired with rising market rents and reduced rental concessions, most notably across the industrial sector. Market rents in the office, industrial and apartment sectors have continued to trend upward over the last several consecutive quarters, but retail market rents have largely remained flat over the same period.
Operating Expenses:
Operating expenses increased $6.0 million, or 10.3%, driven by net acquisition activity and rising costs charged by vendors providing services to the Account's properties, most notably to the office sector. Continued tightening in the U.S. labor market is moving wages upward, driving price increases for services such as maintenance, groundskeeping, and security services.
Real Estate Taxes:
Real estate taxes increased $1.5 million, or 3.3%, due to net acquisition activity and rising property values, notably in the industrial and office sectors.
Interest Expense:
Interest expense decreased $3.3 million, or 10.9%, as a result of lower average outstanding principal balances on loans payable, as compared to the same period in 2018.
Income from Real Estate Joint Ventures and Limited Partnerships:
Income from real estate joint ventures and limited partnerships increased $24.1 million, or 64.6%, which was attributed to a larger portfolio of joint ventures.
Interest and Dividend Income:
Interest income increased $8.4 million due to interest earned on a larger loan receivable portfolio in 2019 as compared to the same period in 2018 paired with an increase in interest earned on the Account's debt securities due to higher interest rates. Dividend income decreased $8.8 million in line with associated decreases in the Account's REIT portfolio as compared to the same period in 2018.
Expenses:
Investment management, administrative and distribution charges are costs charged to the Account associated with managing the Account. Investment management charges are comprised primarily of fixed components, but fluctuate based on the size of the Account’s portfolio of investments, whereas administrative and distribution charges are comprised of more variable components that generally correspond with movements in net assets. These expenses

57


increased $1.9 million from the comparable period of 2018, as a result of increased costs related to asset management, primarily driven by an increase in the level of transaction activity by the Account (e.g., real estate purchases and sales). The overall increase was partially offset by reductions in expenses related to information technology.
Mortality and expense risk and liquidity guarantee expenses are contractual charges to the Account from TIAA for TIAA’s assumption of these risks and provision of the liquidity guarantee. The rate for these charges is established annually and are charged at a fixed rate based on the Account’s net assets. These expenses increased $2.5 million as a result of an increase in the net assets of the Account from the comparative period paired with a four basis point increase to the expense charge for the liquidity guarantee effective August 1, 2019.
Net Realized and Unrealized Gains and Losses on Investments and Loans Payable
The following table shows the net realized and unrealized gains and losses on investments and loans payable for the three months ended September 30, 2019 and 2018 and the dollar and percentage changes for those periods (dollars in millions, unaudited).
 
 
For the Three Months Ended September 30,
 
Change
2019
 
2018
 
$
 
%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND LOANS PAYABLE
 
 
 
 
 
 
 
 
Net realized gain (loss) on investments:
 
 
 
 
 
 
 
 
Real estate properties
 
$
300.0

 
$
179.8

 
$
120.2

 
66.9
 %
Real estate joint ventures and limited partnerships
 

 
56.8

 
(56.8
)
 
N/M

Marketable securities
 
27.5

 
3.3

 
24.2

 
N/M

Total realized gain on investments:
 
327.5

 
239.9

 
87.6

 
36.5
 %
Net change in unrealized appreciation (depreciation) on:
 
 
 
 
 
 
 
 
Real estate properties
 
(83.2
)
 
(65.2
)
 
(18.0
)
 
27.6
 %
Real estate joint ventures and limited partnerships
 
(138.0
)
 
(49.3
)
 
(88.7
)
 
N/M

Marketable securities
 
37.3

 
(6.4
)
 
43.7

 
N/M

Loans receivable
 
(1.0
)
 
1.0

 
(2.0
)
 
N/M

Loans receivable with related parties
 
(0.4
)
 

 
(0.4
)
 
N/M

Loans payable
 
(32.1
)
 
(0.8
)
 
(31.3
)
 
N/M

Net change in unrealized depreciation on investments and loans payable
 
(217.4
)
 
(120.7
)
 
(96.7
)
 
80.1
 %
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND LOANS PAYABLE
 
$
110.1

 
$
119.2

 
$
(9.1
)
 
(7.6
)%
N/M—Not meaningful
Real Estate Properties, Joint Ventures and Limited Partnerships:
Net realized gains in the Account are primarily attributed to the sale of wholly-owned investments. See the Recent Transactions section herein for additional disclosure regarding the sale of the Account’s real estate property investments.
Real Estate Properties:
Wholly-owned real estate investments experienced net realized and unrealized gains of $216.8 million during the third quarter of 2019 compared to $114.6 million during the comparable period of 2018. Appreciation is primarily due to significant investor interest in the New York metro area.

58


Real Estate Joint Ventures and Limited Partnerships:
Real estate joint ventures and limited partnerships experienced net realized and unrealized losses of $138.0 million during the third quarter of 2019, compared to $7.5 million of net realized and unrealized gains during the comparable period of 2018. Net losses in the third quarter of 2019 were driven by the Account's retail joint ventures, attributed to rising investor caution to overexposure in the retail sector. Occupancy and rents, however, have remained stable across the Account's retail portfolio and are expected to remain as such over the near term.
Marketable Securities:
The Account’s marketable securities experienced net realized and unrealized gains of $64.8 million during the third quarter of 2019 compared to net realized and unrealized losses of $3.1 million during the comparable period of 2018, primarily attributed to the performance of the Account's real-estate related securities. The performance of the Account's REIT portfolio was in line with the FTSE NAREIT All Equity REITs Index in both periods. U.S. Treasuries, government agency notes and corporate bonds had a nominal impact in both periods due to the short and intermediate-term nature of these investments, respectively.
Loans Receivable, including those with related parties:
Loans receivable, including loans receivable with related parties, experienced an unrealized loss of $1.4 million during the third quarter of 2019 compared to a $1.0 million unrealized loss during the comparable period of 2018. The changes in both periods were minimal as there were no significant changes in the credit quality of the underlying collateral of the debt investments in either period.
Loans Payable:
Loans payable experienced an unrealized loss of $32.1 million during the third quarter of 2019 compared to a $0.8 million unrealized loss during the comparable period of 2018. The changes in both periods were consistent with the directional movement of U.S. Treasury rates.
Liquidity and Capital Resources
As of September 30, 2019 and December 31, 2018, the Account’s cash and cash equivalents and non-real estate-related marketable securities had a value of $4.2 billion and $4.1 billion representing 15.7% and 15.8% of the Account’s net assets at such dates, respectively.
Net Income and Marketable Securities
The Account’s net investment income is a source of liquidity for the Account. Net investment income was $583.2 million for the nine months ended September 30, 2019, as compared to $558.5 million for the comparable period of 2018. The increase in total net investment income is described more fully in the Results of Operations section.
As of September 30, 2019, cash and cash equivalents, along with real estate-related and non-real estate related marketable securities comprised 18.8% of the Account’s net assets. The Account’s real estate-related marketable securities primarily consist of publicly traded REITs. The Account’s liquid assets continue to be available to purchase suitable real estate properties, meet the Account’s debt obligations, expense needs, and participant redemption requests (i.e., participant withdrawals or benefit payments).
The Account has a $500.0 million unsecured line of credit available as needed to fund the Account's near-term objectives, as further described in Note 10—Line of Credit. As of September 30, 2019, the Account has no active loans outstanding on the unsecured line of credit.

59


The Account may from time to time borrow money and assume or obtain a mortgage on a property to make leveraged real estate investments. The Account is authorized to borrow money in accordance with its investment guidelines. Under the Account’s current investment guidelines, the Account’s loan to value ratio (as described below) is to be maintained at or below 30%. Such incurrences of debt from time to time may include:
placing new debt on properties;
refinancing outstanding debt;
assuming debt on acquired properties or interests in the Account’s properties;
extending the maturity date of outstanding debt; and/or
an unsecured line of credit or credit facility.
In calculating this limit, only the Account’s actual percentage interest in any borrowings is included, and not that percentage interest held by any joint venture partner. Further, the Account may only borrow up to 70% of the then-current value of a property, although construction loans may be for 100% of the costs incurred in developing a property. At the time the Account (or a joint venture in which the Account is a partner) enters into a revolving line of credit, for the purpose of calculating the loan-to-value ratio, management includes only amounts outstanding when calculating outstanding indebtedness.
As of September 30, 2019, the Account’s ratio of outstanding principal amount of debt (inclusive of the Account’s proportionate share of debt held within its joint venture investments) to total gross asset value (i.e., a “loan to value ratio”) was 16.7%. The Account intends to maintain its loan to value ratio at or below 30% (this ratio is measured at the time of incurrence and after giving effect thereto). The Account’s total gross asset value, for these purposes, is equal to the total fair value of the Account’s assets (including the fair value of the Account’s interest in joint ventures), with no reduction associated with any indebtedness on such assets.
As of September 30, 2019, there are no mortgage obligations secured by real estate investments wholly-owned by the Account maturing within the next twelve months. The Account has sufficient liquidity in the form of cash and cash equivalents and securities to meet its mortgage obligations.
In times of high net inflow activity, in particular during times of high net participant transfer inflows, management may determine to apply a portion of such cash flows to make prepayments of indebtedness prior to scheduled maturity, which would have the effect of reducing the Account’s loan to value ratio.
Recent Transactions
The following describes transactions occurring during the third quarter of 2019 related to real estate properties, real estate joint ventures, limited partnerships, loans receivable, and loans payable. Except as noted, expenses for operating the properties purchased are either borne or reimbursed, in whole or in part, by the property tenants, although the terms vary under each lease. Dollar amounts are shown in millions.
Real Estate Properties and Joint Ventures
Acquisitions
Property Name
 
Purchase Date
 
Ownership Percentage
 
Sector
 
Location
 
Net Purchase Price (1)
Riverside 202 Industrial
 
07/09/2019
 
100.00%
 
Industrial
 
Phoenix, AZ
 
$
29.6

Campus Pointe 6
 
07/09/2019
 
45.00%
 
Office
 
San Diego, CA
 
111.9

Campus Pointe 5
 
07/26/2019
 
45.00%
 
Office
 
San Diego, CA
 
37.2

Storage Portfolio III - Southwest
 
08/23/2019
 
90.00%
 
Storage
 
Various
 
18.4

Almond Avenue
 
08/28/2019
 
100.00%
 
Land
 
Fontana, CA
 
8.8

Cabana Beach Gainesville
 
09/27/2019
 
97.00%
 
Apartment
 
Gainesville, FL
 
64.4

T-C 4th & Madison, LLC (2)
 
09/26/2019
 
51.00%
 
Office
 
Seattle, WA
 
307.5

(1)  
The net purchase price represents the purchase price and closing costs.
(2)  
On September 26, 2019, the Account sold off 49% of its ownership in Fourth and Madison to Clarion Partners ("Clarion"), with the remaining 51% of its ownership transferring to newly formed T-C 4th & Madison, LLC. Concurrent with this sale, Clarion and the Account formed the joint venture T-C 4th & Madison, LLC, to hold their joint ownership of the property, with Clarion contributing its 49% interest and the Account contributing the remaining 51% interest.

60


Dispositions
Property Name
 
Sales Date
 
Ownership Percentage
 
Sector
 
Location
 
Net Sales Price (1)
 
Realized Gain/Loss on Sale
55 Second Street
 
08/21/2019
 
100.00%
 
Office
 
San Francisco, CA
 
$
400.1

 
$
106.3

Township Apartments
 
09/12/2019
 
100.00%
 
Apartment
 
Redwood City, CA
 
88.1

 
4.7

Fourth and Madison (2)
 
09/26/2019
 
100.00%
 
Office
 
Seattle, WA
 
602.8

 
189.0

(1)  
The net sales price represents the sales price, less selling expenses.
(2)  
On September 26, 2019, the Account sold off 49% of its ownership in Fourth and Madison to Clarion, with the Account retaining ownership of the remaining 51%. Concurrent with this sale, Clarion and the Account formed the joint venture T-C 4th & Madison, LLC, to hold their joint ownership of the property, with Clarion contributing its 49% interest and the Account contributing the remaining 51% interest.
Limited Partnerships
Acquisitions
Fund Name
 
Date of Initial Capital Contribution
 
Amount of Initial Capital Contribution
 
Total Commitment
SP V - II, LLC
 
08/20/2019
 
$
5.4

 
$
100.0

Veritas Trophy VI, LLC
 
09/18/2019
 
3.0

 
40.0

Loans Receivable
Originations and purchases
Investment Name
 
Financing Date
 
Interest Rate
 
Collateral
 
Maturity Date
 
Location
 
Amount
San Diego Office Portfolio
 
7/26/2019
 
2.45% + LIBOR
 
Office
 
08/09/2022
 
San Diego, CA
 
$
62.5

MRA Hub 34 Holding, LLC
 
8/26/2019
 
2.50% + LIBOR
 
Office
 
09/01/2022
 
Long Island City, NY
 
36.5

SoNo Collection
 
9/17/2019
 
6.75% + LIBOR
 
Retail
 
08/06/2021
 
Norwalk, CT
 
60.0

THP Student Housing, LLC
 
09/27/2019
 
3.20%
 
Apartment
 
9/1/2024
 
Gainesville, FL
 
32.9

Financings
New financings and assumptions of debt
Collateral
 
Date
 
Ownership Percentage
 
Interest Rate
 
Collateral Type
 
Maturity Date
 
Location
 
Amount
San Diego Office Portfolio
 
08/28/2019
 
100.00%
 
3.62%
 
Loan Receivable
 
08/15/2022
 
San Diego, CA
 
$
47.5

T-C 4th & Madison, LLC(1)
 
09/26/2019
 
51.00%
 
3.75%
 
Office
 
06/01/2023
 
Seattle, WA
 
99.6

T-C 4th & Madison, LLC(1)
 
09/26/2019
 
51.00%
 
4.17%
 
Office
 
06/01/2023
 
Seattle, WA
 
45.9

Cabana Beach Gainesville
 
09/27/2019
 
97.00%
 
3.20%
 
Apartment
 
09/01/2024
 
Gainesville, FL
 
31.9

(1)  
Represents the assumption of the Account's share of the debt of T-C 4th & Madison, LLC, of which the Account owns 51%.

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Payoffs and assignments of debt
Collateral
 
Date
 
Ownership Percentage
 
Interest Rate
 
Sector
 
Maturity Date
 
Location
 
Amount 
Mass Court
 
07/30/2019
 
100.00%
 
2.88%
 
Apartment
 
09/01/2019
 
Washington, D.C.
 
$
(89.2
)
55 Second Street
 
08/21/2019
 
100.00%
 
3.74%
 
Office
 
10/1/2026
 
San Francisco, CA
 
(137.5
)
Township Apartments
 
09/12/2019
 
100.00%
 
3.65%
 
Apartment
 
05/01/2025
 
Redwood City, CA
 
(49.0
)
Fourth and Madison(2)
 
09/26/2019
 
100.00%
 
3.75%
 
Office
 
06/01/2023
 
Seattle, WA
 
(195.4
)
Fourth and Madison(2)
 
09/26/2019
 
100.00%
 
4.17%
 
Office
 
06/01/2023
 
Seattle, WA
 
(90.0
)
(2)  
Represents the assignment of the debt on Fourth and Madison to the new joint venture with Clarion, T-C 4th & Madison, LLC.
Critical Accounting Policies
Management’s discussion and analysis of the Account’s financial condition and results of operations is based on the Account’s Consolidated Interim Financial Statements, which have been prepared by management in accordance with GAAP. The preparation of the Account’s financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the financial statements and disclosures. Some of these estimates and assumptions require application of difficult, subjective, and/or complex judgments about the effect of matters that are inherently uncertain and that may change in subsequent periods. Management evaluates its estimates and assumptions on an ongoing basis. Management bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities of the Account that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
In the Form 10-K for the year ended December 31, 2018, management identified the critical accounting policies which affect its significant estimates and assumptions used in preparing the Account’s financial statements. Certain of these accounting policies are described in Note 1—Organization and Significant Accounting Policies in this Form 10-Q. There have been no material changes to these accounting policies to those disclosed in the Account's Annual Report on Form 10-K for the year ended December 31, 2018.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Account’s real estate holdings, including real estate joint venture, limited partnerships and loans receivable, which, as of September 30, 2019, represented 82.7% of the Account’s total investments, expose the Account to a variety of risks. These risks include, but are not limited to:
General Real Estate Risk—The risk that the Account’s property values or rental and occupancy rates could decline due to general economic conditions, a weak market for real estate generally, disruptions in the credit and/or capital markets, or changing supply and demand for certain types of properties;
Appraisal Risk—The risk that the sale price of an Account property (i.e., the value that would be determined by negotiations between independent parties) might differ substantially from its estimated or appraised value, leading to losses or reduced profits to the Account upon sale;
Risk Relating to Property Sales—The risk that the Account might not be able to sell a property at a particular time for its full value, particularly in a declining market. This might make it difficult to raise cash quickly and also could lead to Account losses;
Risks of Borrowing—The risk that interest rate changes may impact Account returns if the Account takes out a mortgage on a property, buys a property subject to a mortgage or holds a property subject to a mortgage, and hedging against such interest rate changes, if undertaken by the Account, may entail additional costs and be unsuccessful; and
Foreign Currency Risk—The risk that the value of the Account’s foreign investments, related debt, or rental income could increase or decrease due to changes in foreign currency exchange rates or foreign currency exchange control regulations, and hedging against such currency changes, if undertaken by the Account, may entail additional costs and be unsuccessful.
The Account believes the diversification of its real estate portfolio, both geographically and by sector, along with its quarterly valuation procedure, helps manage the real estate and appraisal risks described above.
As of September 30, 2019, 17.3% of the Account’s total investments were comprised of marketable securities. Marketable securities include high-quality debt instruments and REIT securities. The Consolidated Schedule of Investments for the Account sets forth the general financial terms of these instruments, along with their fair values, as determined in accordance with procedures described earlier in the Critical Accounting Policies section above and in Note 1—Organization and Significant Accounting Policies to the Account’s Consolidated Financial Statements included herewith. As of the date of this report, the Account does not invest in derivative financial investments, nor does the Account engage in any hedging activity, although it may do so in selected circumstances in the future.
Risks associated with investments in real estate-related liquid assets (which could include, from time to time, REIT securities and CMBS), and non-real estate-related liquid assets, including financial/credit risk, market volatility risk, interest rate volatility risk and deposit/money market risk.
Financial/Credit Risk—The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value.
Market Volatility Risk—The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets regardless of the credit quality or financial condition of the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility over the past year. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.
Interest Rate Volatility—The risk that interest rate volatility may affect the Account’s current income from an investment.
Deposit/Money Market Risk—The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if that bank fails. The Account does not believe it has exposure to significant concentration of deposit risk. In addition, investments held in money market accounts may also suffer losses.

63


In addition, to the extent the Account were to hold mortgage-backed securities (including commercial mortgage-backed securities) these securities are subject to prepayment risk or extension risk (i.e., the risk that borrowers will repay the loans earlier or later than anticipated). If the underlying mortgage assets experience faster than anticipated repayments of principal, the Account could fail to recoup some or all of its initial investment in these securities, since the original price paid by the Account was based in part on assumptions regarding the receipt of interest payments. If the underlying mortgage assets are repaid later than anticipated, the Account could lose the opportunity to reinvest the anticipated cash flows at a time when interest rates might be rising. The rate of prepayment depends on a variety of geographic, social and other functions, including prevailing market interest rates and general economic factors. The fair value of these securities is also highly sensitive to changes in interest rates. Note that the potential for appreciation, which could otherwise be expected to result from a decline in interest rates, may be limited by any increased prepayments. These securities may be harder to sell than other securities.
In addition to these risks, real estate equity securities (such as REIT stocks and mortgage-backed securities) would be subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. For more information on the risks associated with all of the Account’s investments, see the Account’s most recent prospectus.
ITEM 4. CONTROLS AND PROCEDURES
(a) The registrant maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information required to be disclosed in the registrant’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including TIAA’s Executive Vice President, and Chief Product Officer of TIAA Financial Solutions Product Group (Principal Executive Officer (“PEO”)) and TIAA’s Senior Vice President, Chief Accounting Officer and Corporate Controller (Principal Financial and Accounting Officer (“PFO”)), as appropriate, to allow timely decisions regarding required disclosure.
Under the supervision and participation of the registrant’s management, including the registrant’s PEO and PFO, the registrant conducted an evaluation of the effectiveness of the registrant’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of September 30, 2019. Based upon management’s review, the PEO and PFO concluded that the registrant’s disclosure controls and procedures provide reasonable assurance that material information required to be included in the Account's periodic reports is recorded, processed, summarized and reported within the time periods specified in the relevant SEC rules and forms.
(b) Changes in internal control over financial reporting. There have been no changes in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, the registrant’s internal control over financial reporting.

64


PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
In the normal course of business, the Account may be named, from time to time, as a defendant or may be involved in various legal actions, including arbitrations, class actions and other litigation.
The Account establishes an accrual for all litigation and regulatory matters when it believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted, as appropriate, in light of additional information. The amount of loss ultimately incurred in relation to those matters may be higher or lower than the amounts accrued for those matters.
As of the date of this report, management of the Account does not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material effect on the Account’s business, financial position or results of operations.
ITEM 1A. RISK FACTORS.
There have been no material changes from the Account’s risk factors as previously reported in the Account’s Annual Report on Form 10-K for the year ended December 31, 2018.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable.
ITEM 5. OTHER INFORMATION.
Not applicable.


65


ITEM 6. EXHIBITS
(1)
(A)
Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account, dated as of January 1, 2008, by and among Teachers Insurance and Annuity Association of America, for itself and on behalf of the Account, and TIAA-CREF Individual & Institutional Services, LLC1
 
 

(3)
(A)
Restated Charter of TIAA (as amended)2
 
 
 
(B)
Amended Bylaws of TIAA3
 
 
(4)
(A)
Forms of RA, GRA, GSRA, SRA, IRA Real Estate Account Endorsements,4 Keogh Contract,5 Retirement Choice and Retirement Choice Plus Contracts5 and Retirement Select and Retirement Select Plus Contracts and Endorsements6
 
 
 
 
 
 
 
(B)
Forms of Income-Paying Contracts4
 
 
 
(C)
Form of Contract Endorsement for Internal Transfer Limitation7
 
 
 
(D)
Form of Non-ERISA Retirement Choice Plus Contract9
 
 
 
 
 
(E)
Form of Trust Company Retirement Choice Contract10
 
 
 
 
 
(F)
Form of Trust Company Retirement Choice Plus Contract11
 
 
 
 
 
(G)
Form of Income Test Drive Endorsement for Retirement Annuity Contracts. After-Tax Retirement Annuity Contracts, Supplemental Retirement Annuity Contracts and IRA Contracts (including Rollover IRA, Contributory IRA, Roth IRA, OneIRA)12
 
 
 
(H)
Form of Income Test Drive Endorsement for Group Retirement Annuity Certificates, Group Supplemental Retirement Annuity Certificates, Keogh Certificates, Retirement Choice Certificates, Retirement Choice Plus Certificates, Non-ERISA Retirement Choice Plus Certificates, Trust Retirement Choice Certificates, and Trust Retirement Choice Plus Certificates13
 
 
 
(I)
Form of OneIRA Non-Qualified Deferred Annuity Contract (and Rate Schedule)14
 
 
 
(J)
(1) Form of Endorsement to Retirement Choice and Retirement Choice Plus Contracts for Custom Portfolios16
 
 
 
 
(2) Form of Endorsement to Retirement Choice and Retirement Choice Plus Certificates for Custom Portfolios17
 
 
 
(K)
Form of Endorsement to Group Supplemental Retirement Annuity (GSRA) Certificate18
 
 
(10)
(A)
Amended and Restated Independent Fiduciary Letter Agreement, dated as of February 21, 2018, between TIAA, on behalf of the registrant, and RERC, LLC15
 
 
 
(B)
Custodian Agreement, dated as of March 3, 2008, by and between TIAA, on behalf of the registrant, and State Street Bank and Trust Company, N.A.8
 
 

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(101)
 
The following financial information from the Quarterly Report on Form 10-Q for the period ended September 30, 2019 (Unaudited), formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Assets and Liabilities as of September 30, 2019 (Unaudited), (ii) the Consolidated Statements of Operations for the three and nine months ended September 30, 2019 and 2018 (Unaudited) , (iii) the Consolidated Statements of Changes in Net Assets for the three and nine months ended September 30, 2019 and 2018 (Unaudited), (iv) the Consolidated Statements of Cash Flows for the nine months ended September 30, 2019 and 2018 (Unaudited), and (v) the Notes to the Consolidated Financial Statements (Unaudited).**
*
Filed herewith.
**
Furnished electronically herewith.
(1) 
Previously filed and incorporated herein by reference to Exhibit 1(A) to the Account’s Registration Statement on Form S-1, filed with the Commission on March 15, 2013 (File No. 333-187309).
(2) 
Previously filed and incorporated herein by reference to Exhibit 3(A) to the Account’s Registration Statement on Form S-1, filed with the Commission on April 22, 2015 (File No. 333-202583).
(3) 
Previously filed and incorporated herein by reference to Exhibit 3(B) to the Account’s Registration Statement on Form S-1, filed with the Commission on April 22, 2015 (File No. 333-202583).
(4) 
Previously filed and incorporated herein by reference to the Account’s Post-Effective Amendment No. 2 to the Registration Statement on Form S-1, filed with the Commission on April 30, 1996 (File No. 33-92990).
(5) 
Previously filed and incorporated herein by reference to Exhibit 4(A) to the Account’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1, filed with the Commission on May 2, 2005 (File No. 333-121493).
(6) 
Previously filed and incorporated herein by reference to the Account’s Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1, filed with the Commission on April 29, 2004 (File No. 333-113602).
(7) 
Previously filed and incorporated by reference to Exhibit 4(C) to the Account’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2010 and filed with the Commission on November 12, 2010 (File No. 33-92990).
(8) 
Previously filed and incorporated herein by reference to Exhibit 10(B) to the Account's Annual Report on Form 10-K for the fiscal year ended December 31, 2012 and filed with the Commission on March 14, 2013 (File No. 33-92990).
(9) 
Previously filed and incorporated herein by reference to Exhibit 4(D)(1) and 4(D)(2) to the Account’s Registration Statement on Form S-1, filed with the Commission on March 21, 2017 (File No. 333-216849).
(10) 
Previously filed and incorporated herein by reference to Exhibit 4(E)(1) and 4(E)(2) to the Account’s Registration Statement on Form S-1, filed with the Commission on March 21, 2017 (File No. 333-216849).
(11) 
Previously filed and incorporated herein by reference to Exhibit 4(F)(1) and 4(F)(2) to the Account’s Registration Statement on Form S-1, filed with the Commission on March 21, 2017 (File No. 333-216849).
(12) 
Previously filed and incorporated herein by reference to Exhibit 4(G) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 15, 2018 (File No. 333-216849).
(13) 
Previously filed and incorporated herein by reference to Exhibit 4(H) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 15, 2018 (File No. 333-216849).
(14) 
Previously filed and incorporated herein by reference to Exhibit 4(I) to the Account’s Annual Report on Form 10-K, filed with the Commission on March 15, 2018 (File No. 333-216849).
(15) 
Previously filed and incorporated herein by reference to Exhibit 10.1 to the Account’s Current Report on Form 8-K, filed with the Commission on March 1, 2018 (File No. 33-92990).
(16) 
Previously filed and incorporated herein by reference to Exhibit 4(J)(1) to the Account’s Current Report on Form 10-K, filed with the Commission on March 14, 2019 (File No. 33-92990).
(17) 
Previously filed and incorporated herein by reference to Exhibit 4(J)(2) to the Account’s Current Report on Form 10-K, filed with the Commission on March 14, 2019 (File No. 33-92990).
(18) 
Previously filed and incorporated herein by reference to Exhibit 4(K) to the Account’s Current Report on Form 10-K, filed with the Commission on March 14, 2019 (File No. 33-92990).




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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant, TIAA Real Estate Account, has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on the 7th day of November 2019.
 
TIAA REAL ESTATE ACCOUNT
 
 
 
 
 
By:
 
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
 
 
 
 
November 7, 2019
By:
 
/s/ Carol W. Deckbar
 
 
 
Carol W. Deckbar
Executive Vice President, Teachers Insurance and Annuity Association of America and Chief Product Officer of TIAA Financial Solutions Product Group
(Principal Executive Officer)
 
 
 
 
November 7, 2019
By:
 
/s/ Oluseun S. Salami
 
 
 
Oluseun S. Salami
Senior Vice President, Chief Accounting Officer and Corporate Controller of Teachers Insurance and Annuity Association of America (Principal Financial and Accounting Officer)


68