TIAA Real Estate Account

11/05/2026 | Press release | Distributed by Public on 11/05/2026 12:38

Quarterly Report for Quarter Ending September 30, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE ACCOUNT'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Account's financial condition and results of operations should be read together with the Consolidated Financial Statements and notes contained in this report, the audited Consolidated Financial Statements and accompanying notes contained in the Account's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026 (the "Form 10-K"), and with consideration to the sub-section entitled "Forward-Looking Statements," which begins below, the section entitled "Item 1A. Risk Factors" of the Account's 2025 Form 10-K and the section entitled "Item 1.A Risk Factors" of this Quarterly Report on Form 10-Q and the Account's previous Quarterly Reports on Form 10-Q, as such risk factors may be updated in subsequent reports. 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, employment rates, the sectors, markets and businesses 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, owning and selling real property and real estate investments, including risks related to general economic and real estate market conditions, the risk that the Account's properties become too concentrated (whether by geography, sector or by tenant mix) and the risk that the sales price of a property might differ from its estimated or appraised value;
•Property valuations, including the fact that the Account's appraisals are generally obtained on a quarterly basis and there may be periods in between appraisals of a property during which the value attributed to the property for purposes of the Account's daily accumulation unit value may be more or less than the actual realizable value of the property;
•Financing the Account's properties, including the risk of default on loans secured by the Account's properties (which could lead to foreclosure);
•Contract owner transactions, in particular that (i) significant net contract owner transfers out of the Account may impair our ability to pursue or consummate new investment opportunities, (ii) significant net contract owner transfers into the Account may result, on a temporary basis, in our cash holdings and/or holdings in liquid non-real estate-related investments exceeding our long-term targeted holding levels and (iii) high levels of cash and liquid non-real estate-related investments in the Account during times of appreciating real estate values can impair the Account's overall return;
•Joint ventures and real estate funds, including the risk that the Account may have limited rights with respect to the joint venture or that a co-venturer or fund manager may have financial difficulties;
•Governmental regulatory matters such as zoning laws, rent control laws, and property and other taxes;
•Potential liability for damage to the environment or injury to individuals caused by hazardous substances used or found on its properties, as well as risks associated with federal and state environmental laws, that may impose restrictions on the manner in which a property may be used;
•Certain catastrophic losses that may be uninsurable, as well as risks related to climate-related changes and hazards, which could adversely impact the Account's investment returns;
•ESG criteria used to assess economic risk or financial opportunity projections in the evaluation of commercial real estate investments may not materialize in the way we have anticipated, resulting in the Account
subsequently underperforming relative to other investment vehicles that did not utilize such ESG criteria in selecting and managing portfolio properties;
•Countries with emerging market, foreign commercial real properties, foreign real estate loans, foreign debt investments and foreign securities investments that may experience unique risks such as changes in currency exchange rates, imposition of market controls or currency exchange controls, seizure, expropriation or nationalization of assets, political, social or diplomatic events or unrest (for example, the wars in Ukraine and Gaza), regulatory and taxation risks and risks associated with enforcing judgments in foreign countries that could cause the Account to lose money;
•Investments in REITs, including changes in the value of the underlying properties or by the quality of any credit extended, as well as exposure to market risk due to changing conditions in the financial markets;
•Investments in mortgage-backed securities, which are subject to the same risks inherent in real estate investing, making mortgage loans and investing in debt securities. For example, the underlying mortgage loans may experience defaults, are subject to prepayment risks and are sensitive to economic conditions impacting the credit markets generally;
•Risks associated with the Account's investments in mortgage or mezzanine loans, including (i) borrower default that results in the Account being unable to recover its original investment, (ii) liens that may have priority over the Account's security interest, (iii) a deterioration in the financial condition of tenants, and (iv) changes in interest rates for the Account's variable-rate mortgage loans and other debt instruments;
•Risks associated with the Account's investments in, and leasing of, single-family real estate include risks relating to the condition of the properties, the credit quality and employment stability of the tenants, and compliance with applicable local laws regarding the acquisition and leasing of single family real estate (which may include manufactured housing);
•Investment securities issued by U.S. Government agencies and U.S. Government-sponsored entities, including the risk that the issuer may not have their securities backed by the full faith and credit of the U.S. Government, which could adversely affect the pricing and value of such securities;
•Risks associated with investments in liquid, fixed-income investments and real estate-related liquid assets (which could include, from time to time, registered or unregistered REIT securities and CMBS), and non-real estate-related liquid assets;
•Conflicts of interests associated with TIAA serving as investment manager of the Account and provider of the liquidity guarantee while also serving as an investment manager to other real estate accounts or funds;
•Lending securities, which has the Account bear the market risk with respect to the investment of collateral or a portion of the income generated by interest paid by the securities lending agent on the cash collateral balance;
•The Account's requirement to sell property in the event that TIAA owns too large of a percentage of the Account's accumulation units, which sales could occur at a time or price that is not optimal for the Account's returns; and
•The tax rules applicable to the contracts vary and your rights under a contract may be subject to the terms of your employer's retirement plan itself, regardless of the terms of the contract. We cannot provide detailed information on all tax aspects of owning the contracts. Tax rules may change without notice, and we cannot predict whether, when, or how tax rules could change or what, if any, tax legislation will actually be proposed or enacted;
•Continued liquidity risks within the Account's portfolio. Additional detail regarding the recent triggering of the Account's Liquidity Guarantee is included below in the sub-section entitled "Liquidity and Capital Resources."
More detailed discussions of certain of these risk factors are contained in the section of the Form 10-K entitled "Item 1A. Risk Factors" and "Part II, Item 1A, Risk Factors" in this Report and also in the section below entitled "Quantitative and Qualitative Disclosures About Market Risk." These risks could cause actual results to differ materially from historical experience or management's present expectations.
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, 2026 and may be subsequently revised. Prior period data may have been adjusted to reflect updated calculations. Investors should not rely exclusively on the data presented below in forming a judgment regarding the current or prospective performance of the commercial real estate market generally.
ABOUT THE TIAA REAL ESTATE ACCOUNT
The Account was established, under the laws of New York, in February 1995 as a separate account of TIAA and interests in the Account were first offered to eligible contract owners 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 Real Estate Account seeks to generate favorable total returns primarily through the rental income and appreciation of a diversified portfolio of directly held, private real estate investments and real estate-related investments, while offering investors guaranteed, daily liquidity.
Real Estate-Related Investments. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. These investments may consist of:
•Direct ownership interests in domestic and foreign real estate;
•Direct ownership of real estate through interests in joint ventures;
•Indirect interests in real estate through real estate-related securities: such as
◦private real estate limited partnerships and limited liability companies (collectively, "real estate funds");
◦real estate operating businesses;
◦investments in equity or debt securities of domestic and foreign companies whose operations involve real estate (i.e., that primarily own, develop or manage real estate) which may not be real estate investment trusts ("REITs");
◦domestic or foreign loans, including conventional commercial mortgage loans, participating mortgage loans, secured domestic and foreign mezzanine loans, subordinated loans and collateralized mortgage obligations, including commercial mortgage-backed securities ("CMBS"), collateralized mortgage obligations ("CMOs"),and other similar investments; and
◦public and/or privately placed, domestic and foreign, registered and unregistered equity investments in REITs, which investments may consist of registered or unregistered common or preferred stock interests.
The Account's principal strategy is to purchase direct ownership interests in income-producing real estate, including the four primary sectors of industrial, multi-family, office, and retail, as well as alternative real estate sectors (defined as real estate outside of the four primary sectors noted above). The Account targets holding between 65% and 85% of the Account's net assets in such direct ownership interests.
In addition, the Account is authorized to hold up to 25% of its net assets in liquid real estate-related securities, including publicly traded REITs and CMBS. Management intends that the Account will not hold more than 10% of net assets in such securities on a long-term basis. As of September 30, 2026, the Account did not hold any publicly traded REITs or CMBS.
In making commercial real estate investments within the Account, TIAA seeks to make investments that are suitable from a financial perspective, taking into account the potential financial impacts associated with industry recognized environmental, social and governance ("ESG") criteria to the extent that such criteria are reasonably expected to impact the financial performance of the investment and not to achieve a desired outcome or as an investment
qualification or screen. TIAA believes awareness, and, as appropriate, implementation of ESG criteria in commercial real estate holdings is beneficial to total long-term returns for the Account. Ultimately, the Account will make an investment decision that incorporates ESG criteria only to the extent that the criteria are reasonably expected to enhance our understanding of the investment's ability to achieve desired returns for the Account.
Liquid, Fixed-Income Investments. The Account will invest the remaining portion of its assets (targeted to be between 15% and 25% of its net assets) in the following types of liquid, fixed income investments:
•U.S. Treasury or U.S. Government agency securities;
•Intermediate-term or long-term government related instruments, such as bond or other fixed-income securities issued by U.S. Government agencies, U.S. states or municipalities or U.S. Government-sponsored entities as well as foreign governments and their agencies (including those in emerging markets) and supranational or multinational organizations (e.g., European Union);
•Intermediate-term or long-term non-government related instruments, such as corporate debt securities, domestic- or foreign mezzanine or other debt, and structured securities, (e.g. unsecured debt obligations with a return linked to the performance of an underlying asset). Such structured securities may include asset-backed securities ("ABS") issued by domestic or foreign entities, mortgage backed securities ("MBS"), residential mortgage backed securities ("RMBS"), debt securities of foreign governments, and collateralized debt ("CDO"), collateralized bond ("CBO") and collateralized loan ("CLO") obligations, but only if such non-government related instruments are investment-grade securities;
•Money market instruments and other cash equivalents. These will usually be high-quality, short-term debt instruments, including U.S. Government or government agency securities, commercial paper, certificates of deposit, bankers' acceptances, repurchase agreements, interest-bearing time deposits, and corporate debt securities; and
•To a limited extent, privately issued (or non-publicly traded) debt securities, including Rule 144A securities, issued by domestic and foreign companies that do not primarily own or manage real estate, but only if such domestic and foreign privately issued debt securities are investment-grade securities.
However, the Account's liquid, fixed-income investments may comprise less than 15% of its net assets especially during and following periods of significant net contract owner outflows. In addition, the Account, on a temporary basis, may hold in excess of 25% of its net assets in liquid, fixed-income investments, particularly during times of significant inflows into the Account and/or a lack of attractive real estate-related investments available in the market.
Liquid Securities Generally. Primarily due to management's need to manage fluctuations in cash flows, in particular during and following periods of significant contract owner net transfer activity into or out of the Account, the Account may, on a temporary or long term 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 structured securities (including ABS, RMBS, CMBS and MBS), or (ii) be below the low end of its targeted holdings in such liquid securities (currently 15% of the Account's net assets).
The portion of the Account's net assets invested in liquid investments of all types may exceed the upper end of its target, for example, if (i) the Account receives a large inflow of money in a short period of time, in particular due to significant contract owner transfer activity into the Account, (ii) the Account receives significant proceeds from sales or financings of direct real estate assets, (iii) there is a lack of attractive direct real estate investments available on the market, and/or (iv) the Account anticipates more near-term cash needs, including to acquire or improve direct real estate investments, pay expenses or repay indebtedness. Conversely, the portion of the Account's net assets invested in liquid investments of all types may exceed the lower end of its target, for example, during and immediately following periods of significant net contract owner outflows.
Foreign Investments. The Account may also make foreign real estate, foreign real estate-related investments and foreign liquid, fixed-income investments. Under the Account's investment guidelines, investments in direct foreign real estate and real estate loans, together with foreign real estate-related securities and foreign liquid, fixed-income
investments may not comprise more than 25% of the Account's net assets. However, management does not intend such foreign investments, in the aggregate, to exceed 10% of the Account's net assets. As of September 30, 2026, the fair value of the Account's foreign real estate investments was $170.4 million, or 0.7% of net assets.
In managing any domestic or foreign mezzanine debt or other domestic or foreign loans or securities, the Account may enter into certain derivatives transactions (including forward currency contracts and swaps, futures contracts, put and call options and other hedging transactions) in order to hedge against the risks of exchange rate uncertainties, interest rate uncertainties and foreign currency or market fluctuations impacting the Account's domestic or foreign investments. The Account does not intend to speculate in such transactions.
THIRD QUARTER 2026 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
2025 3Q 2026 2026 2027
Economy(1)
Gross Domestic Product ("GDP")
2.0% 3.1% 2.2% 2.0%
Employment Growth (2)
10 51 60 57
Unemployment Rate 4.4% 4.2% 4.4% 4.7%
Interest Rates(3)
10 Year Treasury 4.2% 5.3% 4.9% 4.4%
Sources: Bureau of Economic Analysis, 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)Values presented in thousands. Forecast values represent average monthly employment growth in the respective periods.
(3)Treasury rates are an average over the stated period.
Global economic growth continued at a solid pace in the third quarter of 2026, as elevated spending on AI-related investments and resilient consumer demand have helped sustain expansion. The effects of the United States and Iran conflict continue to ripple through the global economy, however, and have triggered a resurgence in inflation across most major economies. In response, major central banks have pivoted in recent months and have raised or signaled the intention to raise interest rates to combat the inflationary environment.
The United States economy expanded at a robust rate in the third quarter of 2026, with GDP accelerating to an estimated 3.1% annualized pace following 2.2% growth in the prior quarter. Healthy consumer spending and continued investment in AI-related hardware and software helped sustain economic growth in 2026, though other sectors, including non-AI-related investment and residential construction, remained under pressure. Labor market conditions remained soft during the third quarter, with an average of just 51,000 jobs added per month. Wage growth decelerated to its slowest pace in over five years during the quarter, pressuring consumers and raising questions about the sustainability of consumer spending going forward.
In response to rising inflation, the Federal Reserve raised the short-term federal funds rate by 25 basis points ("bps") in September 2026, reversing the rate-cutting cycle that began in September 2024. Given the healthy pace of economic growth, Federal Reserve officials have signaled a willingness to implement further rate increases, and markets currently anticipate an additional 25 bps increase at the December meeting. The combination of heightened inflation risks, a more hawkish policy stance, and elevated capital flows into artificial intelligence-related investment contributed to a significant increase in 10-year Treasury yields during the quarter, which reached 5.29% at the end of September, the highest level in over 24 years.
In Europe, economic growth continued at a modest pace during the third quarter, as energy-importing developed economies remained particularly exposed to the effects of higher oil and gas prices resulting from the conflict between the United States and Iran. As in the United States, spending on AI-related infrastructure provided some support for growth throughout the year, helping to offset the impact of higher inflation across developed economies.
The European Central Bank raised interest rates for the second consecutive quarter, with markets anticipating further policy tightening to curb inflation. The Bank of England held policy rates steady during the third quarter, citing weak economic growth; however, inflation is rising in the United Kingdom, and Bank of England officials have been divided over the appropriate policy response in recent meetings. Long-term yields in Europe followed a pattern similar to that of the United States, rising significantly during the third quarter in response to tighter monetary policy and rising inflation.
In Asia, China's economy grew 4.5% year-over-year in the third quarter, in line with the Chinese government's growth target of 4.5% for 2026. Growth in China continues to be sustained by strength in the export sector, aided by reduced United States tariff burdens, which has helped fuel robust growth in China's manufacturing sector and offset declining residential real estate investment. As in Europe, most of the largest economies in Asia are net energy importers, particularly through the contested Strait of Hormuz, and have experienced downward pressure on domestic activity as disputes continue in the Middle East. However, the global boom in AI-related infrastructure has been a tailwind for Asian export nations such as South Korea and Singapore.
Real Estate Market Conditions and Outlook
The rise in long-term interest rates in developed economies has introduced some additional risk into the real estate sector heading to the end of 2026. Persistently higher interest rates are likely to put downward pressure on commercial real estate valuations and pricing, hampering returns performance in the near term. However, fundamentals across the commercial real estate landscape have begun to stabilize, as several property types have benefited from a broad slowdown in construction activity. This should provide some support for income growth and some protection for total return performance should values adjust to the higher risk-free rate.
Despite this increase in rates, transaction activity continued to accelerate in the third quarter of 2026. Preliminary data from Real Capital Analytics shows that United States sales volume totaled $215.6 billion in the third quarter of 2026, up 59.6% from the same time last year and the strongest quarter for sales transactions since mid-2022. The rise in sales activity has brought some stability to property values over the past several quarters. Real estate values rose by 1.7% in the third quarter from the second quarter values and are now up 4.7% year-over-year according to Green Street's Commercial Property Price Index (CPPI). This marks the eighth consecutive quarter of yearly gains following a 21% decline from the peak in early 2022.
The Account returned 3.96% in the third quarter of 2026 and 7.21% since September 30, 2025. The Account's portfolio displayed strong property fundamentals in the third quarter. Future transaction activity is expected to be consistent with the Account's multi-year strategy of increasing allocations to anticipated outperforming sectors such as housing, industrial, necessity retail, and alternatives.
Data for the Account's top five markets in terms of market value as of September 30, 2026 are provided below. The five markets presented below represent 38.7% of the Account's total real estate portfolio. Across all markets, the Account's properties are 91.0% leased.
Top 5 Metro Areas by Fair Market Value Account % Leased Number of Property Investments Metro Area Fair Value as a % of Total RE Portfolio* Metro Area Fair Value as a % of Total Investments*
Dallas-Fort Worth-Arlington, TX 95.4% 12 8.8% 7.3%
Riverside-San Bernardino-Ontario, CA 87.4% 6 8.4% 6.9%
Los Angeles-Long Beach-Anaheim, CA 89.4% 19 8.4% 6.9%
Washington-Arlington-Alexandria, DC-VA-MD-WV 80.3% 17 7.2% 5.9%
San Diego-Chula Vista-Carlsbad, CA 92.3% 8 5.9% 4.8%
*Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.
Office
The recovery in the U.S. office sector gained some momentum in the third quarter. Demand growth reached a post-pandemic high of 9.1 million square feet during the quarter, marking the fifth consecutive quarter of positive demand growth, according to CoStar. While this pace of demand growth remains below pre-pandemic trends, it is
an encouraging sign that consolidation among office occupiers is beginning to slow. Employment growth in traditional office-using segments of the economy, such as finance and insurance, remains subdued, which is likely to constrain demand for office space going forward.
On the supply side, net supply growth has been negative in each of the last four quarters after accounting for demolitions and conversions of obsolete space to other uses, contributing to a decline in sector vacancy for the fifth consecutive quarter. The pace of new development remains near historic lows, signaling limited new supply over the medium term. This dynamic has created investment opportunities in the office sector, particularly for high-quality assets in gateway markets. Newer properties have collectively experienced improving occupancy since early 2024 and are well positioned to benefit from limited competing supply in the coming quarters.
According to CoStar, the nationwide office vacancy rate edged down slightly in the third quarter of 2026, declining to 13.7% from 13.8% in the second quarter, even as occupancy decreased by 1.0 percentage point to 83.7%, driven by tenant vacancies and dispositions. Within the Account's office portfolio, vacancy increased slightly to 16.3% in the third quarter from 15.3% in the second quarter, with the increase concentrated in the Washington, D.C. and Dallas metro areas. This increase was driven by lease expirations and non-renewals, tenant downsizing, and continued challenges in the office leasing market.
Account Vacancy Market
Vacancy*
Top 5 Office Metropolitan Areas Total Sector
by Metro Area
($M) 		% of Total
Investments 		Q3 2026 Q2 2026 Q3 2026 Q2 2026
All Office
16.3 % 15.3 % 13.7 % 13.8 %
Washington-Arlington-Alexandria, DC-VA-MD-WV $ 688.2 2.6 % 36.3 % 20.9 % 17.3 % 17.4 %
San Diego-Chula Vista-Carlsbad, CA 663.1 2.5 % 2.8 % 6.4 % 13.9 % 13.9 %
Dallas-Fort Worth-Arlington, TX 620.9 2.4 % 11.1 % 5.2 % 17.0 % 17.3 %
New York-Newark-Jersey City, NY-NJ-PA 357.8 1.4 % 5.6 % 9.9 % 12.3 % 12.5 %
Houston-The Woodlands-Sugar Land, TX 325.9 1.2 % 11.0 % 11.5 % 19.4 % 19.4 %
*Source: CoStar. Market vacancy is defined as the percentage of space available for rent. The Account's vacancy is defined as the percentage of unleased square footage.
Industrial
United States industrial fundamentals continued to improve in the third quarter, with vacancy in the sector falling 7 basis points to 7.4%, according to CoStar. Net absorption reached 79.2 million square feet during the quarter, marking the fastest pace of demand growth since the end of 2022. Supply growth, which had driven much of the vacancy increase in 2023-2024, reaccelerated to 71.2 million square feet but fell short of demand growth for the first time in over four years. With demand returning and fundamentals stabilizing, the number of new projects breaking ground has picked up over the past several quarters. Still, the pace of development remains well below the peaks seen in 2022 and 2023, and the sector is expected to remain largely insulated from significant supply risk in the coming quarters. Demand growth continues to face some challenges, but the sector benefits from significant long-term tailwinds, such as e-commerce growth and supply chain diversification, which should support tenant demand over the next several years.
The average vacancy rate of the industrial properties held by the Account decreased from 12.2% in the second quarter of 2026 to 9.4% in the third quarter. This decrease was driven by a combination of multiple lease commencements, acquisitions, and new tenant activity, with the Riverside metro area experiencing the most significant impact from these factors.
Account Vacancy Market
Vacancy*
Top 5 Industrial Metropolitan Areas Total Sector
by Metro Area
($M) 		% of Total
Investments 		Q3 2026 Q2 2026 Q3 2026 Q2 2026
All Industrial
9.4 % 12.2 % 7.4 % 7.4 %
Riverside-San Bernardino-Ontario, CA $ 1,808.4 6.9 % 12.6 % 21.3 % 8.7 % 9.1 %
Dallas-Fort Worth-Arlington, TX 776.8 3.0 % - % 1.9 % 7.8 % 8.3 %
Seattle-Tacoma-Bellevue, WA 653.3 2.5 % 19.9 % 19.9 % 10.3 % 10.3 %
Miami-Fort Lauderdale-Pompano Beach, FL 599.2 2.3 % 3.7 % 2.0 % 7.5 % 7.6 %
Los Angeles-Long Beach-Anaheim, CA 593.1 2.3 % 14.5 % 14.5 % 6.5 % 6.8 %
*Source: CoStar. Market vacancy is defined as the percentage of space available for rent. The Account's vacancy is defined as the percentage of unleased square footage.
Multi-Family
The multi-family sector continued to show modest improvement in the third quarter. Data from CoStar indicates that net absorption in the third quarter of 2026 exceeded 138,000 units, up 31% from the third quarter of 2025. Tougher immigration policies and slowing birth rates have curbed population growth in the United States and weighed on household formation, but elevated interest rates and affordability challenges in the single-family housing market have continued to support apartment demand. On the supply side, growth remains generally elevated relative to historical trends, though net new deliveries totaled less than 103,000 units in the third quarter of 2026, down 25.4% year-over-year. The number of multi-family units currently under construction fell to near-decade lows during the quarter, and multi-family fundamentals are expected to continue improving as the remaining pipeline of projects under construction is delivered. This should contribute to stability in rent growth as recently delivered space is absorbed and vacancy continues to trend downward.
The national apartment vacancy rate decreased moderately to 6.6% in the third quarter of 2026, down from 6.7% in the previous quarter, as reported by CoStar. The vacancy rate of the Account's apartment properties declined slightly from 4.8% in the second quarter of 2026 to 4.7% in the third quarter. This decrease was driven by continued improvement in tenant demand and steady lease renewal activity, coupled with dispositions in the sector.
Account Vacancy Market
Vacancy*
Top 5 Apartment Metropolitan Areas Total Sector
by Metro Area
($M) 		% of Total
Investments 		Q3 2026 Q2 2026 Q3 2026 Q2 2026
All Apartment
4.7 % 4.8 % 6.6 % 6.7 %
Los Angeles-Long Beach-Anaheim, CA $ 621.9 2.4 % 3.3 % 3.4 % 5.0 % 5.1 %
Washington-Arlington-Alexandria, DC-VA-MD-WV 611.2 2.3 % 6.5 % 4.4 % 7.0 % 7.1 %
Miami-Fort Lauderdale-Pompano Beach, FL 516.5 2.0 % 4.4 % 4.5 % 5.4 % 5.5 %
Atlanta-Sandy Springs-Alpharetta, GA 439.8 1.7 % 5.7 % 5.6 % 9.3 % 9.5 %
Chicago-Naperville-Elgin, IL-IN-WI 323.9 1.2 % 5.1 % 10.0 % 4.5 % 4.6 %
*Source: RealPage. Market vacancy is the percentage of units vacant. The Account's vacancy is defined as the percentage of unleased square footage.
Retail
Retail fundamentals remained healthy in the third quarter, with vacancy continuing to hover near historic lows despite rising pressure on United States consumers. Facing elevated inflation, rising credit burdens, soft job growth, and falling real wages, consumers nonetheless sustained solid spending trends in the third quarter, aided by continued spending strength among wealthier income cohorts. Demand growth for retail space registered a healthy 8.6 million square feet in the third quarter according to CoStar, more than double the pace of demand growth in the third quarter of the prior year. Leasing activity continues to be dominated by smaller-format, freestanding, and in-
line spaces, with service-based tenants leading growth. Within the mall subsector, high-end malls continue to perform well and have demonstrated the ability to attract quality tenants, while lower-tier malls are experiencing higher vacancies and weaker foot traffic. Grocery-anchored centers remain highly stable investments, as essential shopping provides some insulation against an uncertain consumer environment. Construction activity and supply growth in the retail sector have been limited in recent quarters and are expected to remain low over the next several quarters, as existing rents are not yet high enough in most areas to justify the elevated construction and financing costs associated with new development. This dynamic should help keep vacancy relatively low, even if macroeconomic conditions were to worsen.
The Account's retail portfolio is composed primarily of high-end lifestyle shopping centers and regional malls located in large metropolitan and tourist markets, property types that inherently carry higher vacancy rates relative to the broader national retail market. The portfolio spans more than 1,100 retailers, with the largest single retailer representing less than 5.0% of total retail rentable area, reflecting a deliberate strategy to limit concentration risk. While the national retail vacancy rate dropped to 4.4% through the first three quarters of the year, the average vacancy rate across the Account's retail properties decreased from 7.5% to 5.8% over the same period, driven largely by dispositions across all segments. The lifestyle and mall segment experienced the most pronounced decline, reflecting increased leasing activity and strong tenant retention, as higher-end malls continued to attract greater foot traffic.
Account Vacancy
Market
Vacancy*
Total Exposure
($M) 		% of Total Investments Q3 2026 Q2 2026 Q3 2026 Q2 2026
All Retail 5.8 % 7.5 % 4.4 % 4.5 %
Lifestyle & Mall $ 1,148.6 4.4 % 3.3 % 5.2 % 8.1 % 8.4 %
Neighborhood, Community & Strip 808.7 3.1 % 9.9 % 10.8 % 6.2 % 6.2 %
Power Center** 349.8 1.3 % 8.4 % 9.4 % 4.7 % 4.9 %
*Source: CoStar. Market vacancy is the percentage of space available for rent. The Account's vacancy is defined as the percentage of unleased square footage.
**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 fewer anchor units.
Hotel
The Account's hotel investment experienced an increase in vacancy during the third quarter of 2026, reflecting softer lodging demand and decreased occupancy from business and leisure travel activity. Looking ahead, hotel occupancy trends are expected to stabilize over time, though the extent of improvement will depend in part on broader economic conditions.
The Account's exposure to the hospitality sector is limited to a single hotel located in the Dallas metro area. Situated in a business park, the property caters largely to business travelers. Key metrics used to track hotel performance include occupancy, average daily rate ("ADR"), and revenue per available room ("RevPAR"). For the quarter ended September 30, 2026, occupancy decreased to 48.4%, compared to 75.1% in the prior quarter. ADR and RevPAR were $149.18 and $72.14, respectively, for the third quarter of 2026, compared to $158.10 and $118.81, respectively, in the prior quarter.
INVESTMENTS
As of September 30, 2026, the Account had total net assets of $23.8 billion, a 4.4% increase from December 31, 2025.
As of September 30, 2026, the Account held 82.1% of its total investments in real estate and real estate joint ventures. The Account also held a real estate operating business representing 7.0% of total investments, real estate funds representing 3.2% of total investments, U.S treasury securities representing 2.3% of total investments, U.S. short term repos representing 2.2% of total investments, U.S. government agency notes representing 2.0% of total
investments and investments in loans receivable, including those with related parties, representing 1.2% of total investments.
The outstanding principal on loans payable on the Account's wholly-owned real estate portfolio as of September 30, 2026 was $0.5 billion. The Account's proportionate share of outstanding principal on loans payable within its joint venture investments was $2.5 billion, which is netted against the underlying properties when determining the joint venture investment's fair value presented on the Consolidated Schedules of Investments. As of September 30, 2026, the total outstanding principal on the Account's portfolio was $5.2 billion, inclusive of loans payable within the joint venture investments, $1,750.0 million in senior notes payable, $302.0 million outstanding on the Account's line of credit, and $80.0 million in loans collateralized by a loan receivable. This amount represented a loan-to-value ratio of 17.8%.
Management believes that the Account's real estate portfolio is diversified by location and property type. The Account does not intend to buy and sell its real estate investments simply to make short-term profits. Rather, the Account's general strategy in selling real estate investments is to dispose of those assets that management believes (i) have maximized in value, (ii) have underperformed or face deteriorating property-specific or market conditions, (iii) need significant capital infusions in the future, (iv) are appropriate to dispose of in order to remain consistent with the Account's intent to diversify the Account by property type and geographic location (including reallocating the Account's exposure to or away from certain property types in certain geographic locations), or (v) otherwise no longer satisfy the investment objectives of the Account. Management, from time to time, will evaluate the need to manage liquidity in the Account as part of its analysis as to whether to undertake a particular asset sale. The Account may reinvest any sale proceeds that it does not need to pay operating expenses or to meet debt service or redemption requests (e.g., contract owner withdrawals or benefit payments).
The following table lists the Account's ten largest investments as of September 30, 2026. 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)
Simpson Housing Portfolio 80.00% Various U.S.A Apartment $ 1,023.6 $ 474.9 $ 548.7 4.3% 3.6%
Ontario Industrial Portfolio 100.00% Ontario CA Industrial 960.3 - 960.3 4.0% 3.3%
Fashion Show 50.00% Las Vegas NV Retail 789.4 420.0 369.4 3.3% 2.8%
Campus Pointe Consolidation 40.67% San Diego CA Office 673.7 - 673.7 2.8% 2.3%
Storage Portfolio II 90.00% Various U.S.A Other 580.4 171.2 409.2 2.4% 2.0%
Lincoln Centre 100.00% Dallas TX Office 577.9 - 577.9 2.4% 2.0%
The Florida Mall 50.00% Orlando FL Retail 535.7 307.4 228.3 2.3% 1.9%
Dallas Industrial Portfolio 100.00% Dallas TX Industrial 535.6 - 535.6 2.2% 1.9%
1001 Pennsylvania Avenue 100.00% Washington DC Office 418.2 - 418.2 1.8% 1.5%
Seavest MOB 98.78% Various U.S.A Office 413.9 72.0 341.9 1.7% 1.4%
(1)The Account's share of the fair value of the property investment, gross of debt.
(2)Debt fair values are presented at the Account's ownership interest.
(3)The Account's share of the fair value of the property investment, net of debt.
(4)Total real estate portfolio is the aggregate fair value of the Account's wholly-owned properties and the properties held within a joint venture, gross of debt.
(5)Total investments are the aggregate fair value of all investments held by the Account, gross of debt. Total investments, as calculated within this table, will vary from total investments, as calculated in the Account's Schedule of Investments, as joint venture investments are presented in the Schedule of Investments at their net equity position in accordance with accounting principles generally accepted in the United States (U.S. GAAP").
Results of Operations
Three months ended September 30, 2026 compared to Three months ended September 30, 2025
Net Investment Income
The following table shows the results of operations for the three months ended September 30, 2026 and 2025 and the dollar and percentage changes for those periods (dollars in millions).
For the Three Months Ended September 30, Change
2026 2025 $ %
2
Real estate income, net:
Rental income $ 303.2 $ 305.7 $ (2.5) (0.8) %
Real estate property level expenses:
Operating expenses 74.3 75.3 (1.0) (1.3) %
Real estate taxes 44.9 47.6 (2.7) (5.7) %
Interest expense 9.7 13.6 (3.9) (28.7) %
Total real estate property level expenses 128.9 136.5 (7.6) (5.6) %
Real estate income, net 174.3 169.2 5.1 3.0 %
Income from real estate joint ventures 42.3 29.1 13.2 45.4 %
Income from real estate funds 3.0 5.1 (2.1) (41.2) %
Interest income
27.3 29.6 (2.3) (7.8) %
TOTAL INVESTMENT INCOME 246.9 233.0 13.9 6.0 %
Expenses:
Investment management charges 16.8 17.1 (0.3) (1.8) %
Administrative charges 12.7 13.4 (0.7) (5.2) %
Distribution charges 2.7 2.0 0.7 35.0 %
Liquidity guarantee charges 16.2 16.0 0.2 1.3 %
Interest expense 33.7 17.0 16.7 98.2 %
TOTAL EXPENSES 82.1 65.5 16.6 25.3 %
INVESTMENT INCOME, NET $ 164.8 $ 167.5 $ (2.7) (1.6) %
The table below illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the three months ended September 30, 2026 and 2025, "same property", as compared to the comparative increases or decreases associated with the acquisition and disposition of properties made in either period.
Rental Income Operating Expenses Real Estate Taxes
Change Change Change
2026 2025 $ % 2026 2025 $ % 2026 2025 $ %
Same Property $ 262.5 $ 274.5 $ (12.0) (4.4) % $ 65.1 $ 67.8 $ (2.7) (4.0) % $ 39.3 $ 41.0 $ (1.7) (4.1) %
Properties Acquired 31.9 - 31.9 N/M 6.5 - 6.5 N/M 4.7 - 4.7 N/M
Properties Sold 8.8 31.2 (22.4) (71.8) % 2.7 7.5 (4.8) (64.0) % 0.9 6.6 (5.7) (86.4) %
Impact of Properties Acquired/Sold 40.7 31.2 9.5 30.4 % 9.2 7.5 1.7 22.7 % 5.6 6.6 (1.0) (15.2) %
Total Property Portfolio $ 303.2 $ 305.7 $ (2.5) (0.8) % $ 74.3 $ 75.3 $ (1.0) (1.3) % $ 44.9 $ 47.6 $ (2.7) (5.7) %
N/M-Not meaningful
Rental Income:
Rental income decreased by $2.5 million, or 0.8%, driven by tenant lease terminations, increased rent concessions in the office sector and a reduction in room revenue at the Account's only hotel property, partially offset by net acquisitions between the current and prior year quarters, as seen in the table above.
Operating Expenses:
Operating expenses decreased by $1.0 million, or 1.3% when compared to the third quarter of 2025, primarily driven by the reduction in room service and food/beverage expenses for the Account's only hotel property and net property dispositions between the current and prior year quarters, partially offset by net property acquisitions during the current quarter, as seen in the table above.
Real Estate Taxes:
Real estate taxes decreased $2.7 million, or 5.7%, when compared to the third quarter of 2025, primarily due to a reduction in real estate taxes resulting from prior-period abatements
Interest Expense:
Interest expense decreased $3.9 million, or 28.7%, primarily attributable to a reduction in the average outstanding principal balance on loans payable during the third quarter of 2026, as compared to the same quarter in 2025.
Income from Real Estate Joint Ventures:
Income from real estate joint ventures increased $13.2 million, or 45.4%, as compared to the corresponding third quarter in 2025, driven primarily by an increase in distributed income from medical office properties located in various locations, a retail property located in Orlando, Florida and an office consolidation located in California. The increase in distributed income is attributable to lower operating expenses incurred by the Account's joint ventures.
Income from Real Estate Funds:
Income from real estate funds decreased $2.1 million, or 41.2%, as compared to the corresponding quarter in 2025, primarily attributable to lower dividends received from two of the Account's real estate fund investments, driven by higher operating expenses incurred, which reduced the distributable income available to the Account.
Interest Income:
Interest income decreased $2.3 million, or 7.8%, in comparison to the same quarter of 2025, due to a reduction in the Account's loan receivable portfolio, resulting in lower interest earned on these investments.
Expenses:
Investment management, administrative and distribution expenses charged to the Account by TIAA and one of its affiliates are charged on an at-cost basis and are 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. Both distribution services (pursuant to the Distribution Agreement) and administrative services are provided to the Account by Services and TIAA, respectively, on an at-cost basis. Investment management expenses decreased by $0.3 million when compared to the prior year third quarter due to a net reduction in the investment management rates. Administrative expenses decreased $0.7 million due to a continued reduction in employee related costs. Distribution charges increased $0.7 million when compared to the prior year third quarter due to higher average net assets resulting in increased servicing fees.
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. There was no mortality and expense risk expenses charged by TIAA in the comparative periods. Liquidity guarantee expenses were $0.2 million higher than the comparable period of 2025 as a result of higher average net assets, though the overall level of expense remained relatively flat in both periods.
Interest expense on the Account's unsecured debt increased $16.7 million when compared to the same quarter of 2025, driven by an increase in the Account's outstanding principal balance on its line of credit and senior notes payable.
Net Realized and Unrealized Gains and Losses on Investments and Debt
The following table shows the net realized and unrealized losses on investments and debt for the three months ended September 30, 2026 and 2025 and the dollar and percentage changes for those periods (millions).
For the Three Months Ended September 30, Change
2026 2025 $ %
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT
Net realized gain (loss) on:
Real estate properties $ (179.0) $ (11.5) $ (167.5) (1,456.5) %
Real estate joint ventures 17.7 (126.2) 143.9 114.0 %
Real estate funds - 8.4 (8.4) (100.0) %
Foreign currency translation - 0.1 (0.1) (100.0) %
Loans receivable - (20.1) 20.1 100.0 %
Loans payable 7.4 - 7.4 N/M
Total realized gain (loss) on investments and debt (153.9) (149.3) (4.6) (3.1) %
Net change in unrealized gain (loss) on:
Real estate properties 228.7 29.1 199.6 685.9 %
Real estate joint ventures 30.5 168.4 (137.9) (81.9) %
Real estate funds 5.8 (12.4) 18.2 146.8 %
Real estate operating business 597.4 53.0 544.4 1,027.2 %
Loans receivable (1.6) (9.5) 7.9 83.2 %
Loans payable (4.2) 7.3 (11.5) (157.5) %
Other unsecured debt 38.4 (3.8) 42.2 1,110.5 %
Net change in unrealized gain (loss) on investments and debt
895.0 232.1 662.9 285.6 %
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT $ 741.1 $ 82.8 $ 658.3 795.0 %
N/M-Not meaningful
Real Estate Properties:
Wholly-owned real estate investments experienced net realized and unrealized gains of $49.7 million during the third quarter of 2026, compared to $17.6 million of net realized and unrealized gains during the comparable quarter of 2025. Current period realized losses were primarily driven by the sale of two office properties located in Massachusetts and Virginia, two multi-family properties located in Washington, D.C. and Virginia, two retail properties located in Illinois (including one disposed of through a deed-in-lieu-of-foreclosure agreement), and an industrial property located in Texas, partially offset by realized gains on a retail property located in Tennessee and a partial sale within an industrial portfolio located in California. Unrealized gains during the quarter were largely attributable to property valuations concentrated in the retail and industrial sectors, primarily driven by stable occupancy, improved rental income expectations, and resilient tenant demand. Realized losses in the third quarter of 2025 were attributable to the disposition of a multi-family property located in Texas, with unrealized gains in the comparable 2025 period largely attributable to the office and multi-family sectors, driven by resilient demand, consistent rental income growth, stabilized capitalization rates, and moderation in new supply.
Real Estate Joint Ventures:
Real estate joint ventures experienced net realized and unrealized gains of $48.2 million during the third quarter of 2026, compared to $42.2 million of net realized and unrealized gains during the third quarter of 2025. Unrealized gains for the current quarter were primarily driven by the Account's joint venture investments in the office and multifamily sectors, attributable to growth in market demand, capitalization rate compression and favorable leasing activity. Realized gains were primarily due to the disposition of a retail property in California and a multifamily property in Arizona, slightly offset by realized losses on the partial disposition of a multifamily property in Texas held within a portfolio. Prior period net realized and unrealized gains were primarily driven by unrealized gains
attributable to the Account's joint venture office and apartment investments, due to increased market demand and reduced leasing concession. These unrealized gains were offset by realized losses primarily driven by the sale of an office property in New York.
Real Estate Funds:
Real estate funds recognized unrealized gains of $5.8 million for the three months ended September 30, 2026, compared to net realized and unrealized losses of $4.0 million for the comparable 2025 period. The current quarter's gains were primarily attributable to favorable valuations, reflecting favorable capitalization rates and updated market assumptions, as compared to the prior year quarter, which was driven by unfavorable capitalization rates and reduced investor demand amid economic conditions.
Real Estate Operating Business:
The Account's operating business recognized an unrealized gain of $597.4 million in the third quarter of 2026, compared to an unrealized gain of $53.0 million in the third quarter of 2025. The current quarter's gain was primarily driven by positive valuation adjustments. The increases were driven by an increase in forecasted development for new data centers with signed tenant agreements. The prior year quarter's gain was primarily attributable to a favorable valuation of DataBank resulting from a significant lease that added substantial value to the operating business.
Loans Receivable, including those with related parties:
Loans receivable, including those with related parties, experienced unrealized losses of $1.6 million during the third quarter of 2026, compared to $29.6 million of net realized and unrealized losses during the comparable quarter of 2025. The current period unrealized losses are primarily attributed to an unfavorable valuation on a single mezzanine loan during the quarter. The appraised values of the collateral asset properties were lower than the principal value of the loans, which resulted in the unfavorable valuation of the loans receivable. The comparable period net realized and unrealized losses are mainly attributed to unfavorable valuations of two loans during the period, the foreclosure of a loan collateralized by an office portfolio and a payoff of a loan collateralized by an office property.
Loans Payable:
Loans payable experienced net realized and unrealized gains of $3.2 million during the third quarter of 2026, compared to unrealized gains of $7.3 million during the third quarter of 2025. The current period realized gains were primarily driven by the extinguishment of debt in connection with the disposition of a retail property located in Illinois through a deed-in-lieu of foreclosure agreement. These gains were partially offset by unrealized losses from declines in the fair value of debt which reflected volatile market interest rates during the quarter. The comparable period gains were primarily due to favorable fair value adjustments driven by market interest rate reductions and tightened credit spreads.
Other Unsecured Debt:
The Account's other unsecured debt experienced unrealized gains of $38.4 million in the third quarter of 2026, compared to $3.8 million of unrealized losses during the comparable quarter of 2025. The unrealized gains recognized in the current period were primarily attributable to favorable market perception during the quarter. The unrealized losses recorded in the prior period were driven by changes in the risk free yield curve and market assumptions due to political pressures.
Nine months ended September 30, 2026 compared to Nine months ended September 30, 2025
Net Investment Income
The following table shows the results of operations for the nine months ended September 30, 2026 and 2025 and the dollar and percentage changes for those periods (dollars in millions).
For the Nine Months Ended September 30, Change
2026 2025 $ %
INVESTMENT INCOME
Real estate income, net:
Rental income $ 921.5 $ 942.4 $ (20.9) (2.2) %
Real estate property level expenses:
Operating expenses 230.8 232.1 (1.3) (0.6) %
Real estate taxes 132.4 139.0 (6.6) (4.7) %
Interest expense 31.1 46.9 (15.8) (33.7) %
Total real estate property level expenses 394.3 418.0 (23.7) (5.7) %
Real estate income, net 527.2 524.4 2.8 0.5 %
Income from real estate joint ventures 126.1 125.8 0.3 0.2 %
Income from real estate funds 6.0 20.0 (14.0) (70.0) %
Interest income 77.1 94.4 (17.3) (18.3) %
TOTAL INVESTMENT INCOME 736.4 764.6 (28.2) (3.7) %
Expenses:
Investment management charges 53.4 51.5 1.9 3.7 %
Administrative charges 40.9 41.9 (1.0) (2.4) %
Distribution charges 7.8 7.1 0.7 9.9 %
Liquidity guarantee charges 47.8 47.4 0.4 0.8 %
Interest expense 75.3 37.1 38.2 103.0 %
TOTAL EXPENSES 225.2 185.0 40.2 21.7 %
INVESTMENT INCOME, NET $ 511.2 $ 579.6 $ (68.4) (11.8) %
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, 2026 and 2025. 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).
Rental Income Operating Expenses Real Estate Taxes
Change Change Change
2026 2025 $ % 2026 2025 $ % 2026 2025 $ %
Same Property $ 779.4 $ 786.7 $ (7.3) (0.9) % $ 197.8 $ 191.5 $ 6.3 3.3 % $ 111.6 $ 112.1 $ (0.5) (0.4) %
Properties Acquired 91.9 30.5 61.4 201.3 % 18.1 9.0 9.1 101.1 % 13.6 4.6 9.0 195.7 %
Properties Sold 50.2 125.2 (75.0) (59.9) % 14.9 31.6 (16.7) (52.8) % 7.2 22.3 (15.1) (67.7) %
Impact of Properties Acquired/Sold 142.1 155.7 (13.6) (8.7) % 33.0 40.6 (7.6) (18.7) % 20.8 26.9 (6.1) (22.7) %
Total Property Portfolio $ 921.5 $ 942.4 $ (20.9) (2.2) % $ 230.8 $ 232.1 $ (1.3) (0.6) % $ 132.4 $ 139.0 $ (6.6) (4.7) %
N/M-Not meaningful
Rental Income:
Rental income decreased by $20.9 million, or 2.2%, when compared to the first nine months of 2025, primarily due to lower parking revenue, reduced rental rates resulting from tenant move-outs and lease expirations, and lower tenant reimbursements primarily in the retail sector, as well as increased rent concessions and lease terminations in the office sector. The decrease was further driven by net property dispositions, as indicated in the table above.
Operating Expenses:
Operating expenses decreased $1.3 million, or 0.6%, when compared to the same period of 2025, primarily due to net property dispositions, as indicated in the table above.
Real Estate Taxes:
Real estate taxes decreased $6.6 million, or 4.7%, when compared to the same period in 2025, primarily due to net property dispositions, as noted in the table above.
Interest Expense:
Interest expense decreased by $15.8 million when compared to the same period in 2025, primarily due to a lower average outstanding principal balance and average interest rates on the Account's loans payable.
Income from Real Estate Joint Ventures:
Income from real estate joint ventures increased $0.3 million compared to the corresponding period in 2025, driven primarily by an increase in distributed income from a consolidated office property located across various markets and a retail property located in Orlando, Florida, partially offset by lower distributed income from a retail property located in Las Vegas, Nevada, and a student housing portfolio located in various markets. The increase in distributed income is attributable to lower operating expenses incurred by the Account's joint ventures.
Income from Real Estate Funds:
Income from real estate funds decreased $14.0 million, when compared to the corresponding period in 2025, primarily attributable to lower dividends received from two of the Account's real estate fund investments, driven by higher operating expenses incurred, which reduced the distributable income available to the Account.
Interest Income:
Interest income decreased $17.3 million compared to the same period in 2025, due to a reduction in the loan receivable portfolio.
Expenses:
Investment management, administrative and distribution expenses charged to the Account by TIAA and one of its affiliates are charged on an at-cost basis and are 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. Both distribution services (pursuant to the Distribution Agreement) and administrative services are provided to the Account by Services and TIAA, respectively, on an at-cost basis. Investment management expenses increased by $1.9 million when compared to the prior year due to elevated transaction activity increasing the Account's total investments. Administrative expenses decreased $1.0 million due to lower personnel costs and professional fees. Distribution charges increased $0.7 million when compared to the prior year due to higher average net assets resulting in increased servicing fees.
Mortality and expense risk and liquidity guarantee expenses represent contractual charges to the Account from TIAA in exchange for TIAA's assumption of these risks and its provision of the liquidity guarantee. These charges are established annually and assessed at a fixed rate based on the Account's net assets. There was no mortality and expense risk expenses charged by TIAA in the comparative periods. Liquidity guarantee expenses were $0.4 million higher than the comparable period of 2025, reflecting slight growth in the Account's average net assets over the period.
Interest expense from the Account's other unsecured debt and line of credit increased $38.2 million when compared to the same period of 2025, driven by an increase in the Account's outstanding principal balance on its line of credit and senior notes payable.
Net Realized and Unrealized Gains and Losses on Investments and Debt
The following table shows the net realized and unrealized gains and losses on investments and debt for the nine months ended September 30, 2026 and 2025 and the dollar and percentage changes for those periods (dollars in millions).
For the Nine Months Ended September 30, Change
2026 2025 $ %
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT
Net realized gain (loss) on:
Real estate properties $ (229.6) $ (681.5) $ 451.9 66.3 %
Real estate joint ventures (44.5) (129.7) 85.2 65.7 %
Real estate funds 25.7 8.4 17.3 206.0 %
Foreign currency translation
- 0.2 (0.2) (100.0) %
Loans receivable (56.0) (113.0) 57.0 50.4 %
Loans payable 42.1 61.7 (19.6) (31.8) %
Total realized gain (loss) on investments and debt: (262.3) (853.9) 591.6 69.3 %
Net change in unrealized gain (loss) on:
Real estate properties 178.9 641.5 (462.6) (72.1) %
Real estate joint ventures 159.0 203.4 (44.4) (21.8) %
Real estate funds (44.8) (10.7) (34.1) (318.7) %
Real estate operating business 768.3 25.0 743.3 2,973.2 %
Marketable securities (0.4) - (0.4) N/M
Loans receivable 48.2 76.8 (28.6) (37.2) %
Loans payable (34.9) 10.6 (45.5) (429.2) %
Other unsecured debt 56.7 (18.1) 74.8 413.3 %
Net change in unrealized gain (loss) on investments and debt 1,131.0 928.5 202.5 21.8 %
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT $ 868.7 $ 74.6 $ 794.1 1,064.5 %
N/M-Not meaningful
Real Estate Properties:
Wholly owned real estate investments experienced net realized and unrealized losses of $50.7 million during the first nine months of 2026, compared to net realized and unrealized losses of $40.0 million during the comparable period of 2025. Current period realized losses were attributable to the dispositions of three retail properties located in Pennsylvania and Illinois, four office properties located in Massachusetts, Virginia, and Oregon, three multi-family properties located in Texas, Washington, D.C., and Virginia, and an industrial property located in Texas. The realized losses were partially offset by realized gains on two retail properties located in North Carolina and Tennessee, a multi-family property located in California, an industrial portfolio located in Texas, and a partial sale within an industrial portfolio located in California. Net unrealized gains during the period were largely attributable to industrial and retail properties driven by stable occupancy, improved rental income expectations, and resilient tenant demand. Net realized losses in the comparable 2025 period were attributable to the dispositions of five multi-family properties located in Texas, California, and Minnesota and six office properties located in Washington, D.C., Virginia, Massachusetts, and California. Net unrealized gains in that period were primarily driven by office and multi-family properties in the Western and Eastern regions reflecting resilient demand, positive rent growth, and stabilized interest rates.
Real Estate Joint Ventures:
Real estate joint ventures experienced net realized and unrealized gains of $114.5 million during the first nine months of 2026, compared to net realized and unrealized gains of $73.7 million during the comparable period of 2025. Unrealized gains for the current period were primarily driven by the Account's joint venture investments in the office and multi-family sectors, reflecting continued growth in market demand and compressed capitalization rates. Realized losses for the current period were attributable to the disposition of multi-family properties in New York and Texas and a medical office property located in Minnesota, partially offset by realized gains attributable to the disposition of a multi-family property located in Arizona and a retail property located in California. In the prior
year period unrealized gains were primarily driven by the Account's joint venture investments in the office and retail sectors, reflecting increased regional market demand, reduced leasing concessions, and macroeconomic conditions producing mixed capitalization rates across the real estate sectors. Realized losses in the prior year period were primarily driven by the disposition of an office property located in New York.
Real Estate Funds:
Real estate funds experienced net realized and unrealized losses of $19.1 million during the first nine months of 2026, compared to net realized and unrealized losses of $2.3 million during the first nine months of 2025. Realized gains in the current period of 2026 are due to sales within one of the Account's real estate fund portfolios. Unrealized losses were driven by unfavorable changes in capitalization rates and lowered investor demand, resulting in unfavorable valuations for the Account's real estate fund investments. Prior period gains were due to favorable valuations of four of the Account's real estate funds, due to lower capitalization rates.
Real Estate Operating Business:
The Account's real estate operating business experienced unrealized gains of $768.3 million during the nine months of 2026, compared to $25.0 million of unrealized gains in the comparable period of 2025. Unrealized gains were primarily attributable to favorable valuation adjustments, largely resulting from reduced development costs, increased income from core operations, anticipated capacity expansion projects scheduled for 2027 and 2032 and an increase in forecasted development for new data centers. Unrealized gains in the 2025 period were primarily attributable to a favorable valuation resulting from a significant lease expected to add substantial value to the overall operating business
Marketable Securities:
The Account's marketable securities holdings experienced an unrealized loss of $0.4 million during the first nine months of 2026, compared to no unrealized loss during the comparable period of 2025. Unrealized losses remained relatively minor throughout the year, driven by fluctuating U.S. Treasury rates. The impact of which was not present in the prior period.
Loans Receivable, including those with related parties:
Loans receivable, including those with related parties, experienced net realized and unrealized losses of $7.8 million during the nine months of 2026, compared to $36.2 million of net realized and unrealized losses during the comparable period of 2025. Current period realized losses are primarily attributable to the foreclosure of a loan collateralized by an office portfolio, the payoff of two loans collateralized by office properties, a loan collateralized by a industrial property and loan collateralized by multi-family property, partially offset by unrealized gains resulting from favorable valuation adjustments on two investments. The appraised values of the collateral properties exceeded the principal balances of the respective loans, supporting the favorable valuation adjustments recognized in the period. Prior period net realized and unrealized losses are primarily attributable to realized losses associated with three loans paid off by the borrower and one foreclosure, offset by favorable valuations of four loans.
Loans Payable:
Loans payable recognized net realized and unrealized gains of $7.2 million in the nine months of 2026, compared to $72.3 million of net realized and unrealized gains in the comparable period of 2025. The realized gains in the nine months of 2026 were primarily attributable to the forgiveness of debt associated with an office property in Portland, Oregon, a debt extinguishment related to a retail property in Mooresville, North Carolina and the extinguishment of debt in connection with the disposition of a retail property located in Illinois through a deed-in-lieu of foreclosure agreement. These gains were offset by unrealized losses primarily driven by unfavorable valuation adjustments on debt resulting from rising market interest rates and widening credit spreads during the period. The comparable period of 2025 reflected realized gains primarily attributable to interest and debt forgiven in connection with a disposed office property in Massachusetts, as well as unrealized gains primarily attributable to favorable market interest rate reductions and tightened credit spreads during the period.
Other Unsecured Debt:
Other unsecured debt experienced unrealized gains of $56.7 million in the nine months of 2026, attributable to favorable changes in credit spreads and improved market perception. Prior year unrealized losses of $18.1 million were attributable to unfavorable changes in credit spreads and market assumptions due to political pressures.
Liquidity and Capital Resources
As of September 30, 2026 and December 31, 2025, the Account's cash and cash equivalents and non-real estate-related marketable securities had a value of $1.8 billion at each date (7.6% and 7.9% of the Account's net assets at such dates, respectively). The Account's liquid assets continue to be available to purchase suitable real estate properties, meet the Account's debt obligations, expense needs, and contract owner redemption requests (i.e., contract owner transfers, withdrawals or benefit payments). In addition, as disclosed in the Account's 2025 Form 10-K, the Account is able to meet its short-term and long-term liquidity needs through cash provided by operating activities, the available borrowing capacity under its Credit Agreement and the liquidity guarantee provided by TIAA as described below.
Liquidity Guarantee
The liquidity guarantee ensures that the account will be able to meet its cash requirements with respect to redeeming accumulation unit contract owners, both in the short- and long-term. In accordance with the liquidity guarantee obligation, TIAA guarantees that all contract owners in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. The Account pays TIAA a fee for the risks associated with providing the liquidity guarantee through a daily deduction from the Account's net assets.
Although the Account experienced mixed net contract owner outflows and inflows during the third quarter of 2026, the TIAA General Account was not required to purchase any liquidity units during the period. TIAA's ownership is approximately 4.04% of the outstanding accumulation units of the Account as of September 30, 2026. The independent fiduciary, which has the right to adjust the percentage of total accumulation units that TIAA's ownership should not exceed (the "trigger point"), has established the trigger point at 45% of the outstanding accumulation units.
Net Investment Income
Net investment income continues to be an additional source of liquidity for the Account. Net investment income was $511.2 million for the nine months ended September 30, 2026, as compared to $579.6 million for the comparable period of 2025. The decrease in total net investment income is described more fully in the Results of Operations section.
Leverage
As of September 30, 2026, 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, senior notes payable and any loans outstanding on the Account's Credit Agreement) to total gross asset value (i.e., a "loan -to-value ratio") was 17.8%. The Account intends to maintain its loan-to-value ratio at or below 30% (this ratio is measured at the time of incurrence and after giving effect thereto). The Account's total gross asset value, for these purposes, is equal to the total fair value of the Account's assets (including the fair value of the Account's net equity interest in joint ventures), with no reduction associated with any indebtedness on such assets.
The Account's Credit Agreement is a $1.4 billion unsecured line of credit or credit facility that facilitates near-term investment objectives, as further described in Note 12-Credit Facility. As of September 30, 2026, the Account had $302.0 million outstanding on the line of credit. The Credit Agreement was recently amended to increase the maximum capacity and provide for three extension options. The amendment also increased the accordion feature, allowing the Account to request additional funding of up to $300.0 million at any time prior to the Commitment Termination date, and removed the credit spread adjustment from the SOFR rate election. Any request for additional funding beyond the base commitment is subject to approval at the sole discretion of the lenders and is not guaranteed.
As of September 30, 2026, the total principal outstanding for mortgages on properties held directly by the Account (one of which are collateralized by a loan receivable), the Credit Agreement and senior notes payable were $2.7 billion. The Account has three mortgage obligations secured by wholly-owned real estate investments, totaling $118.2 million, that are scheduled to mature within the next twelve months. The Account currently has sufficient liquidity in the form of cash and cash equivalents, short-term securities, and available capacity on the Account's line of credit under the Credit Agreement that can be drawn to meet its current mortgage obligations.
In times of high net inflow activity, in particular during times of high net contract owner 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.
Statements of Cash Flows
The following table sets forth the Account's sources and uses of cash flows for the nine months ended September 30, 2026 and 2025 (in millions)
For the Nine Months Ended September 30,
2026 2025
Cash flows provided by (used in):
Operating activities $ 412.9 $ 225.2
Financing activities $ (302.3) $ (302.6)
The following provides information regarding the Account's cash flows from operating and financing activities for the nine months ended September 30, 2026.
Operating Activities: The Account's operating cash flows are primarily impacted by net investment income and the purchase or sale of investments and debt. Cash provided by operating activities for the nine months ended September 30, 2026, as compared to the prior year period, increased by approximately $187.7 million. This increase was primarily driven by:
•$490.6 million increase in the proceeds from the sale of real estate properties and payoffs of loans receivable, when compared to third quarter of prior year;
•$168.9 million in net decrease of purchases of wholly owned properties, real estate joint ventures and funds; and
•$71.7 million favorable decrease in operations in other assets
Offsetting the increase in cash provided by operating activities above were the following;
•$223.6 million in decrease in payable for securities purchased.
•$185.9 million in net decrease in proceeds from sale of real estate joint ventures, funds and payoff of loans receivable from related parties; and
•$120.4 million net increase in the purchase of marketable securities.
Financing Activities: The Account's financing cash flows are primarily impacted by contract owner transactions and repayments of debt. For the period ended September 30, 2026, cash used in financing activities decreased $0.3 million compared to the comparable period in 2025, primarily driven by:
•A decrease in net debt repayments of $258.8 million;
•Proceeds from new unsecured debt issuance in the amount of $150.0 million; and
•A decrease in net contract owner outflows of $25.9 million, when compared to the first nine months of prior year.
Offsetting the decrease in cash used in financing activities above was the following;
•An increase in payment on line of credit of $400.0 million; and
•A decrease in proceeds from line of credit borrowings of $34.0 million.
Long-Term Financing and Capital Needs
The Account expects to meet its long-term liquidity requirements, such as debt maturities, property acquisitions and financing of development activities, through the use of unsecured debt and credit facilities, proceeds received from
the disposition of certain properties and joint ventures, along with cash generated from operations after all distributions. The Account has a significant number of unencumbered properties available to secure additional mortgage borrowings should unsecured capital be unavailable or the cost of alternative sources of capital be too high. The value of and cash flow from these unencumbered properties are in excess of the requirements the Account must maintain in order to comply with covenants under its unsecured notes and Credit Agreement.
A summary of the Account's outstanding debt is as follows (in millions):
September 30, 2026 December 31, 2025
Principal Balance % of Total Principal Balance % of Total
Secured $ 618.9 23.2 % $ 892.4 33.6 %
Unsecured 2,052.0 76.8 % 1,760.0 66.4 %
Total $ 2,670.9 100.0 % $ 2,652.4 100.0 %
Fixed Rate Debt:
Secured $ 478.7 17.9 % $ 531.8 20.1 %
Unsecured 1,750.0 65.5 % 1,600.0 60.3 %
Fixed Rate Debt $ 2,228.7 83.4 % $ 2,131.8 80.4 %
Floating Rate Debt:
Secured $ 140.2 5.3 % $ 360.6 13.6 %
Unsecured 302.0 11.3 % 160.0 6.0 %
Floating Rate Debt $ 442.2 16.6 % $ 520.6 19.6 %
Total $ 2,670.9 100.0 % $ 2,652.4 100.0 %
Recent Transactions
The following describes property and property-related transactions by the Account during the third quarter of 2026. Except as noted, the expenses for operating the properties purchased are either borne or reimbursed, in whole or in part, by the property tenants, although the terms vary under each lease.
Real Estate Properties and Joint Ventures
Purchases
Property Name
Purchase Date
Ownership Percentage Sector Location
Net Purchase Price(1)
The Ashton Venture(2)
07/2/2026 90.0% Multi-family Washington, DC $ 24.3
Innovation Drive (3)
07/22/2026 100.0% Industrial Chicago, IL 57.1
Shakopee(3)
07/22/2026 100.0% Industrial Shakopee, MN 16.7
Lombard(3)
07/22/2026 100.0% Industrial Lombard, IL 22.3
Alft Lane(3)
07/22/2026 100.0% Industrial Elgin, IL 35.3
Galvin Drive(3)
07/22/2026 100.0% Industrial Galvin, IL 38.4
Gilberts(3)
07/22/2026 100.0% Industrial Gilberts, IL 28.2
Maple Grove(3)
07/22/2026 100.0% Industrial Maple Grove, MN 32.6
Rogers(3)
07/22/2026 100.0% Industrial Rogers, MN 51.9
Park 303 08/24/2026 100.0% Industrial Litchfield Park, AZ 168.2
Lennar MFPV Cave Creek(4)
09/17/2026 100.0% Multi-family Phoenix, AZ 81.3
Carrington at Lincolnwood 09/29/2026 95.0% Multi-family Lincolnwood, IL 202.9
(1) Represents the purchase price net of closing costs.
(2) On July 2, 2026, the Account sold 10% of its ownership in The Ashton and transferred the remaining 90% to a newly formed joint venture with Lowe Enterprises. The amount shown represent the Account's 90% interest in the joint venture investment.
(3) Property is held in North Central Core Portfolio.
(4) On September 17, 2026, the Account purchased the 10% ownership interest LMC Cave Creek Investor, LLC, a joint venture between the Account Lennar MF Holdings, LLC. The multi-family property is now wholly-owned by the Account.
Sales
Property Name Transaction Date Ownership Percentage Sector Location
Net Sales Price(1)
Realized Gain (Loss) on Disposition(2)
374 Congress Street(3)
07/1/2026 100.0% Office Boston, MA $ 27.6 $ (47.0)
The Forum - Sam Houston 07/1/2026 97.0% Multi-family Huntsville, TX 25.3 (10.0)
The Ashton(4)
07/2/2026 100.0% Multi-family Washington, DC 25.7 (17.2)
Park 10 07/30/2026 100.0% Industrial Houston, TX 16.6 (0.5)
The Henley at Kingstowne 07/30/2026 100.0% Multi-family Alexandria, VA 106.0 (5.5)
Village Crossing 08/31/2026 100.00% Retail Skokie, IL 120.4 (57.7)
32 South State Street(5)
09/10/2026 100.00% Retail Chicago, IL 19.5 (28.7)
Lennar MFPV Cave Creek(6)
09/17/2026 90.00% Multi-family Phoenix, AZ 72.3 0.8
Forum at Carlsbad(7)
09/18/2026 50.00% Retail Carlsbad, CA 139.8 29.9
8830 Siempre Viva(8)
09/22/2026 100.00% Industrial San Diego, CA 22.3 3.4
Southside at McEwen 09/28/2026 100.00% Retail Franklin, TN 76.8 28.1
8270 Greensboro Drive 09/29/2026 100.00% Office Mclean, VA 47.4 (53.8)
(1) Represents the sales price, less selling expenses.
(2) Majority of the realized gain (loss) was previously recognized as unrealized gains (losses) in the Account's Consolidated Statements of Operations.
(3) The Account sold an office property within the Fort Point Creative Exchange Portfolio
(4) On July 2, 2026, the Account sold 10% of its ownership in The Ashton and transferred the remaining 90% to a newly formed joint venture with Lowe Enterprises.
(5) The Account agreed to relinquish the property to the lender through a deed-in-lieu of foreclosure agreement.
(6) On September 17, 2026, the Account purchased the 10% ownership interest LMC Cave Creek Investor, LLC, a joint venture between the Account Lennar MF Holdings, LLC. The multi-family property is now wholly-owned by the Account.
(7) The underlying property sold by the Account during the current quarter, continues to reflect residual value attributable to the cash equity remaining in the joint venture, which is expected to be distributed within the next quarter.
(8) The Account sold an industrial property asset within the Otay Mesa Industrial Portfolio.
Financings
New Debt
Property Name Transaction Date Interest Rate Sector Maturity Date Principal Amount
The Ashton 07/02/2026
3.85% + SOFR
Multi-family 06/29/2029 $ 14.3
Carrington at Lincolnwood 09/29/2026
1.65% + SOFR
Multi-family 09/30/2031 119.2
Debt Payoff
Property Name Transaction Date Interest Rate Sector Maturity Date Principal Amount
Project Sonic 08/13/2026
2.00% + SOFR
Industrial 06/09/2027 $ 34.6
Reserve at Chino Hills 09/09/2026
1.61% + SOFR
Multi-family 10/09/2026 82.2
32 South State Street(1)
09/10/2026 4.48% Retail 06/06/2025 24.0
Lennar MFPV Cave Creek 09/17/2026
3.50% + SOFR
Multi-family 09/30/2026 46.6
Forum at Carlsbad 09/18/2026
3.00% + SOFR
Retail 09/09/2026 61.2
(1) Debt was extinguished as part of the disposition of the property through a deed-in-lieu of foreclosure agreement.
Loan Receivable
Payoff
Description Transaction Date Interest Rate Sector Maturity Date Principal Amount
Project Sonic Mezzanine & Senior Loan 08/13/2026
2.75% + SOFR
Industrial - Debt Asset 06/09/2027 $ 50.4
Reserve at Chino Hills 09/09/2026
2.51% + SOFR
Multi-family - Debt Asset 10/09/2026 108.0
Critical Accounting Estimates
Management's discussion and analysis of the Account's financial condition and results of operations is based on the
Account's Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of the Account's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Management considers the valuation of real estate properties and valuation of real estate joint ventures to be critical accounting estimates because they involve a significant level of estimation uncertainty and have a material impact on the Account's financial condition and results of operations.
There have been no material changes to the Account's critical accounting policies described in the Account's Annual Report on Form 10-K for the year ended December 31, 2025.
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