tiaareal-20230630

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2023.

☐ 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; 333-270449

TIAA REAL ESTATE ACCOUNT

(Exact name of registrant as specified in its charter)


New York						NOT APPLICABLE
(State or other jurisdiction						(I.R.S. Employer Identification No.)
C/O TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
730 Third Avenue						10017-3206
New York, New York						(Zip code)
(Address of principal executive offices)

(212) 490-9000

Registrant’s telephone number, including area code

NOT APPLICABLE

(Former name, former address and former fiscal year, if changed since last report)

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


Title of each class	Trading Symbol(s)	Name of each exchange of which registered
NONE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of 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 ☒ No ☐

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

☐

Accelerated filer

☐

Non-accelerated filer

☒

Smaller Reporting Company

☐

Emerging Growth Company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

TABLE OF CONTENTS


			Page
Part I	Financial Information
	Item 1.	Unaudited Consolidated Financial Statements
		Consolidated Statements of Assets and Liabilities	3
		Consolidated Statements of Operations	4
		Consolidated Statements of Changes in Net Assets	5
		Consolidated Statements of Cash Flows	6
		Notes to the Consolidated Financial Statements	7
		Condensed Consolidated Schedules of Investments	26
	Item 2.	Management's Discussion and Analysis of the Account's Financial Condition and Results of Operations	31
	Item 3.	Quantitative and Qualitative Disclosures about Market Risk	51
	Item 4.	Controls and Procedures	53
Part II	Other Information
	Item 1.	Legal Proceedings	53
	Item 1A.	Risk Factors	53
	Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	54
	Item 3.	Defaults Upon Senior Securities	54
	Item 4.	Mine Safety Disclosures	54
	Item 5.	Other Information	54
	Item 6.	Exhibits	55
Signatures			58

PART I. FINANCIAL INFORMATION

ITEM 1. UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

TIAA REAL ESTATE ACCOUNT

CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

(Unaudited)

(In millions, except per accumulation unit amounts)


	June 30,		December 31,
	2023		2022

ASSETS
Investments, at fair value:
Real estate properties (cost: $14,503.4 and $14,323.2)	$	19,191.3	$	20,444.0
Real estate joint ventures (cost: $5,789.6 and $5,738.1)	6,341.5		7,103.6
Real estate funds (cost: $815.8 and $787.7)	892.7		893.4
Real estate operating business (cost: $371.4 and $355.0)	653.6		641.9

Marketable securities (cost: $639.0 and $2,077.1)	639.3		2,030.2
Loans receivable (principal: $1,551.1 and $1,546.0)	1,264.5		1,418.7
Loans receivable with related parties (principal: $101.0 and $69.9)	101.0		69.9
Total investments (cost: $23,771.3 and $24,897.0)	$	29,083.9	$	32,601.7
Cash and cash equivalents	82.2		72.4
Due from investment manager	0.1		—

Other	360.6		359.5
TOTAL ASSETS	$	29,526.8	$	33,033.6
LIABILITIES
Loans payable, at fair value (principal outstanding: $1,923.5 and $2,168.7)	1,847.3		2,069.7

Other unsecured debt, at fair value (principal outstanding: $1,400.0 and $1,000.0)	1,354.4		953.1
Due to investment manager	—		7.1
Accrued real estate property expenses	279.1		291.8


Other	47.9		53.8
TOTAL LIABILITIES	$	3,528.7	$	3,375.5
COMMITMENTS AND CONTINGENCIES
NET ASSETS
Accumulation Fund	25,428.3		29,025.7
Annuity Fund	569.8		632.4
TOTAL NET ASSETS	$	25,998.1	$	29,658.1
NUMBER OF ACCUMULATION UNITS OUTSTANDING	49.0		52.1
NET ASSET VALUE, PER ACCUMULATION UNIT	$	518.533	$	556.923

See notes to the consolidated financial statements

TIAA REAL ESTATE ACCOUNT

CONSOLIDATED STATEMENTS OF OPERATIONS

(In millions, Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
INVESTMENT INCOME
Real estate income, net:
Rental income	$	337.0	$	314.1	$	671.5	$	617.8
Real estate property level expenses and taxes:
Operating expenses	88.9		71.1		168.3		144.7
Real estate taxes	54.4		50.3		107.8		102.0
Interest expense	23.3		18.2		46.5		37.8
Total real estate property level expenses and taxes	166.6		139.6		322.6		284.5
Real estate income, net	170.4		174.5		348.9		333.3
Income from real estate joint ventures	47.4		42.5		100.7		103.0
Income from real estate funds	3.9		5.5		10.5		11.5
Interest	38.3		22.3		78.6		43.0

Other	—		—		—		0.8
TOTAL INVESTMENT INCOME	260.0		244.8		538.7		491.6
Expenses:
Investment management charges	19.8		21.4		41.6		43.9
Administrative charges	23.2		8.9		35.1		22.4
Distribution charges	1.3		5.0		6.1		12.3
Mortality and expense risk charges	—		0.1		—		0.5
Liquidity guarantee charges	18.9		22.4		38.8		45.1
Interest expense	19.0		3.1		30.4		4.4
TOTAL EXPENSES	82.2		60.9		152.0		128.6
INVESTMENT INCOME, NET	177.8		183.9		386.7		363.0
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT
Net realized gain (loss) on investments:
Real estate properties	—		37.9		—		29.5
Real estate joint ventures	42.1		(37.8)		42.1		13.1
Real estate funds	13.9		—		13.9		—
Foreign currency exchange on forward contracts	(2.9)		—		(2.9)		—
Marketable securities	(16.5)		(0.3)		(35.6)		(1.3)

Net realized gain (loss) on investments	36.6		(0.2)		17.5		41.3
Net change in unrealized gain (loss) on:
Real estate properties	(945.4)		939.7		(1,432.8)		2,152.1
Real estate joint ventures	(393.0)		277.1		(770.3)		349.0
Real estate funds	(39.8)		16.3		(28.8)		6.9
Real estate operating business	1.2		140.4		(4.7)		200.8
Foreign currency exchange on forward contracts	2.8		1.6		2.3		1.6
Marketable securities	18.4		(9.9)		47.1		(38.5)
Loans receivable	(116.3)		(83.2)		(159.3)		(82.2)

Loans payable	(15.9)		46.1		(22.7)		49.8
Other unsecured debt	5.6		13.8		(1.3)		13.8
Net change in unrealized (loss) gain on investments and debt	(1,482.4)		1,341.9		(2,370.5)		2,653.3
NET REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS AND DEBT	(1,445.8)		1,341.7		(2,353.0)		2,694.6
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(1,268.0)	$	1,525.6	$	(1,966.3)	$	3,057.6

See notes to the consolidated financial statements

TIAA REAL ESTATE ACCOUNT

CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS

(In millions, Unaudited)


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023		2022
FROM OPERATIONS
Investment income, net	$	177.8	$	183.9	$	386.7	$	363.0
Net realized gain (loss) on investments	36.6		(0.2)		17.5		41.3
Net change in unrealized (loss) gain on investments and debt	(1,482.4)		1,341.9		(2,370.5)		2,653.3
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	(1,268.0)		1,525.6		(1,966.3)		3,057.6
FROM CONTRACT OWNER TRANSACTIONS
Premiums	539.8		859.1		1,050.4		1,667.5
Annuity payments	(13.8)		(14.5)		(28.2)		(27.0)
Death benefits	(40.9)		(36.4)		(78.2)		(67.0)
Withdrawals	(1,269.3)		(656.0)		(2,637.7)		(1,254.3)
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM CONTRACT OWNER TRANSACTIONS	(784.2)		152.2		(1,693.7)		319.2
NET (DECREASE) INCREASE IN NET ASSETS	(2,052.2)		1,677.8		(3,660.0)		3,376.8
NET ASSETS
Beginning of period	28,050.3		29,771.0		29,658.1		28,072.0
End of period	$	25,998.1	$	31,448.8	$	25,998.1	$	31,448.8

See notes to the consolidated financial statements

TIAA REAL ESTATE ACCOUNT

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions, Unaudited)


	For the Six Months Ended June 30,
	2023		2022
CASH FLOWS FROM OPERATING ACTIVITIES
Net (decrease) increase in net assets resulting from operations	$	(1,966.3)	$	3,057.6
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	(17.5)		(41.3)
Net change in unrealized loss (gain) on investments and debt	2,370.5		(2,653.3)
Purchase of real estate properties	(0.3)		(339.5)
Capital improvements on real estate properties	(181.1)		(195.8)
Proceeds from sales of real estate properties	—		334.0
Purchases of other real estate investments	(156.7)		(687.1)
Proceeds from sales of other real estate investments	159.7		392.7
Purchases and originations of loans receivable	(16.5)		(317.5)
Purchases and originations of loans receivable with related parties	(31.1)		—
Proceeds from sales of loans receivable	—		161.4
Proceeds from payoffs of loans receivable	11.4		8.4
Decrease (Increase) in other investments	1,402.4		(556.0)
Net change in due to/from investment manager	(7.2)		1.0

Increase in payable for securities purchased	—		100.0
(Increase) in other assets	(10.0)		(4.8)
(Increase) in other liabilities	(17.6)		(27.4)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES	1,539.7		(767.6)
CASH FLOWS FROM FINANCING ACTIVITIES


Proceeds from issuance of unsecured debt	400.0		500.0
Mortgage loan proceeds received	100.0		9.1
Payments of mortgage loans	(345.1)		(46.8)
Premiums	1,050.4		1,667.5
Annuity payments	(28.2)		(27.0)
Death benefits	(78.2)		(67.0)
Withdrawals	(2,637.7)		(1,254.3)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES	(1,538.8)		781.5
NET INCREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	0.9		13.9
CASH, CASH EQUIVALENTS AND RESTRICTED CASH
Beginning of period cash, cash equivalents and restricted cash	117.0		46.0
Net increase in cash, cash equivalents and restricted cash	0.9		13.9
End of period cash, cash equivalents and restricted cash	$	117.9	$	59.9
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	38.9	$	43.2

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 June 30,
	2023		2022
Cash and cash equivalents	$	82.2	$	32.1
Restricted cash(1)	35.7		27.8
TOTAL CASH, CASH EQUIVALENTS AND RESTRICTED CASH	$	117.9	$	59.9

(1) Restricted cash is included within other assets in the Consolidated Statements of Assets and Liabilities.

See notes to the consolidated financial statements

TIAA REAL ESTATE ACCOUNT

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

Note 1—Organization and Significant Accounting Policies

Business: The TIAA Real Estate Account (“Account”) is an insurance separate account of Teachers Insurance and Annuity Association of America (“TIAA”) and was established by resolution of TIAA’s Board of Trustees (the “Board”) on February 22, 1995, under the insurance laws of the State of New York, for the purpose of funding variable annuity contracts issued by TIAA. The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account, and make withdrawals from the Account on a daily basis, under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.

The investment objective of the Account is to seek favorable total returns primarily through the rental income and appreciation of a diversified portfolio of directly held, private real estate investments and real estate-related investments while offering investors guaranteed, daily liquidity. The Account holds real estate properties directly and through subsidiaries wholly-owned by TIAA for the sole benefit of the Account. The Account also holds limited interests in real estate joint ventures and funds, as well as investments in loans receivable with real estate properties as underlying collateral. Additionally, the Account invests in real estate-related and non-real estate-related publicly traded securities, cash and other instruments to maintain adequate liquidity levels for operating expenses, capital expenditures and to fund benefit payments (withdrawals, transfers and related transactions).

Interim Financial Information: The Consolidated Financial Statements of the Account as of June 30, 2023 and for the three and six months ended June 30, 2023 and 2022 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 accounting principles generally accepted in the United States of America (“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, 2022 (“2022 Form 10-K”).

Use of Estimates: The Consolidated Financial Statements were prepared in accordance with GAAP, which requires the use of estimates made by management. Actual results may vary from those estimates and such differences may be material.

Basis of Presentation: The accompanying Consolidated Financial Statements include the Account and those subsidiaries wholly-owned by TIAA for the benefit of the Account. Certain prior period amounts have been reclassified for comparative purposes to conform to the current period financial statement presentation. These reclassifications had no effect on previously reported results of operations or cash flows. 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 contract owner transactions effective through the period end date to which this report relates. Total return is computed based on the AUV used for processing transactions.

Significant Accounting Policy Updates: There were no changes to the Account’s significant accounting policies as described in the Account’s 2022 Form 10-K.

Recent Accounting Pronouncements: In March 2023, the FASB issued ASU 2023-01—Leases (Topic 842): Common Control Arrangements. The amendments in this Update provide a practical expedient for private

companies and not-for-profit entities that are not conduit bond obligors to use the written terms and conditions of a common control arrangement to determine: 1. Whether a lease exists and, if so, 2. The classification of and accounting for that lease. The practical expedient may be applied on an arrangement-by-arrangement basis. If no written terms and conditions exist, an entity is prohibited from applying the practical expedient and must evaluate the enforceable terms and conditions to apply Topic 842. In addition, the ASU requires all entities (that is, including public companies) to amortize leasehold improvements associated with common control leases over the useful life to the common control group. Lastly, leasehold improvements should be accounted for as a transfer between entities under common control through an adjustment to equity (or net assets for not-for-profit entities) if, and when, the lessee no longer controls the use of the underlying asset. Additionally, those leasehold improvements are subject to the impairment guidance in Topic 360, Property, Plant, and Equipment. The amendments in this Update are effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been made available for issuance. If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. Management does not expect the guidance to materially impact the Account.

In March 2020, the FASB issued ASU 2020-04, Facilitation of the Effects of Reference Rate Reform on Financial Reporting (“ASU 2020-04”). The guidance provides optional expedients and exceptions for applying generally accepted accounting principles to contract modifications and hedging relationships, subject to meeting certain criteria, that reference the London Interbank Offered Rate ("LIBOR") or another reference rate expected to be discontinued. In December 2022, the FASB issued ASU 2022-06, Reference Rate Reform (Topic 848): Deferral of the Sunset Date of Topic 848 (“ASU 2022-06”). The amendments in ASU 2022-06 extend the period of time preparers can utilize the reference rate reform relief guidance. ASU 2022-06 is effective for all entities upon issuance. To ensure the relief in Topic 848 covers the period of time during which a significant number of modifications may take place, the ASU defers the sunset date of Topic 848 from December 31, 2022, to December 31, 2024, after which entities will no longer be permitted to apply the relief in Topic 848. Management does not expect the guidance to have a material impact to the Account.

Note 2—Related Party Transactions

Investment management, administrative and distribution services are provided to the Account at cost by TIAA. Services provided at cost are paid by the Account on a daily basis based upon projected expenses to be provided to the Account. Payments are adjusted periodically to ensure daily payments are as close as possible to the Account’s actual expenses incurred. Differences between actual expenses and the amounts paid by the Account are reconciled and adjusted quarterly.

Investment management services for the Account are provided by TIAA officers, under the direction and control of the Board, pursuant to investment management procedures adopted by TIAA for the Account. TIAA’s investment management decisions for the Account are subject to review by the independent fiduciary. TIAA also provides various portfolio accounting and related services for the Account.

Part of TIAA’s compensation for provision of at cost investment management services to the Account includes reimbursement of costs incurred by TIAA to manage certain of the Account’s joint ventures. Such joint ventures also reimburse the Account directly in its capacity as general partner or managing member (collectively, the “GP”) of the joint venture in the form of an asset management fee for GP-related services provided by the Account, and such fee is based on a percentage of the fair market value of the underlying properties held in the joint venture.

The Account is a party to the Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account (the “Distribution Agreement”), dated January 1, 2008, by and among TIAA, for itself and on behalf of the Account, and TIAA-CREF Individual and Institutional Services, LLC (“Services”). Services is a direct wholly-owned subsidiary of TIAA, and is registered with the SEC as a broker-dealer and a registered investment adviser and is a member of the Financial Industry Regulatory Authority. Pursuant to the Distribution Agreement, Services performs distribution services for the Account which include, among other things, (i) distribution of annuity contracts issued by TIAA and funded by the Account, (ii) advising existing annuity contract owners in connection with their accumulations and (iii) helping employers implement and manage retirement plans. In addition, TIAA

performs administrative functions for the Account, which include, among other things, (i) maintaining accounting records and performing accounting services, (ii) receiving and allocating premiums, (iii) calculating and making annuity payments, (iv) processing withdrawal requests, (v) providing regulatory compliance and reporting services, (vi) maintaining the Account’s records of contract ownership and (vii) otherwise assisting generally in all aspects of the Account’s operations. Both distribution services (pursuant to the Distribution Agreement) and administrative services are provided to the Account by Services and TIAA, as applicable, on an at cost basis. The Distribution Agreement is terminable by either party upon 60 days written notice and terminates automatically upon any assignment thereof.

In addition to providing the services described above, TIAA charges the Account fees to bear certain mortality and expense risks and risks with providing the liquidity guarantee. These fees are charged as a percentage of the net assets of the Account. Rates for these fees are established annually.

Once an Account contract owner 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 are contractual charges for TIAA’s assumption of this risk.

TIAA provides the Account with a liquidity guarantee enabling the Account to have funds available to meet contract owner redemption, transfer or cash withdrawal requests. The liquidity guarantee is required by the New York State Department of Financial Services and is subject to a prohibited transaction exemption that the Account received in 1996 (96-76) from the U.S. Department of Labor (the “PTE 96-76”). The Account pays TIAA for the risk associated with providing the liquidity guarantee through a daily deduction from the Account’s net assets. Whether the liquidity guarantee is exercised is based on the cash level of the Account from time to time, as well as recent contract owner withdrawal activity and the Account’s expected working capital, debt service and cash needs, and subject to the oversight of the independent fiduciary. If the Account cannot fund contract owner withdrawal or redemption requests from the Account’s own cash flow and liquid investments, TIAA will fund them by purchasing accumulation units issued by the Account (accumulation units that are purchased by TIAA are generally referred to as “liquidity units”). TIAA guarantees that contract owners can redeem their accumulation units at the accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. Liquidity units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s contract owners. 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.

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 12—Financial Highlights.

The Account has loans receivable outstanding with related parties as of June 30, 2023. Two of the loans are with a joint venture partner and the other 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 of the Account's 2022 Form 10-K. The following table presents the key terms of the loans as of the reporting date (in millions):


		Related Party	Equity Ownership Interest	Interest Rate	Maturity Date	Fair Value at
Principal						June 30, 2023		December 31, 2022
2023	2022

36.5	36.5	MRA Hub 34 Holding, LLC	95.00%	2.50% + LIBOR	9/1/2023	$	36.5	$	36.5
0.5	0.5	MRA 34 LLC	—%	3.75% + LIBOR	8/26/2023	0.5		0.5
32.8	32.8	THP Student Housing, LLC	97.00%	3.20%	9/1/2024	32.9		32.9
3.4	—	MR MCC 3 Sponsor, LLC	—%	6.00%	12/1/2025	3.4		—
27.8	—	THP Student Housing, LLC	97.00%	6.10%	6/30/2026	27.7		—
TOTAL LOANS RECEIVABLE WITH RELATED PARTIES						101.0		69.9

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 June 30, 2023, the Account had no significant concentrations of tenants as no single tenant had annual contract rent that made up more than 4% of the rental income of the Account. Moreover, the Account's tenants have no notable concentration present in any one industry.

The Account’s wholly-owned real estate investments and investments in joint ventures are primarily located in the United States. The following table represents the diversification of the Account’s portfolio by region and property type as of June 30, 2023:


Diversification by Fair Value(1)
	West(2)		South(3)		East(4)		Midwest(5)		Foreign(6)		Total
Industrial	17.3	%	7.8	%	2.6	%	1.5	%	—	%	29.2	%
Apartments	8.1	%	10.9	%	7.0	%	1.0	%	—	%	27.0	%
Office	6.8	%	5.5	%	12.1	%	0.2	%	—	%	24.6	%
Retail	3.8	%	5.4	%	2.9	%	0.7	%	—	%	12.8	%
Other(7)	1.9	%	2.4	%	1.6	%	0.4	%	0.1	%	6.4	%
Total	37.9	%	32.0	%	26.2	%	3.8	%	0.1	%	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)Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY.

(3)Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX.

(4)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.

(5)Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI.

(6)Represents a developable land investment in Ireland.

(7)Represents interests in Storage Portfolio investments, a hotel investment and land.

Note 4—Leases

The Account’s wholly-owned real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2051. Rental income is recognized in accordance with the billing terms of the lease agreements. The leases do not have material variable payments, material residual value guarantees or material restrictive covenants. Certain leases have the option to extend or terminate at the tenant's discretion, with termination options resulting in additional fees due to the Account. Aggregate minimum annual rentals for wholly-owned real estate investments owned by the Account through the non-cancelable lease term, excluding short-term residential leases, as of June 30, 2023 and December 31, 2022 are as follows (in millions):


	As of
Years Ended	June 30, 2023			December 31, 2022
2023	$	350.7	(1)	$	689.0
2024	669.2			634.5
2025	602.1			556.9
2026	507.7			460.0
2027	409.2			362.0
Thereafter	1,320.6			1,276.1
Total	$	3,859.5		$	3,978.5

(1) Representative of minimum rents owed for the remaining months of the calendar year ending December 31, 2023.

Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts, sales volume or contractual increases as defined in the lease agreement. These contractual contingent rentals are not included in the table above.

The Account has ground leases for which the Account is the lessee. The leases do not contain material residual value guarantees or material restrictive covenants. The fair value of right-of-use assets and leases liabilities related to ground leases are reflected on the balance sheet within other assets and other liabilities, respectively.

The fair values and key terms of the right-of-use assets and lease liabilities related to the Account's ground leases are as follows (in millions):


	As of
	June 30, 2023			December 31, 2022

Assets:
Right-of-use assets, at fair value	$	40.5		$	43.3
Liabilities:
Ground lease liabilities, at fair value	$	40.5		$	43.3
Key Terms:
Weighted-average remaining lease term (years)	64.9			69.9
Weighted-average discount rate(1)	7.94		%	7.51		%

(1) Discount rates are reflective of the rates utilized during the most recent appraisal of the associated real estate investments.

For both the six months ended June 30, 2023 and 2022, operating lease costs related to ground leases were $1.2 million and $1.1 million, respectively. These costs include variable lease costs, which are immaterial. Aggregate future minimum annual payments for ground leases held by the Account are as follows (in millions):


	As of
	June 30, 2023			December 31, 2022
Years Ended
2023	$	1.3	(1)	$	2.4
2024	2.5			2.4
2025	2.6			2.5
2026	2.6			2.5
2027	2.6			2.5
Thereafter	448.7			424.3
Total	$	460.3		$	436.6

(1) Representative of minimum rents owed for the remaining months of the calendar year ending December 31, 2023.

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 asset or liability's categorization within the valuation hierarchy described above is based upon the lowest level of input that is significant to the fair value measurement. Real estate fund investments are excluded from the valuation hierarchy, as these investments are fair valued using their net asset value as a practical expedient since market quotations or values from independent pricing services are not readily available. See Note 1—Organization and Significant Accounting Policies of the Account's 2022 Form 10-K for further discussion regarding the use of a practical expedient for the valuation of real estate funds.

The following tables show the major categories of assets and liabilities measured at fair value on a recurring basis as of June 30, 2023 and December 31, 2022, 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 June 30, 2023
Real estate properties	$	—	$	—	$	19,191.3	$	—	$	19,191.3
Real estate joint ventures	—		—		6,341.5		—		6,341.5
Real estate funds	—		—		—		892.7		892.7
Real estate operating business	—		—		653.6		—		653.6
Marketable securities:

U.S. government agency notes	—		627.3		—		—		627.3

U.S. treasury securities	—		12.0		—		—		12.0


Loans receivable(1)	—		—		1,365.5		—		1,365.5
Total Investments at June 30, 2023	$	—	$	639.3	$	27,551.9	$	892.7	$	29,083.9
Loans payable	$	—	$	—	$	(1,847.3)	$	—	$	(1,847.3)

Other unsecured debt	$	—	$	(854.4)	$	(500.0)	$	—	$	(1,354.4)


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, 2022
Real estate properties	$	—	$	—	$	20,444.0	$	—	$	20,444.0
Real estate joint ventures	—		—		7,103.6		—		7,103.6
Real estate funds	—		—		—		893.4		893.4
Real estate operating business	—		—		641.9		—		641.9
Marketable securities:
U.S. government agency notes	—		902.9		—		—		902.9
Foreign government agency notes	—		16.9		—		—		16.9
U.S. treasury securities	—		574.0		—		—		574.0
Corporate bonds	—		536.4		—		—		536.4

Loans receivable(1)	—		—		1,488.6		—		1,488.6
Total Investments at December 31, 2022	$	—	$	2,030.2	$	29,678.1	$	893.4	$	32,601.7
Loans payable	$	—	$	—	$	(2,069.7)	$	—	$	(2,069.7)

Other unsecured debt	$	—	$	(453.1)	$	(500.0)	$	—	$	(953.1)

(1) Includes loans receivable with related parties.

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 six months ended June 30, 2023 and 2022 (in millions):


	Real Estate Properties		Real Estate Joint Ventures		Real Estate Operating Business		Loans Receivable(3)		Total Level 3 Investments		Loans Payable		Other Unsecured Debt
For the three months ended June 30, 2023
Beginning balance April 1, 2023	$	20,057.9	$	6,762.1	$	636.0	$	1,450.2	$	28,906.2	$	(2,129.9)	$	(500.0)
Total realized and unrealized (losses) gains included in changes in net assets	(945.4)		(350.9)		1.2		(116.3)		(1,411.4)		(15.9)		—
Purchases(1)	78.8		55.2		16.4		35.1		185.5		(1.1)		—
Sales	—		—		—		—		—		—		—
Settlements(2)	—		(124.9)		—		(3.5)		(128.4)		299.6		—
Ending balance June 30, 2023	$	19,191.3	$	6,341.5	$	653.6	$	1,365.5	$	27,551.9	$	(1,847.3)	$	(500.0)


	Real Estate Properties		Real Estate Joint Ventures		Real Estate Operating Business		Loans Receivable(3)		Total Level 3 Investments		Loans Payable		Other Unsecured Debt
For the six months ended June 30, 2023
Beginning balance January 1, 2023	$	20,444.0	$	7,103.6	$	641.9	$	1,488.6	$	29,678.1	$	(2,069.7)	$	(500.0)
Total realized and unrealized (losses) included in changes in net assets	(1,432.8)		(728.2)		(4.7)		(159.3)		(2,325.0)		(22.7)		—
Purchases(1)	180.1		91.4		16.4		47.6		335.5		(100.0)		—
Sales	—		—		—		—		—		—		—
Settlements(2)	—		(125.3)		—		(11.4)		(136.7)		345.1		—
Ending balance June 30, 2023	$	19,191.3	$	6,341.5	$	653.6	$	1,365.5	$	27,551.9	$	(1,847.3)	$	(500.0)


	Real Estate Properties		Real Estate Joint Ventures		Real Estate Operating Business		Loans Receivable(3)		Total Level 3 Investments		Loans Payable		Other Unsecured Debt
For the three months ended June 30, 2022
Beginning balance April 1, 2022	$	20,179.1	$	7,253.3	$	487.6	$	1,329.2	$	29,249.2	$	(2,338.0)	$	(500.0)
Total realized and unrealized gains (losses) included in changes in net assets	977.6		239.3		140.4		(83.2)		1,274.1		46.1		—
Purchases(1)	308.3		230.4		—		312.3		851.0		(6.1)		—
Sales(4)	(176.4)		—		—		—		(176.4)		—		—
Settlements(2)	—		(80.1)		—		(0.2)		(80.3)		5.0		—
Ending balance June 30, 2022	$	21,288.6	$	7,642.9	$	628.0	$	1,558.1	$	31,117.6	$	(2,293.0)	$	(500.0)


	Real Estate Properties		Real Estate Joint Ventures		Real Estate Operating Business		Loans Receivable(3)		Total Level 3 Investments		Loans Payable		Other Unsecured Debt
For the six months ended June 30, 2022
Beginning balance January 1, 2022	$	18,903.9	$	7,175.9	$	326.3	$	1,492.6	$	27,898.7	$	(2,380.5)	$	(500.0)
Total realized and unrealized gains (losses) included in changes in net assets	2,181.6		362.1		200.8		(82.2)		2,662.3		49.8		—
Purchases(1)	537.1		481.8		100.9		317.5		1,437.3		(9.1)		—
Sales(4)	(334.0)		—		—		(161.4)		(495.4)		—		—
Settlements(2)	—		(376.9)		—		(8.4)		(385.3)		46.8		—
Ending balance June 30, 2022	$	21,288.6	$	7,642.9	$	628.0	$	1,558.1	$	31,117.6	$	(2,293.0)	$	(500.0)

(1)Includes purchases, contributions for joint ventures, capital expenditures, lending for loans receivable, assumption of loans payable and term loan borrowings.

(2)Includes operating income for real estate joint ventures net of distributions, payments of loans receivable, and payments of loans payable and line of credit.

(3)Includes loans receivable with related parties.

(4)Real estate properties amount shown is inclusive of post closing realized losses.

The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of June 30, 2023.

Type

Asset Class

Valuation
Technique(s)

Unobservable

Inputs(1)

Range (Weighted Average)

Real Estate Properties and Joint Ventures

Office

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

6.3% - 9.5% (7.4%)

5.0% - 8.5% (6.2%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

4.0% - 8.0% (5.8%)

Industrial

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

6.0% - 8.3% (7.0%)

4.5% - 7.0% (5.3%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

1.8% - 6.3% (4.7%)

Apartment

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

6.0% - 7.3% (6.5%)

4.5% - 5.8% (5.1%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

4.0% - 5.5% (4.6%)

Retail

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

6.3% - 11.5% (7.4%)

5.0% - 8.8% (6.1%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

4.8% - 8.3% (5.6%)

Hotel

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

10.0%

8.0%

Income Approach—Direct Capitalization

Overall Capitalization Rate

7.5%

Real Estate Operating Business

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Growth Rate

10.0%

8.2%

Market Approach

EBITDA Multiple

30.0x

Loans Payable

Office

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

35.7% - 82.5% (55.0%)

5.2% - 7.7% (6.1%)

Type

Asset Class

Valuation
Technique(s)

Unobservable

Inputs(1)

Range (Weighted Average)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple

35.7% - 82.5% (55.0%)

1.1 - 1.9 (1.3)

Industrial

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

28.6% - 36.5% (31.8%)

5.5% - 5.6% (5.5%)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple

28.6% - 36.5% (31.8%)

1.1 - 1.1 (1.1)

Apartment

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

27.9% - 70.1% (42.1%)

5.6% - 7.5% (6.4%)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple

27.9% - 70.1% (42.1%)

1.1 - 1.3 (1.1)

Retail

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

47.9% - 79.7% (56.9%)

5.7% - 6.6% (6.0%)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple

47.9% - 79.7% (56.9%)

1.2- 1.7 (1.3)

Loans Receivable, including those with related parties

Office

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

41.0% - 105.0% (68.0%)

6.7% - 17.2% (10.6%)

Industrial

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

49.5% - 66.0% (57.8%)

5.3% - 8.3% (6.0%)

Apartment

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

39.6% - 70.2% (61.8%)

6.1% - 8.5% (7.7%)

Retail & Hospitality

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

12.1% - 56.6% (34.4%)

10.0% - 12.4% (12.3%)

The following table shows quantitative information about unobservable inputs related to the Level 3 fair value measurements as of June 30, 2022.

Type

Asset Class

Valuation
Technique(s)

Unobservable

Inputs(1)

Range (Weighted Average)

Real Estate Properties and Joint Ventures

Office

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

5.8% - 9.8% (6.6%)

4.5% - 8.5% (5.5%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

4.0% - 8.0% (5.0%)

Industrial

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

4.8% - 8.0% (5.8%)

3.3% - 6.8% (4.4%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

1.8% - 6.0% (3.8%)

Apartment

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

5.3% - 7.0% (5.8%)

4.0% - 5.5% (4.5%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

3.5% - 5.0% (4.0%)

Retail

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

6.0% - 11.5% (7.0%)

5.0% - 8.5% (5.6%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

4.5% - 8.3% (5.2%)

Hotel

Income Approach—Discounted Cash Flow

Discount Rate
Terminal Capitalization Rate

9.8% (9.8%)

7.8% (7.8%)

Income Approach—Direct Capitalization

Overall Capitalization Rate

7.5% (7.5%)

Real Estate Operating
Business

Income Approach—Discounted Cash Flow

Discount Rate

9.8

Terminal Growth Rate

7.1

Market Approach

EBITDA Multiple

28.3x

Loans Payable

Office

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

35.6% - 70.1% (46.2%)

3.5% - 5.0% (4.1%)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital
Risk Premium Multiple

35.6% - 70.1% (46.2%)

1.2 - 1.3 (1.2)

Industrial

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

28.3% - 36.3% (31.5%)

4.5% - 4.7% (4.6%)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital
Risk Premium Multiple

28.3% - 36.3% (31.5%)

1.1 - 1.2 (1.2)

Apartment

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

24.8% - 66.4% (39.1%)

1.9% - 4.4% (3.2%)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital
Risk Premium Multiple

24.8% - 66.4% (39.1%)

1.2 - 1.4 (1.2)

Type

Asset Class

Valuation
Technique(s)

Unobservable

Inputs(1)

Range (Weighted Average)

Retail

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

42.5% - 73.8% (46.0%)

4.1% - 5.1% (4.4%)

Net Present Value

Loan to Value Ratio
Weighted Average Cost of Capital Risk Premium Multiple

42.5% - 73.8% (46.0%)

1.2 - 1.5 (1.3)

Loans Receivable,
including those with
related parties

Office

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

40.4% - 94.7% (72.2%)

2.7% - 9.6% (6.3%)

Industrial

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

49.5% - 66.0% (57.8%)

2.9% - 6.6% (3.8%)

Apartment

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

36.4% - 76.5% (47.5%)

2.9% - 8.6% (4.7%)

Retail &
Hospitality

Discounted Cash Flow

Loan to Value Ratio
Equivalency Rate

57.1% - 79.8% (65.6%)

2.2% - 7.8% (4.0%)

(1) Equivalency Rate is defined as the prevailing market interest rate used to discount the contractual loan payments.

Significant increases (decreases) in any of those inputs in isolation would result in significantly lower (higher) fair value measurements, respectively.

Line of Credit and Other Unsecured Debt: The Account's line of credit and term loans are recorded at par as Management believes par approximates fair value due to the short-term nature of the credit facility.

During the six months ended June 30, 2023 and 2022, there were no transfers between Levels 1, 2 or 3.

The amount of total net unrealized gains (losses) included in changes in net assets relating to Level 3 investments and loans payable using significant unobservable inputs still held as of the reporting date is as follows (millions):


	Real Estate Properties		Real Estate Joint Ventures		Real Estate Operating Business		Loans Receivable(1)		Total Level 3 Investments		Loans Payable
For the three months ended June 30, 2023	$	(945.4)	$	(380.0)	$	1.2	$	(116.3)	$	(1,440.5)	$	(15.9)
For the six months ended June 30, 2023	$	(1,432.8)	$	(771.1)	$	(4.7)	$	(159.3)	$	(2,367.9)	$	(22.7)
For the three months ended June 30, 2022	$	966.1	$	279.4	$	140.4	$	(83.1)	$	1,302.8	$	46.1
For the six months ended June 30, 2022	$	2,168.4	$	405.0	$	200.8	$	(82.2)	$	2,692.0	$	49.8

(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 June 30, 2023, the Account held investments in joint ventures with ownership interest percentages that ranged from 2.0% to 98.5%. Certain joint ventures are subject to adjusted distribution percentages when earnings in the investment reach a predetermined threshold.

A condensed summary of the results of operations of the joint ventures are shown below (millions):


	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2023		2022		2023	2022
Operating Revenue and Expenses
Revenues	$	308.1	$	288.1	$614.6	$558.0
Expenses	177.1		163.6		361.6	331.0
Excess of revenues over expenses	$	131.0	$	124.5	$253.0	$227.0

Note 7—Investments in Real Estate Funds

The Account has ownership interests in real estate funds (each a “Fund”, and collectively the “Funds”). The Funds are set up as limited partnerships or entities similar to a limited partnership, and as such, meet the definition of a VIE as the limited partners collectively lack the power, through voting or similar rights, to direct the activities of the Fund that most significantly impact the Fund's economic performance. Management has determined that the Account is not the primary beneficiary for any of the Funds, as the Account lacks the power to direct the activities of each Fund that most significantly impact the respective Fund's economic performance, and the Account further lacks substantive kick-out rights to remove the entity with these powers. Refer to Note 1—Organization and Significant Accounting Policies of the Account's 2022 Form 10-K for a description of the methodology used to determine the primary beneficiary of a VIE.

No financial support (such as loans or financial guarantees) was provided to the Funds during the six months ended June 30, 2023. The Account is contractually obligated to make additional capital contributions in certain Funds in future years. These commitments are included in the maximum exposure to loss presented below.

The carrying amount and maximum exposure to loss relating to unconsolidated VIEs in which the Account holds a variable interest but is not the primary beneficiary were as follows at June 30, 2023 (in millions):


Fund Name	Carrying Amount		Maximum Exposure to Loss		Liquidity Provisions	Investment Strategy
LCS SHIP Venture I, LLC (90.0% Account Interest)	$	221.3	$	221.3	Redemptions prohibited prior to liquidation.	To invest in senior housing properties.
					Liquidation estimated to begin no earlier than 2025.
					The Account is permitted to sell or transfer its interest in the fund, subject to consent and approval of the manager.
Veritas - Trophy VI, LLC (90.4% Account Interest)	$	67.8	$	80.3	Redemptions prohibited prior to liquidation.	To invest in multi-family properties primarily in the San Francisco Bay and Los Angeles metropolitan statistical area ("MSA").
					The Account is not permitted to sell or transfer its interest in the fund until August 2023. 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 (61.8% Account Interest)	$	106.0	$	115.6	Redemptions prohibited prior to liquidation.	To invest in medical office properties in the U.S.
					Liquidation estimated to begin no earlier than 2023.
					The Account is permitted to sell or transfer its interest in the fund, subject to consent and approval of the manager.
Taconic New York City GP Fund, LP (60.0% Account Interest)	$	24.9	$	24.9	Redemptions prohibited prior to liquidation.	To invest in real estate and real estate-related assets in the New York City MSA.
					Liquidation estimated to begin no earlier than 2024.
					The Account is permitted to sell its interest in the fund, subject to consent and approval of the general partner.
Silverpeak NRE FundCo LLC (90.0% Account Interest)	$	44.9	$	71.0	Redemptions prohibited prior to liquidation.	To invest in alternative real estate investments primarily in major U.S. metropolitan markets.
					Liquidation estimated to begin no earlier than 2028.
					The Account is permitted to sell its interest in the fund to qualified institutional investors, subject to consent and approval of the manager.
IDR - Core Property Index Fund, LLC (1.1% Account Interest)	$	41.0	$	41.0	Redemptions are permitted for a full calendar quarter and upon at least 90 days prior written notice, subject to fund availability.	To invest primarily in open-ended funds that fall within the NFI-ODCE Index and are actively managed.

					The Account is permitted to sell its interest in the fund, subject to consent and approval of the manager.


Fund Name	Carrying Amount		Maximum Exposure to Loss		Liquidity Provisions	Investment Strategy
Townsend Group Value-Add Fund (99.0% Account Interest)	$	180.7	$	259.7	Redemptions prohibited prior to liquidation.	To invest in value-add real estate investment opportunities in the U.S. market.
					Liquidation estimated to begin no earlier than 2027.
					The Account is prohibited from transferring its interest in the fund without consent by the general partner, which can be withheld in their sole discretion
Flagler REA Healthcare Properties Partnership (90.0% Account Interest)	$	20.5	$	20.5	Redemptions prohibited prior to liquidation.	To acquire healthcare properties within the top 50 MSA's in the U.S.
					Liquidation estimated to begin no earlier than 2025.
					The Account is permitted to transfer its interest in the fund to a qualified institutional investor, subject to the right first offer by the partner, following the one year anniversary of the fund launch.
Grubb Southeast Real Estate Fund VI, LLC (66.7% Account Interest)	$	18.5	$	18.5	Redemptions prohibited prior to liquidation.	To acquire office investments across the Southeast.
					Liquidation estimated to begin no earlier than 2026.
					The Account is permitted to sell or transfer its interest in the fund with the consent and approval of the manager.
Silverpeak NRE FundCo 2 LLC (90.0% Account Interest)	$	58.4	$	99.0	Redemptions prohibited prior to liquidation.	To invest in value-add real estate investment opportunities in the top 25 major U.S. metropolitan markets.
					The Account is permitted to sell its interest in the fund to qualified institutional investors, subject to consent and approval of the manager.
JCR Capital - REA Preferred Equity Parallel Fund (31.1% Account Interest)	$	61.5	$	103.2	Redemptions prohibited prior to liquidation.	To invest primarily in multi-family properties.
					Liquidation estimated to begin no earlier than 2026.
					The Account is prohibited from transferring its interest in the fund without consent by the general partner, which can be withheld in their sole discretion

Silverpeak NRE FundCo 3 LLC (90.0% Account Interest)	$	47.2	$	98.7	Redemptions prohibited prior to liquidation.	To invest in value-add real estate investment opportunities in the top 25 major U.S. metropolitan markets.
					The Account is permitted to sell its interest in the fund to qualified institutional investors, subject to consent and approval of the manager.
Total	$	892.7	$	1,153.7

Note 8—Loans Receivable

The Account’s loan receivable portfolio is primarily comprised of mezzanine loans secured by the borrower’s direct and indirect interests in commercial real estate. Mezzanine loans are subordinate to first mortgages on the underlying real estate collateral. The following property types represent the underlying real estate collateral for the Account's loans (in millions):


	June 30, 2023						December 31, 2022

	Principal Outstanding		Fair Value		% of Fair Value		Principal Outstanding		Fair Value		% of Fair Value
Office(1)	$	1,085.3	$	805.7	59.0	%	$	904.6	$	788.4	52.9	%
Apartments(1)	244.6		239.8		17.6	%	214.2		209.6		14.1	%
Industrial	133.6		133.7		9.8	%	131.6		130.6		8.8	%
Hotel	139.3		137.5		10.1	%	139.3		134.9		9.1	%
Retail	45.8		45.4		3.3	%	226.1		225.1		15.1	%
Land	3.4		3.4		0.2	%	—		—		—	%
	$	1,652.0	$	1,365.5	100.0	%	$	1,615.8	$	1,488.6	100.0	%

(1) Includes loans receivable with related parties.

The Account monitors the risk profile of the loan receivable portfolio with the assistance of a third-party rating service that models the loans and assigns risk ratings based on inputs such as loan-to-value ratios, yields, credit quality of the borrowers, property types of the collateral, geographic and local market dynamics, physical condition of the collateral, and the underlying structure of the loans. Ratings for loans are updated monthly. Assigned ratings can range from AAA to C, with an AAA designation representing debt with the lowest level of credit risk and C representing a greater risk of default or principal loss. Loans that are delinquent or in default are assigned a D rating. Mezzanine debt in good health is typically reflective of a risk rating in the B range (e.g., BBB, BB, or B), as these ratings reflect borrowers' having adequate financial resources to service their financial commitments, but also acknowledging that adverse economic conditions, should they occur, would likely impede on a borrowers' ability to pay.

All borrowers of loans rated C or higher are current as of June 30, 2023.

The following table presents the fair values of the Account's loan portfolio based on the risk ratings as of June 30, 2023 (in millions), listed in order of the strength of the risk rating (from strongest to weakest):


	June 30, 2023					December 31, 2022
	Number of Loans	Fair Value		% of Fair Value		Number of Loans	Fair Value		% of Fair Value


A+	—	—		—	%	1	—		—	%
A	—	—		—	%	2	130.6		8.8	%
A-	—	—		—	%	1	—		—	%
BBB+	—	—		—	%	3	191.0		12.8	%
BBB	2	200.7		14.7	%	2	137.4		9.2	%
BBB-	—	—		—	%	1	47.5		3.2	%
BB+	5	282.3		20.7	%	2	64.9		4.4	%
BB	1	57.3		4.2	%	2	72.3		4.8	%
BB-	—	—		—	%	1	18.9		1.3	%
B+	3	119.3		8.7	%	3	87.2		5.9	%
B	1	71.6		5.2	%	2	72.5		4.9	%
B-	6	320.2		23.5	%	5	171.0		11.5	%
CCC+	—	—		—	%	3	223.4		15.0	%

CCC-	—	—		—	%	2	60.9		4.1	%
CC	1	12.8		0.9	%	1	66.0		4.4	%
C	4	156.4		11.5	%	1	75.1		5.0	%
D	6	43.9		3.2	%	—	—		—	%
NR(1)	5	101.0		7.4	%	3	69.9		4.7	%
	34	$	1,365.5	100.0	%	35	$	1,488.6	100.0	%

(1) "NR" designates loans not assigned an internal credit rating. As of June 30, 2023 and December 31, 2022, all loans with NR designations were with related parties. The loans are collateralized by equity interests in real estate investments.

The following table represents loans receivable in nonaccrual status as of June 30, 2023 (in millions). Loans are placed in nonaccrual status when a loan is more than 90 days in arrears or at any point when management believes the full collection of principal is doubtful.


Aging	Number of Loans	Principal Outstanding		Fair Value
Past Due - 90 Days +	2	$	148.9	$	—

Note 9—Loans Payable

At June 30, 2023, the Account had outstanding loans payable secured by the following assets (in millions):

Property

Annual Interest Rate and

Payment Frequency

Principal
Amounts Outstanding as of

Maturity

June 30, 2023

December 31, 2022

1001 Pennsylvania Avenue(1)(2)

3.70% paid monthly

—

301.2

June 1, 2023

Biltmore at Midtown

3.94% paid monthly

36.4

July 5, 2023

Cherry Knoll

3.78% paid monthly

35.3

July 5, 2023

Lofts at SoDo

3.94% paid monthly

35.1

July 5, 2023

San Diego Office Portfolio(3)

1.61% + SOFR paid monthly

58.2

August 9, 2023

Pacific City

2.10% + SOFR paid monthly

105.0

October 1, 2023

The Stratum(3)

2.25% + LIBOR paid monthly

40.4

May 9, 2024

Spring House Innovation Park(3)

1.25% + LIBOR paid monthly

56.7

52.3

July 9, 2024

1401 H Street NW

3.65% paid monthly

115.0

November 5, 2024

The District on La Frontera(1)

3.84% paid monthly

36.6

37.0

December 1, 2024

The District on La Frontera(1)

4.96% paid monthly

4.2

December 1, 2024

Circa Green Lake

3.71% paid monthly

52.0

March 5, 2025


Property	Annual Interest Rate and Payment Frequency	Principal Amounts Outstanding as of				Maturity
		June 30, 2023		December 31, 2022

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
Henley at Kingstowne(1)	3.60% paid monthly	67.0		67.7		May 1, 2025
32 South State Street	4.48% paid monthly	24.0		24.0		June 6, 2025
Project Sonic(3)	2.00% + SOFR paid monthly	93.5		—		June 9, 2025
Vista Station Office Portfolio(1)	4.00% paid monthly	18.4		18.6		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
Reserve at Chino Hills(3)	1.50% + LIBOR paid monthly	76.6		72.5		August 9, 2025
Vista Station Office Portfolio(1)	4.20% paid monthly	41.4		41.9		November 1, 2025
Sixth & Main	1.87% + LIBOR paid monthly	—		41.1		November 9, 2025
701 Brickell Avenue(1)	3.66% paid monthly	176.7		178.5		April 1, 2026
Marketplace at Mill Creek	3.82% paid monthly	39.6		39.6		September 11, 2027
Overlook At King Of Prussia	3.82% paid monthly	40.8		40.8		September 11, 2027
Winslow Bay	3.82% paid monthly	25.8		25.8		September 11, 2027
1900 K Street, NW(1)	3.93% paid monthly	159.8		161.1		April 1, 2028
99 High Street	3.90% paid monthly	277.0		277.0		March 1, 2030




Total Principal Outstanding		$	1,923.5	$	2,168.7
Fair Value Adjustment(4)		(76.2)		(99.0)
Total Loans Payable		$	1,847.3	$	2,069.7

(1)The mortgage is adjusted monthly for principal payments.

(2)The principal amount of the outstanding debt was paid off during the quarter.

(3)The loan is collateralized by a mezzanine loan receivable. The mezzanine loan receivable is collateralized by the property reflected within the table above.

(4)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.

Note 10—Credit Facility

The Account has a credit agreement (the “Credit Agreement”) with a syndicate of third-party bank lenders, including JPMorgan Chase Bank, N.A., comprised of revolving credit loans ("Line of Credit") up to $945.0 million and up to $500.0 million in term loans ("Term Loans"). The Account may use the proceeds of borrowings under the Credit Agreement for general organizational purposes in the ordinary course of business, including to finance certain real estate portfolio investments. The Account may prepay borrowings under the Credit Facility at any time during the life of the loan without penalty.

The Account may elect for each borrowing under the Credit Agreement to bear annual interest at an adjusted base rate ("ABR") or adjusted SOFR plus an applicable margin which is dependent on the leverage ratio of the Account. The applicable margin for adjusted SOFR Term Loans ranges from 1.00% to 1.50% and for ABR Term Loans ranges from 0.00% to 0.50%. The applicable margin for adjusted SOFR Revolving Credit Loans ranges from 0.875% to 1.30% and for ABR Revolving Credit Loans ranges from 0.00% to 0.30%. In addition, the Account pays facility fees ranging from 0.125% to 0.20%, depending on the leverage ratio of the Account, on the total revolving commitments (used and unused) under the Credit Agreement.

As of June 30, 2023, the Account was in compliance with all covenants required by the Credit Agreement.

The following table provides a summary of the key characteristics of the Credit Agreement, as of June 30, 2023:

Current Balance - Line of Credit (in millions)

—

Current Balance - Term Loans (in millions)

500.0

Maximum Capacity (in millions)

1,445.0

Inception Date

September 16, 2022

Revolving Commitment Termination and Term Loan Maturity Date

September 16, 2024

Extension Option(1)

Yes

ABR Revolving Credit Loans Interest Rate

ABR + Applicable Margin

ABR Term Loans Interest Rate

ABR + Applicable Margin

SOFR Revolving Credit Loans Interest Rate

Adjusted SOFR + Applicable Margin

SOFR Term Loans Interest Rate(3)

Adjusted SOFR + Applicable Margin

Facility Fee (2)

0.125% - 0.20% quarterly

(1) The Account has three options to extend the Commitment Termination Date for an additional twelve months each. The Account may also request additional funding, not to exceed $55.0 million, at any time prior to the Commitment Termination Date or the Term Loan Maturity Date; however, this request is subject to approval at the sole discretion of the lenders and is not guaranteed.

(2) The Account is charged a fee on the Line of Credit, whether used or unused, which is determined based on the Account's loan-to-value ratio.

(3) The weighted average interest rate for the three and six months ended June 30, 2023 was 6.081% and 5.855%.

Note 11—Senior Notes Payable

On June 10, 2022, the Account entered into a note purchase agreement with certain qualified institutional investors. Under the note purchase agreement, the Account issued $500.0 million of debt securities, in the form of Series A senior notes and Series B senior notes that mature in 2029 and 2032, respectively (the "Series A and B Notes"). The Account is obligated to repay the Series A and B Notes at par, plus accrued and unpaid interest to, but not including, the date of repayment. The Series A Notes bear interest at an annual rate of 3.24%, payable semi-annually, and the Series B Notes bear interest at an annual rate of 3.35%, payable semi-annually. The Account may also prepay the Series A and B Notes in whole or in part at any time, or from time to time, at the Account's option at par plus accrued interest to the prepayment date and, if prepaid on or before 90 days prior to the applicable maturity date, a make-whole premium.

On March 21, 2023, the Account entered into another note purchase agreement with certain qualified institutional investors. Under this note purchase agreement, the Account issued $400.0 million of debt securities on May 30, 2023, in the form of Series C senior notes (the "Series C Notes") that will mature on May 30, 2027. The Series C

Notes bear interest at an annual rate of 5.50%, payable semi-annually and are subject to the same prepayment terms as the Series A and B Notes.

As of June 30, 2023, the Account was in compliance with all covenants required by the note purchase agreements.

The following table provides a summary of the key characteristics of the outstanding senior notes payable, as of June 30, 2023:


	Principal (in millions)		Interest Rate	Maturity Date
Series A	$	300.0	3.24%	June 10, 2029
Series B	$	200.0	3.35%	June 10, 2032
Series C	$	400.0	5.50%	May 30, 2027

Note 12—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 Six Months Ended June 30, 2023			Years Ended December 31,
				2022			2021			2020

Per Accumulation Unit Data:
Rental income	$	13.271		$	23.751		$	22.672		$	21.145
Real estate property level expenses and taxes	6.375			11.042			10.683			10.027
Real estate income, net	6.896			12.709			11.989			11.118
Other income	3.751			6.559			5.474			4.980
Total income	10.647			19.268			17.463			16.098
Expense charges(1)	3.004			5.121			4.035			3.603
Investment income, net	7.643			14.147			13.428			12.495
Net realized and unrealized (loss) gain on investments and debt	(46.033)			28.011			64.615			(16.195)
Net (decrease) increase in Accumulation Unit Value	(38.390)			42.158			78.043			(3.700)
Accumulation Unit Value:
Beginning of period	556.923			514.765			436.722			440.422
End of period	$	518.533		$	556.923		$	514.765		$	436.722
Total return(3)	(6.89)		%	8.19		%	17.87		%	(0.84)		%
Ratios to Average net assets(2):
Expenses(1)	1.10		%	0.89		%	0.84		%	0.81		%
Investment income, net	2.80		%	2.45		%	2.82		%	2.85		%
Portfolio turnover rate(3):
Real estate properties(4)	0.7		%	5.6		%	7.6		%	7.1		%
Marketable securities(5)	9.0		%	4.7		%	—		%	113.4		%
Accumulation Units outstanding at end of period (millions)	49.0			52.1			53.4			52.0
Net assets end of period (millions)	$	25,998.1		$	29,658.1		$	28,072.0		$	23,243.9

(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 six months ended June 30, 2023 are annualized.

(3)Percentages for the six months ended June 30, 2023 are not annualized.

(4)Real estate investment portfolio turnover rate is calculated by dividing the lesser of purchases or sales of real estate property investments (including contributions to, or return of capital distributions received from, existing real estate joint ventures and fund investments) by the average value of the portfolio of real estate investments held during the period.

(5)Marketable securities portfolio turnover rate is calculated by dividing the lesser of purchases or sales of securities, excluding securities having maturity dates at acquisition of one year or less, by the average value of the portfolio securities held during the period.

Note 13—Accumulation Units

Changes in the number of Accumulation Units outstanding were as follows (in millions):


	For the Six Months Ended June 30, 2023	For the Year Ended December 31, 2022

Outstanding:
Beginning of period	52.1	53.4
Credited for premiums	2.0	5.4
Annuity, other periodic payments, withdrawals and death benefits	(5.1)	(6.7)
End of period	49.0	52.1

Note 14—Commitments and Contingencies

Commitments—As of June 30, 2023 and December 31, 2022, the Account had the following immediately callable commitments to purchase additional interests in its real estate funds or provide additional funding through its loans receivable investments (in millions):


		Commitment Expiration	June 30, 2023		December 31, 2022

Real Estate Funds(1)


	SP V - II, LLC	08/2023	$	9.6	$	10.0
	Veritas Trophy VI, LLC	08/2023	12.5		15.4
	Taconic New York City GP Fund, LP	11/2023	—		4.2
	Silverpeak NRE FundCo 3 LLC	12/2023	51.5		70.0
	JCR Capital - REA Preferred Equity Parallel Fund	02/2024	41.7		48.6
	Flagler - REA Healthcare Properties Partnership	02/2025	—		1.2
	Townsend Group Value-Add Fund	12/2026	79.0		84.7
	Silverpeak NRE FundCo LLC	12/2028	26.1		26.2
	Silverpeak NRE FundCo 2 LLC	12/2029	40.6		29.6
			$	261.0	$	289.9
Loans Receivable(2)




	311 South Wacker Mezzanine	03/2023	—		2.2
	SCG Oakland Portfolio Mezzanine	04/2023	—		5.4
	Five Oak Mezzanine	05/2023	—		1.5
	MRA Hub 34 Holding, LLC	08/2023	1.4		1.5
	Liberty Park Mezzanine	11/2023	2.6		2.6
	Colony New England Hotel Portfolio Senior Loan	11/2023	3.6		3.6
	Colony New England Hotel Portfolio Mezzanine	11/2023	1.2		1.2
	Exo Apartments Mezzanine	01/2024	3.9		2.4

	The Stratum Senior Loan	05/2024	1.1		1.3
	The Stratum Mezzanine	05/2024	0.4		0.4
	Spring House Innovation Park Senior Loan	07/2024	17.9		23.4
	Spring House Innovation Park Mezzanine	07/2024	6.0		7.8
	Project Sonic Senior Loan	06/2025	2.4		3.9
	Project Sonic Mezzanine	06/2025	0.8		1.3


	Commitment Expiration	June 30, 2023		December 31, 2022
One Biscayne Tower Senior Loan	07/2025	31.8		31.8
One Biscayne Tower Mezzanine	07/2025	10.6		10.6
The Reserve at Chino Hills	08/2025	8.1		12.7
735 Watkins Mill	08/2025	5.8		9.2
Sixth and Main Senior Loan	11/2025	—		6.2
Sixth and Main Mezzanine	11/2025	—		3.4
		$	97.6	$	132.4

TOTAL COMMITMENTS		$	358.6	$	422.3

(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)Advances from the Account can be requested during the commitment period at any time. The commitment expiration date is reflective of the most recent signed agreement between the Account and the borrower, including any side letter agreements. Certain loans contain extension clauses on the term of the loan that do not require the Account's prior consent. If elected, the Account's commitment may be extended through the extension term.

Contingencies—In the normal course of business, the Account may be named, from time to time, as a defendant or may be involved in various legal actions, including arbitration, class actions and other litigation.

The Account establishes an accrual for all litigation and regulatory matters when it believes it is probable that a loss has been incurred and the amount of the loss can be reasonably estimated. Once established, accruals are adjusted, as appropriate, in light of additional information. The amount of loss ultimately incurred in relation to those matters may be higher or lower than the amounts accrued for those matters.

As of the date of this report, management of the Account does not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material effect on the Account’s business, financial position or results of operations.

Note 15—Subsequent Events

In preparing these financial statements, Management has evaluated events and transactions for potential recognition or disclosure subsequent to June 30, 2023, through August 4, 2023, the date the financial statements were issued and determined there were no material events or transactions to disclose.

TIAA REAL ESTATE ACCOUNT

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(Dollar values shown in millions)


REAL ESTATE PROPERTIES
Location/Sector	June 30, 2023				December 31, 2022
	Fair Value		% of Net Assets		Fair Value		% of Net Assets

Alabama
Retail	50.3		0.2	%	55.3		0.2	%
	$	50.3	0.2	%	$	55.3	0.2	%
Arizona
Industrial	48.3		0.2	%	48.3		0.2	%

Land	6.0		—	%	4.3		—	%
	$	54.3	0.2	%	$	52.6	0.2	%
California
Industrial	3,740.8		14.4	%	3,924.6		13.2	%
Apartment	1,475.2		5.7	%	1,567.0		5.3	%
Office	473.3		1.8	%	574.2		1.9	%
Retail	437.8		1.7	%	441.0		1.5	%

	$	6,127.1	23.6	%	$	6,506.8	21.9	%
Colorado

Office	79.0		0.3	%	102.0		0.3	%
Industrial	46.5		0.2	%	49.0		0.2	%

	$	125.5	0.5	%	$	151.0	0.5	%
Connecticut
Office	31.6		0.1	%	35.4		0.1	%
	$	31.6	0.1	%	$	35.4	0.1	%
Florida
Apartment	1,225.6		4.7	%	1,304.4		4.4	%
Industrial	716.8		2.8	%	714.0		2.4	%
Office	500.4		1.9	%	503.0		1.7	%
Retail	158.7		0.6	%	157.6		0.5	%

	$	2,601.5	10.0	%	$	2,679.0	9.0	%
Georgia
Apartment	418.1		1.6	%	456.7		1.5	%
Retail	255.6		1.0	%	253.7		0.9	%
Industrial	239.0		0.9	%	258.3		0.9	%
	$	912.7	3.5	%	$	968.7	3.3	%
Illinois
Retail	174.4		0.7	%	189.3		0.6	%
Industrial	154.3		0.6	%	182.1		0.6	%
Apartment	123.0		0.5	%	129.4		0.5	%
Land	41.7		0.1	%	5.7		—	%
	$	493.4	1.9	%	$	506.5	1.7	%
Indiana
Industrial	102.0		0.4	%	108.0		0.4	%
	$	102.0	0.4	%	$	108.0	0.4	%
Maryland
Apartment	83.4		0.3	%	86.5		0.3	%

TIAA REAL ESTATE ACCOUNT

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(Dollar values shown in millions)


REAL ESTATE PROPERTIES
Location/Sector	June 30, 2023				December 31, 2022
	Fair Value		% of Net Assets		Fair Value		% of Net Assets
Industrial	78.9		0.3	%	68.4		0.2	%
Retail	70.6		0.3	%	74.4		0.3	%
	$	232.9	0.9	%	$	229.3	0.8	%
Massachusetts
Office	578.6		2.2	%	687.3		2.3	%
Industrial	152.6		0.6	%	169.5		0.6	%
Retail	124.0		0.5	%	123.0		0.4	%
Apartment	53.4		0.2	%	57.7		0.2	%
	$	908.6	3.5	%	$	1,037.5	3.5	%
Minnesota
Industrial	140.1		0.5	%	149.1		0.5	%
Apartment	93.2		0.4	%	100.8		0.3	%
	$	233.3	0.9	%	$	249.9	0.8	%
New Jersey
Industrial	368.4		1.4	%	388.7		1.3	%
Retail	89.0		0.3	%	90.5		0.3	%
	$	457.4	1.7	%	$	479.2	1.6	%
New York
Office	673.9		2.6	%	787.0		2.7	%
Apartment	267.3		1.0	%	266.8		0.9	%
	$	941.2	3.6	%	$	1,053.8	3.6	%
North Carolina
Retail	89.4		0.3	%	90.3		0.3	%
Apartment	75.8		0.3	%	86.4		0.3	%
	$	165.2	0.6	%	$	176.7	0.6	%
Oregon
Apartment	37.8		0.2	%	41.3		0.1	%
	$	37.8	0.2	%	$	41.3	0.1	%
Pennsylvania
Retail	63.3		0.2	%	68.1		0.2	%
	$	63.3	0.2	%	$	68.1	0.2	%



South Carolina
Apartment	78.6		0.3	%	89.5		0.3	%
Retail	48.4		0.2	%	46.9		0.2	%
	$	127.0	0.5	%	$	136.4	0.5	%
Tennessee
Retail	145.2		0.6	%	149.5		0.5	%
Industrial	70.6		0.3	%	73.9		0.3	%
Apartment	37.8		0.1	%	38.6		0.1	%
	$	253.6	1.0	%	$	262.0	0.9	%
Texas
Industrial	949.9		3.6	%	936.5		3.2	%
Apartment	667.4		2.6	%	706.9		2.4	%
Office	512.5		2.0	%	591.8		2.0	%

TIAA REAL ESTATE ACCOUNT

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(Dollar values shown in millions)


REAL ESTATE PROPERTIES
Location/Sector	June 30, 2023				December 31, 2022
	Fair Value		% of Net Assets		Fair Value		% of Net Assets
Hotel	90.2		0.3	%	87.6		0.3	%
	$	2,220.0	8.5	%	$	2,322.8	7.8	%
Utah
Office	96.6		0.4	%	119.5		0.4	%
	$	96.6	0.4	%	$	119.5	0.4	%
Virginia
Apartment	398.9		1.5	%	414.0		1.4	%
Retail	149.3		0.6	%	152.7		0.5	%
Office	92.2		0.4	%	114.1		0.4	%
	$	640.4	2.5	%	$	680.8	2.3	%
Washington
Industrial	570.1		2.2	%	595.2		2.0	%
Apartment	296.1		1.1	%	327.1		1.1	%
	$	866.2	3.3	%	$	922.3	3.1	%
Washington D.C.
Office	1,119.5		4.3	%	1,248.0		4.2	%
Apartment	329.9		1.3	%	353.1		1.2	%
	$	1,449.4	5.6	%	$	1,601.1	5.4	%
TOTAL REAL ESTATE PROPERTIES
(Cost: $14,503.4 and $14,323.2)	$	19,191.3	73.8	%	$	20,444.0	68.9	%


REAL ESTATE JOINT VENTURES
Location/Sector	June 30, 2023				December 31, 2022
	Fair Value		% of Net Assets		Fair Value		% of Net Assets
Arizona
Land	28.0		0.1	%	17.3		0.1	%
	$	28.0	0.1	%	$	17.3	0.1	%
California
Office	882.8		3.4	%	1,082.2		3.6	%
Retail	49.2		0.2	%	50.6		0.2	%

	$	932.0	3.6	%	$	1,132.8	3.8	%
Florida
Retail	570.3		2.2	%	624.8		2.1	%
	$	570.3	2.2	%	$	624.8	2.1	%
Georgia
Land	19.5		0.1	%	—		—	%
	$	19.5	0.1	%	$	—	—	%
Maryland
Land	31.5		0.1	%	16.0		—	%
Retail	16.4		0.1	%	17.1		0.1	%
	$	47.9	0.2	%	$	33.1	0.1	%
Massachusetts
Office	369.7		1.4	%	447.6		1.5	%
	$	369.7	1.4	%	$	447.6	1.5	%
Nevada
Retail	489.2		1.9	%	503.9		1.7	%
	$	489.2	1.9	%	$	503.9	1.7	%

TIAA REAL ESTATE ACCOUNT

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(Dollar values shown in millions)


REAL ESTATE JOINT VENTURES
Location/Sector	June 30, 2023				December 31, 2022
	Fair Value		% of Net Assets		Fair Value		% of Net Assets
New York
Office	79.9		0.3	%	139.7		0.5	%
Industrial	71.8		0.3	%	78.5		0.2	%
Apartment	49.7		0.2	%	51.7		0.2	%
Retail	35.8		0.1	%	32.9		0.1	%
	$	237.2	0.9	%	$	302.8	1.0	%
North Carolina
Apartments	100.0		0.4	%	—		—	%
Retail	44.9		0.2	%	143.0		0.5	%
Land	29.7		0.1	%	30.8		0.1	%
Office	22.9		0.1	%	49.3		0.2	%
	$	197.5	0.8	%	$	223.1	0.8	%
South Carolina
Apartment	61.1		0.2	%	60.0		0.2	%
Land	22.4		0.1	%	8.7		—	%
	$	83.5	0.3	%	$	68.7	0.2	%
Tennessee
Retail	206.5		0.8	%	225.0		0.8	%
	$	206.5	0.8	%	$	225.0	0.8	%
Texas
Office	312.8		1.2	%	348.8		1.2	%
Land	44.7		0.2	%	28.8		0.1	%
Industrial	1.4		—	%	53.3		0.2	%
	$	358.9	1.4	%	$	430.9	1.5	%
Washington
Office	2.8		—	%	135.9		0.5	%
	$	2.8	—	%	$	135.9	0.5	%
Various(1)
Storage	1,287.8		4.9	%	1,310.2		4.4	%
Apartment	1,029.1		4.0	%	1,146.4		3.9	%
Office	450.8		1.7	%	471.7		1.6	%
	$	2,767.7	10.6	%	$	2,928.3	9.9	%
Foreign(2)
Land	21.6		0.1	%	20.4		0.1	%
Other(3)	9.2		—	%	9.0		—	%
	$	30.8	0.1	%	$	29.4	0.1	%
TOTAL REAL ESTATE JOINT VENTURES
(Cost: $5,789.6 and $5,738.1)	$	6,341.5	24.4	%	$	7,103.6	24.0	%

(1)Properties within these investments are located throughout the United States.

(2)Property is located outside of the United States.

(3)The value represents the equity interest in the joint venture, which does not currently hold any properties.

TIAA REAL ESTATE ACCOUNT

CONDENSED CONSOLIDATED SCHEDULES OF INVESTMENTS

(Dollar values shown in millions)


MARKETABLE SECURITIES
	June 30, 2023				December 31, 2022
	Fair Value		% of Net Assets		Fair Value		% of Net Assets
Corporate bonds	—		—	%	536.4		1.8	%
U.S. government agency notes	627.3		2.4	%	902.9		3.0	%
Foreign government agency notes	—		—	%	16.9		0.1	%
U.S. treasury securities	12.0		—	%	574.0		1.9	%
TOTAL MARKETABLE SECURITIES
(Cost: $639.0 and $2,077.1)	$	639.3	2.4	%	$	2,030.2	6.8	%

TOTAL REAL ESTATE FUNDS
(Cost: $815.8 and $787.7)	$	892.7	3.4	%	$	893.4	3.0	%

TOTAL REAL ESTATE OPERATING BUSINESS
(Cost: $371.4 and $355.0)	$	653.6	2.5	%	$	641.9	2.2	%

TOTAL LOANS RECEIVABLE
(Cost: $1,551.1 and $1,546.0)	$	1,264.5	4.9	%	$	1,418.7	4.8	%



TOTAL LOANS RECEIVABLE WITH RELATED PARTIES
(Cost: $101.0 and $69.9)	$	101.0	0.4	%	$	69.9	0.2	%

TOTAL INVESTMENTS
(Cost: $23,771.3 and $24,897.0)	$	29,083.9	111.8	%	$	32,601.7	109.9	%

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, 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, 2022, filed with the SEC on March 9, 2023 (the “Form 10-K”) and with consideration to the sub-section entitled “Forward-Looking Statements,” which begins below, and the section entitled “Item 1A. Risk Factors” of the Account's Form 10-K and the section entitled “Item 1.A Risk Factors” of the Account’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 filed with the SEC on May 5, 2023, as such risk factors may be updated in Item 1A of this Form 10-Q or 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 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, 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, 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 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.

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 June 30, 2023 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; or

•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 (including U.K.) mezzanine loans, subordinated loans and collateralized mortgage obligations, including commercial mortgage-backed securities (“CMBS”), collateralized mortgage obligations (“CMOs”) and other similar investments; 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 office, industrial, retail, and multi-family, and 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 June 30, 2023, the Account did not hold any publicly traded REIT securities 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. The Account intends to promote awareness of these criteria to its joint venture partners, vendors and other stakeholders in connection with portfolio related activity involving

commercial real estate transactions. TIAA believes awareness, and, as appropriate, implementation of ESG criteria in commercial real estate holdings is beneficial to total long-term returns for the Account. In its evaluation of commercial real estate opportunities, the Account will take ESG considerations into account as part of the financial assessment of a commercial real estate portfolio asset, and not to achieve a desired outcome or as an investment qualification or screen. Ultimately, the Account will make an investment decision that incorporates ESG criteria only to the extent that the criteria is reasonably expected to enhance 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.

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 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 June 30, 2023, the fair value of the Account's foreign real estate investments was $30.8 million.

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.

SECOND QUARTER 2023 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
	2022	2Q 2023	2023		2024
Economy(1)
Gross Domestic Product ("GDP")	0.9%	1.5%		1.1%		1.6%
Employment Growth (2)	399	244		181		40
Unemployment Rate	3.6%	3.5%		3.9%		4.3%
Interest Rates(3)
10 Year Treasury	3.9%	3.8%		4.0%		3.9%

Sources: Bloomberg, BEA, Bureau of Labor Statistics (“BLS”), 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 growth conditions remained fragile in the second quarter of 2023, as elevated inflation and the aggressive policy response to combat inflation remain central issues in most developed economies. Globally, the pace of inflation has clearly moderated after peaking last year but remains elevated by historic standards, and central bank officials in Europe and the U.S. have suggested that tighter monetary policy is necessary to bring inflation in line with policy targets. Economic activity has largely held up in the first half of the year despite tighter policy, but leading indicators signal an elevated risk of recession by 2024.

In the U.S., the Federal Reserve held interest rates steady for the first time in over a year in June, following a string of ten straight rate increases totaling 500 basis points. In late July, the Federal Reserve announced it had raised its benchmark interest rate by 0.25%, to as much as 5.25%-5.50%, the highest level in over 20 years. Yearly inflation was 3.0% at the end of the quarter, but Federal Reserve officials have signaled that one to two more rate hikes are likely in 2023 to bring inflation in line. Economic growth has persisted in this environment, with GDP growing at an estimated 1.5% annualized pace quarter-over-quarter in the second quarter of 2023, as year-over-year growth improved to 2.3%. Job growth moderated in the second quarter but remained solid with 732,000 workers added to payrolls, and the combination of improved income growth, moderating inflation, and rising sentiment has translated to resilient U.S. consumer spending.

Other areas of the U.S. economy have not fared as well. The rapid rate hiking cycle introduced some turmoil into the banking sector at the end of the first quarter, particularly among smaller regional banks. As a result, financial institutions tightened lending standards further during the second quarter, and the combination of elevated interest rates and tighter credit standards has restrained business investment, manufacturing, and housing activity. The strength of the U.S. consumer provides some hope for avoiding a recession, but the risks of a downturn are high, particularly if job growth slows significantly.

Real Estate Market Conditions and Outlook

The rapid increase in long-term interest rates in 2022 put significant pressure on commercial real estate values in the last few quarters, leading to significant repricing in the second half of 2022 into the first half of 2023.

Macroeconomic uncertainty and tighter lending standards have curbed deal activity in recent quarters, continuing into the second quarter. According to preliminary results from Real Capital Analytics, sales of commercial properties in the U.S. fell to $175.9 billion in the first half of 2023, marking the slowest first half of deal volume in ten years. Long-term interest rates have been volatile but have not increased further in 2023 after surging in 2022, which should bring some stability to pricing in most sectors and lead to increased dealmaking. Fundamentals remain solid in target areas like industrial, alternatives, and pockets of retail and housing, which benefit from low vacancy rates and healthy net operating income growth.

The Account returned -4.60% in the second quarter of 2023 and -9.10% for the last twelve months. Over the last year, borrowing costs have increased in response to inflation, which caused a decrease in transaction activity. As a result of both factors, property values have been adjusted downward. The second quarter net return was negative for the third consecutive quarter for the first time since September 2020 and reflects the impact of these broader economic conditions on property valuations. While the Account has experienced valuation declines, property fundamentals remain strong and the properties within the Account are well positioned. The Account remains focused on transitioning the portfolio to adapt to changing macro-economic trends by increasing its exposure to sectors with stronger growth prospects and lower capital requirements. Over the last year, the Account has been less active from a transaction standpoint due to the ongoing market volatility and liquidity constraints. The Account will closely monitor conditions for the most prudent timing for potential dispositions and acquisitions of commercial properties.

Data for the Account’s top five markets in terms of market value as of June 30, 2023 are provided below. The five markets presented below represent 42.0% of the Account’s total real estate portfolio. Across all markets, the Account’s properties are 91.8% leased.


Top 5 Metro Areas by Fair Market Value(1)	Account % Leased Fair Value Weighted(2)	Number of Property Investments	Metro Area Fair Value as a % of Total RE Portfolio(3)	Metro Area Fair Value as a % of Total Investments
Riverside-San Bernardino-Ontario, CA	100.0%	7	10.1%	8.8%
Washington-Arlington-Alexandria, DC-VA-MD-WV	83.2%	18	9.4%	8.2%
Los Angeles-Long Beach-Anaheim, CA	86.1%	22	9.0%	7.9%
Miami-Fort Lauderdale-West Palm Beach, FL	96.5%	14	7.4%	6.5%
New York-Newark-Jersey City, NY-NJ-PA	86.5%	14	6.1%	5.4%

(1)The table above has been standardized to depict metropolitan statistical area ("MSA") definitions.

(2)Weighted by fair value, which differs from the calculations provided for market comparisons to CoStar and RealPage data and are used here to reflect the fair value of the Account’s monetary investments in those markets.

(3)Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.

Office

The office sector continued to be challenged in the first half of 2023. Uncertainty surrounding the market has weakened both investor and lessor demand. Most large companies have settled into hybrid working models, and while they are encouraging employees to be present in the office a few days a week, they are still finding themselves with under utilized space. Vacancy is likely to remain elevated throughout 2023.

Vacancy nationwide increased from 12.8% in the first quarter of 2023 to 13.1% in the second quarter, as reported by CoStar. Vacancy rates have remained high in large downtown markets, such as Dallas, Washington D.C. and New York, while suburban markets are experiencing some rent growth. The vacancy rate of the Account’s office portfolio increased from 17.4% in the first quarter of 2023 to 18.9% in the second quarter. 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. The elevated vacancy in the other top markets is due to low market demand. The depth of large tenants is thin which is causing difficulty in re-leasing the space once leases expire. The vacancy increase in the Washington metro area is due to an expiring lease.


					Account Square Foot Weighted Average Vacancy				Market Vacancy(2)
Top 5 Office Metropolitan Areas(1)	Total Sector by Metro Area ($M)		% of Total Investments		Q2 2023		Q1 2023		Q2 2023		Q1 2023
					18.9	%	17.4	%	13.1	%	12.8	%
Washington-Arlington-Alexandria, DC-VA-MD-WV	$	1,211.7	4.2	%	19.7	%	16.8	%	15.9	%	15.8	%
Boston-Cambridge-Newton, MA-NH	948.2		3.3	%	19.5	%	20.5	%	10.5	%	10.2	%
New York-Newark-Jersey City, NY-NJ-PA	771.8		2.7	%	23.6	%	23.9	%	13.3	%	13.0	%
San Diego-Carlsbad, CA	612.9		2.1	%	6.2	%	5.6	%	11.2	%	10.9	%
Dallas-Fort Worth-Arlington, TX	512.5		1.8	%	26.8	%	25.9	%	17.9	%	17.9	%

(1)The table above has been standardized to depict MSA definitions.

(2)Source: CoStar. Market vacancy is the percentage of space available for rent. Account vacancy is the square foot-weighted percentage of unleased space. Market vacancy rates are subject to change.

Industrial

The industrial sector faces some short-term headwinds, as weaker economic conditions in manufacturing, trade, and spending on consumer goods have affected demand for industrial space. At the same time, supply growth has accelerated noticeably in recent quarters, leading to rising vacancy rates in most key markets. Despite these recent increases, vacancy in the sector is still well below historic norms which has propelled healthy rent growth in 2023. In addition, industrial still benefits from favorable medium/long-term dynamics, which make it an attractive investment option in upcoming years. New industrial construction has slowed noticeably in recent quarters, suggesting that supply pressures should ease towards the end of 2024. In addition, long-term structural demand tailwinds stemming from supply chain diversification and rising e-commerce share in retail support demand for industrial space, which should keep vacancies relatively low and drive above-average rental growth in the sector in the next few years.

The national industrial availability was 4.6% in the second quarter of 2023, compared to 4.3% in the first quarter, as reported by CoStar. The average vacancy rate of the industrial properties held by the Account increased from 1.7% in the first quarter of 2023 to 2.1% in the second quarter of 2023, due to expiring leases.


					Account Square Foot Weighted Average Vacancy				Market Vacancy(2)
Top 5 Industrial Metropolitan Areas(1)	Total Sector by Metro Area ($M)		% of Total Investments		Q2 2023		Q1 2023		Q2 2023		Q1 2023
Account / Nation					2.1	%	1.7	%	4.6	%	4.3	%
Riverside-San Bernardino-Ontario, CA	$	2,459.7	8.5	%	—	%	—	%	3.6	%	2.8	%
Los Angeles-Long Beach-Anaheim, CA	709.4		2.4	%	4.8	%	5.1	%	3.6	%	3.1	%
Dallas-Fort Worth-Arlington, TX	626.0		2.2	%	5.1	%	3.6	%	7.2	%	6.3	%
Seattle-Tacoma-Bellevue, WA	570.1		2.0	%	—	%	—	%	5.3	%	4.7	%
Miami-Fort Lauderdale-West Palm Beach, FL	517.2		1.8	%	—	%	1.2	%	2.8	%	2.6	%

(1)The table above has been standardized to depict MSA definitions.

(2)Source: CoStar. Market vacancy is the percentage of space available for rent. Account vacancy is the square foot-weighted percentage of unleased space. Market vacancy rates are subject to change.

Multi-Family

The multifamily sector is experiencing a rebound in demand to the highest level seen since the first quarter of 2022. Still, absorption was 30% below the long-term average for previous second quarters, according to RealPage. Demand is not keeping up with new supply, causing a further deceleration in rent growth. Suburban submarkets are

now experiencing rent growth in-line with urban areas. Near-term demand is unlikely to keep up with the record new supply that is set to peak in early 2024. Supply growth is highest across Sunbelt markets, which continue to experience the strongest in-migration. As mortgage interest rates have climbed, many potential buyers are either being priced out of the market or waiting for a more affordable time to buy.

The national apartment vacancy rate remained relatively flat at 5.4%, increasing slight from 5.3% in the first quarter of 2023. The vacancy rate of the Account’s apartment properties increased to 7.1% in the second quarter of 2023 as compared to 6.9% in the prior quarter, driven by small declines in occupancy across the Account's properties.


					Account Units Weighted Average Vacancy				Market Vacancy(2)
Top 5 Apartment Metropolitan Areas(1)	Total Sector by Metro Area ($M)		% of Total Investments		Q2 2023		Q1 2023		Q2 2023		Q1 2023
Account / Nation					7.1	%	6.9	%	5.4	%	5.3	%
Washington-Arlington-Alexandria, DC-VA-MD-WV	$	812.2	2.8	%	7.8	%	6.9	%	5.1	%	5.2	%
Los Angeles-Long Beach-Anaheim, CA	807.9		2.8	%	6.9	%	9.2	%	4.7	%	4.3	%
Miami-Fort Lauderdale-West Palm Beach, FL	746.9		2.6	%	9.6	%	8.1	%	4.5	%	4.2	%
Atlanta-Sandy Springs-Roswell, GA	418.1		1.4	%	11.7	%	10.3	%	7.2	%	6.9	%
Tampa-St. Petersburg-Clearwater, FL	320.6		1.1	%	6.5	%	6.6	%	6.0	%	5.7	%

(1)The table above has been standardized to depict MSA definitions.

(2)Source: RealPage. Market vacancy is the percentage of units vacant. The Account’s vacancy is the percentage of unleased units. Market vacancy rates are subject to change.

Retail

National vacancy rates remained flat at 4.2% over the first half of 2023; however, the retail sector is facing some short-term demand headwinds from a weakening macroeconomy and shift in consumer preferences towards services, but neighborhood, community, and strip mall centers (particularly grocery-anchored) have proven to be resilient in the cyclical movements in the broader economy. Fundamentals in this area of retail will remain strong, with low vacancy and demand continuing to outpace limited supply growth in the near term. In addition, retail values have been comparatively less sensitive to the recent rise in interest rates than other core property types.

The Account's retail portfolio is composed primarily of high-end lifestyle shopping centers and regional malls in large metropolitan or tourist centers, which tend to have higher vacancy rates than the overall national retail market. The Account has over 1,100 retailers across its portfolio, with its largest retail exposure comprising less than 5.0% of total retail rentable area. The retail portfolio is managed to minimize significant exposure to any single retailer. The Account’s retail vacancy decreased to 10.2% in the second quarter of 2023, down from 11.0% in the first quarter of 2023, due to new leases at multiple properties.


					Account Units Weighted Average Vacancy				Market Vacancy*
	Total Exposure ($M)		% of Total Investments		Q2 2023		Q1 2023		Q2 2023		Q1 2023
All Retail					10.2	%	11.0	%	4.2	%	4.2	%
Lifestyle & Mall	$	1,487.6	5.1	%	14.0	%	15.4	%	9.0	%	8.8	%
Neighborhood, Community & Strip	1,307.6		4.5	%	6.4	%	6.4	%	5.7	%	5.9	%
Power Center**	456.5		1.6	%	12.1	%	13.7	%	4.3	%	4.4	%

*Source: CoStar. 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. Market vacancy rates are subject to change.

**The Power Center designation is reserved for properties with three or more anchor units. Anchor units are leased to large retailers such as department stores, home improvement stores, and warehouse clubs. Properties with the Neighborhood, Community and Strip designation consist of two or less anchor units.

Hotel

Despite inflation and the rising costs of travel, the hotel industry had strong occupancy in the first half of 2023 due primarily to the continued improvement in business travel and other group travel. Growth is expected to continue through the summer months of 2023 as leisure travel increases, eventually tapering off but remaining strong through the end of the year.

The Account's exposure to the hospitality sector is limited to one hotel in the Dallas metro area. The hotel is located in a business park in the Dallas metro area and caters largely to business travelers. Key metrics to track hotel performance include occupancy, the average daily rate (“ADR”) and revenue per available room (“RevPAR”). For the quarter ended June 30, 2023, occupancy of the property increased to 62.7%, as compared to 61.5% in the previous quarter. ADR and RevPAR were $142.18 and $154.15, respectively, for the second quarter of 2023, as compared to $148.82 and $161.31, respectively, in the prior quarter.

INVESTMENTS

As of June 30, 2023, the Account held 87.9% of its total investments in real estate and real estate joint ventures. The Account also held investments in loans receivable, including those with related parties, representing 4.6% of total investments, real estate funds representing 3.1% of total investments, U.S. government agency notes representing 2.2% of total investments, and a real estate operating business representing 2.2% of total investments.

The outstanding principal on loans payable on the Account’s wholly-owned real estate portfolio as of June 30, 2023 was $1.6 billion. The Account’s proportionate share of outstanding principal on loans payable within its joint venture investments was $3.0 billion, which is netted against the underlying properties when determining the joint venture investment’s fair value presented on the Consolidated Schedules of Investments. Total outstanding principal on the Account’s portfolio as of June 30, 2023, inclusive of loans payable within the joint venture investments, $325.5 million in loans collateralized by a loan receivable, $500.0 million of term loans outstanding and $900.0 million in senior notes payable, was $6.3 billion, which represented a loan-to-value ratio of 19.6%.

Management believes that the Account’s real estate portfolio is diversified by location and property type. The Account does not intend to buy and sell its real estate investments simply to make short-term profits. Rather, the Account’s general strategy in selling real estate investments is to dispose of those assets that management believes (i) have maximized in value, (ii) have underperformed or face deteriorating property-specific or market conditions, (iii) need significant capital infusions in the future, (iv) are appropriate to dispose of in order to remain consistent with the Account’s intent to diversify the Account by property type and geographic location (including reallocating the Account’s exposure to or away from certain property types in certain geographic locations), or (v) otherwise do not satisfy the investment objectives of the Account. Management, from time to time, will evaluate the need to manage liquidity in the Account as part of its analysis as to whether to undertake a particular asset sale. The Account may reinvest any sale proceeds that it does not need to pay operating expenses or to meet debt service or redemption requests (e.g., contract owner withdrawals or benefit payments).

The following table lists the Account's ten largest investments as of June 30, 2023. 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)
Ontario Industrial Portfolio	100%	Ontario	CA	Industrial	$	1,236.0	$	—	$	1,236.0	4.3%	3.8%
Simpson Housing Portfolio	80%	Various	USA	Apartment	1,100.6		381.2		719.4		3.9%	3.4%
Fashion Show	50%	Las Vegas	NV	Retail	900.2		417.5		482.7		3.2%	2.8%
The Florida Mall	50%	Orlando	FL	Retail	667.7		297.6		370.1		2.3%	2.1%
1001 Pennsylvania Avenue	100%	Washington	DC	Office	640.2		—		640.2		2.2%	2.0%
Storage Portfolio II	90%	Various	USA	Storage	612.0		165.6		446.4		2.1%	1.9%
701 Brickell Avenue	100%	Miami	FL	Office	500.4		164.8		335.6		1.7%	1.6%
Great West Industrial Portfolio	100%	Rancho Cucamonga	CA	Industrial	475.0		—		475.0		1.7%	1.5%
Lincoln Centre	100%	Dallas	TX	Office	473.5		—		473.5		1.7%	1.5%
Dallas Industrial Portfolio	100%	Dallas	TX	Industrial	418.1		—		418.1		1.5%	1.3%

(1)The Account's share of the fair value of the property investment, gross of debt.

(2)Debt fair values are presented at the Account's ownership interest.

(3)The Account's share of the fair value of the property investment, net of debt.

(4)Total real estate portfolio is the aggregate fair value of the Account's wholly-owned properties and the properties held within a joint venture, gross of debt.

(5)Total investments are the aggregate fair value of all investments held by the Account, gross of debt. Total investments, as calculated within this table, will vary from total investments, as calculated in the Account's Schedule of Investments, as joint venture investments are presented in the Schedule of Investments at their net equity position in accordance with U.S. Generally Accepted Accounting Principals ("GAAP").

Results of Operations

Three months ended June 30, 2023 compared to three months ended June 30, 2022

Net Investment Income

The following table shows the results of operations for the three months ended June 30, 2023 and 2022 and the dollar and percentage changes for those periods (dollars in millions).


	For the Three Months Ended June 30,				Change
	2023		2022		$		%
			2
Real estate income, net:
Rental income	$	337.0	$	314.1	$	22.9	7.3	%
Real estate property level expenses:
Operating expenses	88.9		71.1		17.8		25.0	%
Real estate taxes	54.4		50.3		4.1		8.2	%
Interest expense	23.3		18.2		5.1		28.0	%
Total real estate property level expenses	166.6		139.6		27.0		19.3	%
Real estate income, net	170.4		174.5		(4.1)		(2.3)	%
Income from real estate joint ventures	47.4		42.5		4.9		11.5	%
Income from real estate funds	3.9		5.5		(1.6)		(29.1)	%
Interest	38.3		22.3		16.0		71.7	%


TOTAL INVESTMENT INCOME	260.0		244.8		15.2		6.2	%
Expenses:
Investment management charges	19.8		21.4		(1.6)		(7.5)	%
Administrative charges	23.2		8.9		14.3		N/M
Distribution charges	1.3		5.0		(3.7)		(74.0)	%
Mortality and expense risk charges	—		0.1		(0.1)		N/M
Liquidity guarantee charges	18.9		22.4		(3.5)		(15.6)	%
Interest expense	19.0		3.1		15.9		N/M
TOTAL EXPENSES	82.2		60.9		21.3		35.0	%
INVESTMENT INCOME, NET	$	177.8	$	183.9	$	(6.1)	(3.3)	%

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 June 30, 2023 and 2022. 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
	2023		2022		$		%		2023		2022		$		%		2023		2022		$		%
Same Property	$	322.8	$	297.1	$	25.7	8.7	%	$	85.7	$	65.5	$	20.2	30.8	%	$	52.3	$	47.3	$	5.0	10.6	%
Properties Acquired	4.7		—		4.7		N/M		0.9		—		0.9		N/M		0.8		0.3		0.5		N/M
Properties Sold	9.5		17.0		(7.5)		(44.1)	%	2.3		5.6		(3.3)		(58.9)	%	1.3		2.7		(1.4)		(51.9)	%
Impact of Properties Acquired/Sold	14.2		17.0		(2.8)		(16.5)	%	3.2		5.6		(2.4)		(42.9)	%	2.1		3.0		(0.9)		(30.0)	%
Total Property Portfolio	$	337.0	$	314.1	$	22.9	7.3	%	$	88.9	$	71.1	$	17.8	25.0	%	$	54.4	$	50.3	$	4.1	8.2	%

N/M—Not meaningful

Rental Income:

Rental income increased by $22.9 million, or 7.3%, when compared to the second quarter of 2022, driven by increases across the industrial, office and apartment sectors due to increased markets rents. The office sector also saw increases due to monthly parking fees, as more tenants/employees return to their office. The Account's hotel property continues to experience an increase in income which can be attributed to more group caterings, outlet business, room rentals and short-term corporate bookings, when compared to the second quarter of 2022.

Operating Expenses:

Operating expenses increased $17.8 million, or 25.0%, when compared to the second quarter of 2022 due to increased repair and maintenance, utility costs and payroll expenses, across the Account's real estate holdings. The largest increases were seen in the apartment and office sectors.

Real Estate Taxes:

Real estate taxes increased $4.1 million, or 8.2%, when compared to the same quarter in 2022, due to higher tax refunds received in the prior year period, as well as taxes for additional parcels from one of the Account's multi-family property located in Fullerton, CA that had not previously been taxed.

Interest Expense:

Interest expense increased $5.1 million, or 28.0%, when compared to the same quarter in 2022, as a result of a higher average outstanding principal balance on loans payable.

Income from Real Estate Joint Ventures:

Income from real estate joint ventures increased $4.9 million, or 11.5%, when compared to the same quarter in 2022, as a result of higher distributed income from two large retail properties located in Knoxville, TN and Las Vegas, NV.

Income from Real Estate Funds:

Income from real estate funds decreased $1.6 million, or 29.1%, when compared to the same quarter in 2022, primarily as a result of lower distributed income from one of the Account's real estate fund investments.

Interest Income:

Interest income increased $16.0 million, or 71.7%, in comparison to the same quarter of 2022, due to a higher average outstanding principal balance on loans receivable, as well as a higher effective interest rate on short-term marketable securities.

Expenses:

Investment management, administrative and distribution costs charged to the Account 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. These expenses increased $9.0 million from the comparable quarter of 2022, primarily due to an increase in the administrative charge rate.

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. Mortality and expense risk expenses relatively flat between the comparative periods. Liquidity guarantee expenses were $3.5 million lower than the comparable period of 2022 as a result of lower average net assets.

Interest expense on the Account's other unsecured debt increased $15.9 million when compared to the same quarter of 2022, due to a higher average outstanding principal balance on the Account's credit facility 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 three months ended June 30, 2023 and 2022 and the dollar and percentage changes for those periods (dollars in millions).


	For the Three Months Ended June 30,				Change
	2023		2022		$		%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT
Net realized gain (loss) on investments:
Real estate properties	$	—	$	37.9	$	(37.9)	N/M
Real estate joint ventures	42.1		(37.8)		79.9		N/M
Real estate funds	13.9		—		13.9		N/M
Foreign currency exchange on forward contracts	(2.9)		—		(2.9)		N/M
Marketable securities	(16.5)		(0.3)		(16.2)		N/M

Total realized gain (loss) on investments:	36.6		(0.2)		36.8		N/M
Net change in unrealized gain (loss) on:
Real estate properties	(945.4)		939.7		(1,885.1)		N/M
Real estate joint ventures	(393.0)		277.1		(670.1)		N/M
Real estate funds	(39.8)		16.3		(56.1)		N/M
Real estate operating business	1.2		140.4		(139.2)		(99.1)	%
Foreign currency exchange on forward contracts	2.8		1.6		1.2		75.0	%
Marketable securities	18.4		(9.9)		28.3		N/M
Loans receivable	(116.3)		(83.2)		(33.1)		39.8	%

Loans payable	(15.9)		46.1		(62.0)		N/M
Other unsecured debt	5.6		13.8		(8.2)		(59.4)	%
Net change in unrealized (loss) gain on investments and debt	(1,482.4)		1,341.9		(2,824.3)		N/M
NET REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS AND DEBT	$	(1,445.8)	$	1,341.7	$	(2,787.5)	N/M

N/M—Not meaningful

Real Estate Properties:

Wholly-owned real estate investments experienced unrealized losses of $945.4 million during the second quarter of 2023, compared to $977.6 million of net realized and unrealized gains during the comparable quarter of 2022. Unrealized losses in the second quarter of 2023 were driven by office properties in the Western and Eastern regions, due to decreased market demand, higher concessions and current economic conditions.

Real Estate Joint Ventures:

Real estate joint ventures experienced net realized and unrealized losses of $350.9 million during the second quarter of 2023, compared to $239.3 million of net realized and unrealized gains during the second quarter of 2022. Current quarter unrealized losses were seen across the Account's joint venture investments portfolio, with the largest losses seen in the office sector due to decreased market demand, higher concessions and current economic conditions.

Real Estate Funds:

Real estate funds experienced net realized and unrealized losses of $25.9 million during the second quarter of 2023, compared to $16.3 million of unrealized gains during the second quarter of 2022. Unrealized losses in the second quarter of 2023 were due to unfavorable valuations of two of the Account's real estate funds, driven by higher capitalization rates.

Real Estate Operating Business:

The Account's real estate operating business experienced unrealized gains of $1.2 million during the second quarter of 2023, compared to $140.4 million of unrealized gains in the second quarter of 2022 which saw share price growth related to a recapitalization of the business. Unrealized gains in the second quarter of 2023 were the result of a favorable valuation, which is largely based on the prior year's recapitalization of the business, and put the value in line with comparable market transactions.

Foreign Currency Exchange on Forward Contracts:

The Account's foreign currency exchange on forward contracts experienced net realized and unrealized losses of $0.1 million during the second quarter of 2023, compared to unrealized gains of $1.6 million in the second quarter of 2022 due to unfavorable currency exchange rates at the time of settlement.

Marketable Securities

The Account's marketable securities investments experienced net realized and unrealized gains of $1.9 million in the second quarter of 2023, compared to net realized and unrealized losses of $10.2 million during the second quarter of 2022. The current period gains are the net result of the ebb and flow of interest and U.S. Treasury rates during the quarter.

Loans Receivable, including those with related parties:

Loans receivable, including those with related parties, experienced unrealized losses of $116.3 million during the second quarter of 2023 compared to $83.2 million of unrealized losses during the comparable quarter of 2022. The current period losses are attributed to the unfavorable valuations of loans receivable that were delinquent or went into default during the period.

Loans Payable:

Loans payable experienced unrealized losses of $15.9 million in the second quarter of 2023, compared to $46.1 million of unrealized gains during the comparable quarter of 2022. The unrealized losses in the second quarter of 2023 were attributable to changes in credit spreads and fluctuations in the risk-free yield curve.

Other Unsecured Debt:

The Account's other unsecured debt experienced an unrealized gain of $5.6 million in the second quarter of 2023, attributable to positive changes in the risk-free yield curve.

Six months ended June 30, 2023 compared to six months ended June 30, 2022

Net Investment Income

The following table shows the results of operations for the six months ended June 30, 2023 and 2022 and the dollar and percentage changes for those periods (dollars in millions).


	For the Six Months Ended June 30,				Change
	2023		2022		$		%
INVESTMENT INCOME
Real estate income, net:
Rental income	$	671.5	$	617.8	$	53.7	8.7	%
Real estate property level expenses:
Operating expenses	168.3		144.7		23.6		16.3	%
Real estate taxes	107.8		102.0		5.8		5.7	%
Interest expense	46.5		37.8		8.7		23.0	%
Total real estate property level expenses	322.6		284.5		38.1		13.4	%
Real estate income, net	348.9		333.3		15.6		4.7	%
Income from real estate joint ventures	100.7		103.0		(2.3)		(2.2)	%
Income from real estate funds	10.5		11.5		(1.0)		(8.7)	%
Interest	78.6		43.0		35.6		82.8	%

Other	—		0.8		(0.8)		N/M
TOTAL INVESTMENT INCOME	538.7		491.6		47.1		9.6	%
Expenses:
Investment management charges	41.6		43.9		(2.3)		(5.2)	%
Administrative charges	35.1		22.4		12.7		56.7	%
Distribution charges	6.1		12.3		(6.2)		(50.4)	%
Mortality and expense risk charges	—		0.5		(0.5)		N/M
Liquidity guarantee charges	38.8		45.1		(6.3)		(14.0)	%
Interest expense	30.4		4.4		26.0		N/M
TOTAL EXPENSES	152.0		128.6		23.4		18.2	%
INVESTMENT INCOME, NET	$	386.7	$	363.0	$	23.7	6.5	%

The following table illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the six months ended June 30, 2023 and 2022. 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
	2023		2022		$		%		2023		2022		$		%		2023		2022		$		%
Same Property	$	643.7	$	580.5	$	63.2	10.9	%	$	161.6	$	133.1	$	28.5	21.4	%	$	104.0	$	95.9	$	8.1	8.4	%
Properties Acquired	9.6		—		9.6		N/M		2.0		—		2.0		N/M		1.4		0.3		1.1		N/M
Properties Sold	18.2		37.3		(19.1)		(51.2)	%	4.7		11.6		(6.9)		(59.5)	%	2.4		5.8		(3.4)		(58.6)	%
Impact of Properties Acquired/Sold	27.8		37.3		(9.5)		(25.5)	%	6.7		11.6		(4.9)		(42.2)	%	3.8		6.1		(2.3)		(37.7)	%
Total Property Portfolio	$	671.5	$	617.8	$	53.7	8.7	%	$	168.3	$	144.7	$	23.6	16.3	%	$	107.8	$	102.0	$	5.8	5.7	%

N/M—Not meaningful

Rental Income:

Rental income increased by $53.7 million, or 8.7%, when compared to the first half of 2022, driven by increases across the industrial, office and apartment sectors due to increases in market rent driven by demand and reductions in bad debt expenses and rent concessions. The Account's hotel property also experienced an increase in income which can be attributed to an increase in outlet business and room rental activity.

Operating Expenses:

Operating expenses increased $23.6 million, or 16.3%, when compared to the first half of 2022. The increase is attributed to increased repair and maintenance costs, as well as utility costs, in the office, industrial and apartment sectors. The Account's hotel property also saw a sizeable increase in operating expenses related to higher occupancy and an increased use of event space.

Real Estate Taxes:

Real estate taxes increased $5.8 million, or 5.7%, when compared to the same period in 2022, due to tax refunds received in the prior year period, as well as taxes for additional parcels from one of the Account's multi-family property located in Fullerton, CA that had not previously been taxed.

Interest Expense:

Interest expense increased $8.7 million, or 23.0%, when compared to the same period in 2022, as a result of a higher average outstanding principal balance on loans payable.

Income from Real Estate Joint Ventures:

Income from real estate joint ventures decreased $2.3 million, when compared to the same period in 2022, as a result of lower distributed income, most notably from one of the Account's retail joint venture investments located in Orlando, Florida, which was partially offset by higher income distributions from two retail properties located in Knoxville, TN and Las Vegas, NV.

Income from Real Estate Funds:

Income from real estate funds decreased $1.0 million, when compared to the same period in 2022, as a result of slightly lower distributed income received from five of the Account's real estate fund investments.

Interest Income:

Interest income increased $35.6 million in comparison to the same period of 2022. The increase is due to a higher average outstanding principal balance on loans receivable, as well as a higher effective interest rate on short-term marketable securities.

Expenses:

Investment management, administrative and distribution costs charged to the Account 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. These expenses increased $4.2 million over the comparable period of 2022, primarily due to an increase in the administrative charge rate.

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. Mortality and expense risk expenses decreased $0.5 million over the comparative period of 2022, due to a lower rate charge in effect for the period. Liquidity guarantee expenses were $6.3 million lower than the comparable period of 2022 as a result of lower average net assets.

Interest expense from the Account's other unsecured debt increased $26.0 million when compared to the same period of 2022, due to a higher average outstanding principal balance on the Account's credit facility 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 six months ended June 30, 2023 and 2022 and the dollar and percentage changes for those periods (dollars in millions).


	For the Six Months Ended June 30,				Change
	2023		2022		$		%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT
Net realized gain (loss) on investments:
Real estate properties	$	—	$	29.5	$	(29.5)	N/M
Real estate joint ventures	42.1		13.1		29.0		N/M
Real estate funds	13.9		—		13.9		N/M
Foreign currency exchange on forward contracts	(2.9)		—		(2.9)		N/M
Marketable securities	(35.6)		(1.3)		(34.3)		N/M

Total realized gain on investments:	17.5		41.3		(23.8)		(57.6)	%
Net change in unrealized gain (loss) on:
Real estate properties	(1,432.8)		2,152.1		(3,584.9)		N/M
Real estate joint ventures	(770.3)		349.0		(1,119.3)		N/M
Real estate funds	(28.8)		6.9		(35.7)		N/M
Real estate operating business	(4.7)		200.8		(205.5)		N/M
Foreign currency exchange on forward contracts	2.3		1.6		0.7		43.8	%
Marketable securities	47.1		(38.5)		85.6		N/M
Loans receivable	(159.3)		(82.2)		(77.1)		93.8	%

Loans payable	(22.7)		49.8		(72.5)		N/M
Other unsecured debt	(1.3)		13.8		(15.1)		N/M
Net change in unrealized (loss) gain on investments and debt	(2,370.5)		2,653.3		(5,023.8)		N/M
NET REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS AND DEBT	$	(2,353.0)	$	2,694.6	$	(5,047.6)	N/M

N/M—Not meaningful

Real Estate Properties:

Wholly-owned real estate investments experienced unrealized losses of $1.4 billion during the first six months of 2023, compared to $2.2 billion of net realized and unrealized gains during the comparable period of 2022. While the Account saw depreciation across various real estate sectors during the period, unrealized losses were primarily driven by office properties in the Western and Eastern region due to decreased market demand and current economic conditions.

Real Estate Joint Ventures:

Real estate joint ventures experienced net realized and unrealized losses of $728.2 million during the first six months of 2023, compared to $362.1 million during the first six months of 2022. Net losses in the first half of 2023 were primarily driven by the Account's joint venture investments in the office sector, which saw a large decrease in valuations, mainly from an investment in Seattle, Washington.

Real Estate Funds:

Real estate funds experienced net realized and unrealized losses of $14.9 million during the first six months of 2023, compared to unrealized gains of $6.9 million during the first six months of 2022. Current period losses are due to unfavorable valuations of two funds, due to higher capitalization rates.

Real Estate Operating Business:

The Account's real estate operating business experienced unrealized losses of $4.7 million during the first six months of 2023, compared to $200.8 million unrealized gains in the comparable period of 2022. Unrealized losses were primarily attributed to the recent cost of capital trends.

Foreign Currency Exchange on Forward Contracts:

The Account's foreign currency exchange on forward contracts experienced net realized and unrealized losses of $0.6 million during the second quarter of 2023 due to unfavorable foreign currency exchange at the time of sale.

Marketable Securities:

The Account's marketable securities investments experienced net realized and unrealized gains of $11.5 million in the first six months of 2023, compared to net realized and unrealized losses of $39.8 million in the comparable period of 2022. Current period gains can be attributed to the net result of rising and falling interest and U.S. Treasury rates during the first half of the year.

Loans Receivable, including those with related parties:

Loans receivable, including those with related parties, experienced unrealized losses of $159.3 million during the first six months of 2023, compared to $82.2 million of net realized and unrealized losses during the comparable period of 2022. Losses in the first six months of 2023 are attributed to unfavorable valuations of four loans receivable that were delinquent or defaulted on the loan terms during the period.

Loans Payable:

Loans payable experienced unrealized losses of $22.7 million in the first six months of 2023, compared to $49.8 million of unrealized gains during the comparable period of 2022. The unrealized losses in the first half of 2023 were attributable to changes in credit spreads and fluctuations in the risk-free yield curve.

Other unsecured debt:

Other unsecured debt experienced unrealized losses of $1.3 million in the first half of 2023, attributable to changes in credit spreads and fluctuations in the risk-free yield curve.

Liquidity and Capital Resources

As of June 30, 2023 and December 31, 2022, the Account’s cash and cash equivalents and marketable securities had a value of $721.5 million and $2.1 billion, respectively, representing 2.8% and 7.1% of the Account’s net assets at such dates, respectively. The decrease in liquid assets during the first half of 2023 was largely attributable to continued market volatility and higher contract owner withdrawals driven by unfavorable market trends in the U.S. commercial real estate market, with elevated interest rates negatively impacting property values. 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 Form 10-K for the year ended December 31, 2022, the Account is able to meet its short-term and long-term liquidity needs through cash provided by operating activities and the Liquidity Guarantee provided by TIAA. TIAA's management and the Independent Fiduciary closely monitor the Account's liquidity levels. If contract owner withdrawals continue in line with recent trends, it is likely TIAA will be required to purchase liquidity units pursuant to the Liquidity Guarantee in the third quarter of 2023, depending on the pace of net outflows.

Net Income and Leverage

The Account’s net investment income is a source of liquidity for the Account. Net investment income was $386.7 million for the six months ended June 30, 2023, as compared to $363.0 million for the comparable period of 2022. The increase in total net investment income is described more fully in the Results of Operations section.

The Account has a $945.0 million unsecured line of credit, accessible as needed to fund the Account's near-term investment objectives, as further described in Note 10—Credit Facility. As of June 30, 2023, the Account had not drawn on the line of credit.

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% (measured at the time of incurrence and after giving effect thereto). Such incurrence 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;

•an unsecured line of credit, credit facility or bank loan; or

•the issuance of debt securities.

As of June 30, 2023, the Account’s loan-to-value ratio was 19.6%. The Account's loan-to-value ratio at any time is based on the outstanding principal amount of debt to the Account's total gross asset value, and excludes leverage, if any, employed by REITs and real estate funds in which the Account invests. The ratio is measured at the time of any debt 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. In calculating outstanding indebtedness, we include only the Account’s actual percentage interest in any borrowings on a joint venture investment and not that of any joint venture partner. Also, at the time the Account (or a joint venture in which the Account is a partner) enters into a revolving or other line of credit, management includes only amounts outstanding when calculating outstanding indebtedness.

The Account may borrow up to 70% of the then-current value of a property, although construction loans may be for 100% of costs incurred in developing the property. Except for construction loans, any mortgage loans on a property will be non-recourse to the Account. For this purpose, non-recourse means that if there is a default on a loan in respect to a specific property, the lender will have recourse to (i.e., be able to foreclose on) only the property encumbered (or the joint venture owning the property), or to other specific Account properties that may have been pledged as security for the defaulted loan, but not to any other assets of the Account. Currently, TIAA, on behalf of the Account, maintains a credit agreement with a syndicate of third-party bank lenders, including JPMorgan Chase Bank, N.A. (the “Credit Agreement”), comprised of an unsecured revolving line of credit and term loans. The Account may use the proceeds of borrowings under the Credit Agreement for funding general organizational purposes of the Account in the ordinary course of business, including financing certain real estate portfolio investments. The Account may enter into additional unsecured lines of credit, credit facilities and term bank loans underwritten by one or more third-party lenders. In addition, from time to time, the Account may borrow capital for operating or other needs by offering debt securities.

As of June 30, 2023, there were six mortgage obligations secured by real estate investments wholly-owned by the Account, totaling $310.4 million, that were scheduled to mature within the next twelve months. Three of these obligations, totaling $106.9 million, were repaid by the Account in July 2023. The Account has sufficient liquidity to meet its mortgage obligations.

Statements of Cash Flows

The following table sets forth the Account's sources and uses of cash flows for the six months ended June 30, 2023 and 2022 (in millions):


	As of June 30,
	2023		2022
Cash flows provided by (used for):
Operating activities	$	1,539.7	(767.6)
Financing activities	$	(1,538.8)	$	781.5

The following provides information regarding the Account's cash flows from operating and financing activities for the six months ended June 30, 2023.

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 six months ended June 30, 2023 as compared to the prior year period, increased by approximately $2.3 billion, primarily driven by:

•$1.4 billion cash inflow from the sale of marketable securities.

•$386.7 million of net investment income.

Financing Activities: The Account's financing cash flows are primarily impacted by contract owner transactions, proceeds from debt and repayments of debt. For the period ended June 30, 2023, key drivers were:

•Net contract owner outflows totaled $1.7 billion.

•The Account repaid $345.1 million of mortgage loans.

•The Account received $100.0 million of proceeds from new mortgage loans obtained.

•The Account received $400.0 million of proceeds from the issuance of Series C senior notes.

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 facility.

A summary of the Account's outstanding debt is as follows (in millions):


	June 30, 2023				December 31, 2022
	Principal Balance		% of Total		Principal Balance		% of Total
Secured	$	1,923.5	57.9	%	$	2,168.7	68.4	%
Unsecured	1,400.0		42.1	%	1,000.0		31.6	%
Total	$	3,323.5	100.0	%	$	3,168.7	100.0	%
Fixed Rate Debt:
Secured	$	1,493.1	44.9	%	$	1,799.2	56.8	%
Unsecured	900.0		27.1	%	500.0		15.8	%
Fixed Rate Debt	$	2,393.1	72.0	%	$	2,299.2	72.6	%
Floating Rate Debt:
Secured	430.4		13.0	%	369.5		11.6	%
Unsecured	500.0		15.0	%	500.0		15.8	%
Floating Rate Debt	$	930.4	28.0	%	$	869.5	27.4	%
Total	$	3,323.5	100.0	%	$	3,168.7	100.0	%

Recent Transactions

The following describes transactions occurring during the second quarter of 2023 related to real estate properties, real estate joint ventures, real estate funds, 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.

Sales


Property Name	Transaction Date	Ownership Percentage	Sector	Location	Net Sales Price(1)		Realized Gain on Sale(2)
I-35 Logistics Center	04/26/2023	95.00%	Industrial	Fort Worth, TX	$	55.4	$	20.4
9625 Towne Centre	06/21/2023	49.90%	Office	San Diego, CA	$	80.1	$	32.8

(1) Represents the sales price, less selling expenses.

(2) Majority of the realized gain (loss) has been previously recognized as unrealized gains (losses) in the Account's Consolidated Statements of Operations.

Financings

Debt Payoff

Description

Transaction Date

Interest Rate

Sector

Maturity Date

Amount

1001 Pennsylvania Ave

06/01/2023

3.70%

Office

06/01/2023

(298.2)

Loan Receivable

Originations

Description

Transaction Date

Interest Rate

Maturity Date

Amount

Park on Morton

06/15/2023

6.10%

06/30/2026

27.8

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 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, 2022.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Account’s real estate holdings, including real estate joint ventures, funds, an operating business and loans receivable, including those with related parties, which, as of June 30, 2023, represented 97.8% of the Account’s total investments, expose the Account to a variety of risks. These risks include, but are not limited to:

•General Real Estate Risk—The risk that the Account’s property values or rental and occupancy rates could go down due to general economic conditions, a weak market for real estate generally, disruptions in the credit and/or capital markets, or changing supply and demand for certain types of properties;

•Appraisal Risk—The risk that the sale price of an Account property (i.e., the value that would be determined by negotiations between independent parties) might differ substantially from its estimated or appraised value, leading to losses or reduced profits to the Account upon sale;

•Risk Relating to Property Sales—The risk that the Account might not be able to sell a property at a particular time for its full value, particularly in a poor market. This might make it difficult to raise cash quickly and also could lead to Account losses;

•Risks of Borrowing—The risk that interest rate changes may impact Account returns if the Account borrows against a credit facility, 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 June 30, 2023, 2.2% of the Account’s total investments were comprised of marketable securities. Marketable securities include high-quality debt instruments (i.e., government agency notes and corporate bond securities) and, when applicable, REIT securities. The Account's Consolidated Statements of Investments sets forth the general financial terms of these instruments, along with their fair values, as determined in accordance with procedures described in Note 1–Organization and Significant Accounting Policies to the Account’s Consolidated Financial Statements of the Account's 2022 Form 10-K. As of June 30, 2023, the Account does not invest in derivative financial instruments, although it does engage in hedging activity related to foreign currency denominated investments.

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, include the following:

•Financial/Credit Risk—The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value.

•Market Volatility Risk—The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets regardless of the credit quality or financial condition of the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility over the past year. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.

•Interest Rate Volatility—The risk that interest rate volatility may affect the Account’s current income from an investment.

•Deposit/Money Market Risk—The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. The Account does not believe it has exposure to significant concentration of deposit risk. In addition, there is some risk that investments held in money market accounts can suffer losses.

In addition, to the extent the Account were to hold MBS (including CMBS) 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 securities and MBS) would be subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. For more information on the risks associated with all of the Account’s investments, see Item 1A. Risk Factors, of the Form 10-K for the year ended December 31, 2022, as such risk factors may be updated in Item 1A of this Form 10-Q or in subsequent reports.

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 the registrant’s Principal Executive Officer (“PEO”) and the Principal Financial Officer (“PFO”), as appropriate, to allow timely decisions regarding required disclosure.

Under the supervision and participation of the registrant’s management, including the registrant’s PEO and PFO, the registrant conducted an evaluation of the effectiveness of the registrant’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of June 30, 2023. Based upon management’s review, the PEO and PFO concluded that the registrant’s disclosure controls and procedures, as of the end of the period covered by this report, were effective to provide reasonable assurance that the objectives of disclosure controls and procedures are met.

(b) 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.

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 arbitration, class actions and other litigation.

ITEM 1A. RISK FACTORS.

Continued liquidity challenges could adversely impact the Account’s operations, financial condition, growth and prospects and possibly trigger the Account’s Liquidity Guarantee

The Account requires sufficient liquidity to fund ongoing Account-level loan and debt commitments to make payments on its debt obligations as they become due, satisfy contract owner redemption requests, fund purchases and maintenance of portfolio properties, and meet other cash and contractual commitments. Although 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 withdrawals or benefit payments), as noted above the Account has experienced a sustained decrease in liquid assets during the first half of 2023. The decrease in liquid assets during the first half of 2023 was largely attributable to continued market volatility and higher contract owner withdrawals driven by unfavorable market trends in the U.S. commercial real estate market, with elevated interest rates negatively impacting property values. If net outflows continue in line with recent trends, that could impair the Account’s ability to fund its operations and meet its obligations as they become due. In such event, it is likely TIAA will be required to purchase liquidity units pursuant to the Liquidity Guarantee in the third quarter of 2023, depending on the pace of net outflows, and this could have a material adverse effect on the Account’s business, financial condition and results of operations.

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.

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)	(1) Form of Contract Endorsement for Internal Transfer Limitation7
		(2) Form of Contract Endorsement for Internal Transfer Limitation24
	(D)	(1) Form of Non-ERISA Retirement Choice Plus Contract9
		(2) Form of Non-ERISA Retirement Choice Plus Certificate9
	(E)	(1) Form of Trust Company Retirement Choice Contract10
		(2) Form of Trust Company Retirement Choice Certificate10
		(3) Form of Trust Company Retirement Choice Contract25
		(4) Form of Trust Company Retirement Choice Certificate26
	(F)	(1) Form of Trust Company Retirement Choice Plus Certificate11
		(2) Form of Trust Company Retirement Choice Plus Contract11
		(3) Form of Trust Company Retirement Choice Plus Certificate27
		(4) Form of Trust Company Retirement Choice Plus Contract28
	(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 Portfolios16
	(K)	Form of Endorsement to Group Supplemental Retirement Annuity (GSRA) Certificate17
	(L)	(1)Form of Contract, Rate Schedule and Certificate for Multiple Employer Plan Retirement Choice Annuity Contract18
		(2)Form of Contract, Rate Schedule and Certificate for Multiple Employer Plan Retirement Choice Plus Annuity Contract18
	(M)	Form of Retirement Plan Loan Endorsement to Group Retirement Annuity Certificate19
	(N)	Form of Retirement Plan Loan Endorsement to Retirement Annuity Contract20
	(O)	Form of Retirement Plan Loan Endorsement to Supplemental Retirement Annuity Contract21
	(P)	Form of Required Minimum Distribution Endorsement to All Annuity Contracts22
	(Q)	Form of Required Minimum Distribution Endorsement to All Annuity Contracts23
(10)	(A)	Engagement Letter Agreement with Independent Fiduciary, dated February 10, 2022, between TIAA, on behalf of the Registrant, and SitusAMC Real Estate Valuation Services, 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
	(C)	Form of Note Purchase agreement, dated as of March 21, 2023, by and between TIAA, on behalf of the registrant, and the purchasers party thereto.*
(31)		Rule 13(a)Rule 13(a)-15(e)/ Rule 13a-15(e)/15d-15(e) Certifications(e)/ Rule 13a-15(e)/15d-15(e) Certifications
(32)		Section 1350 Certifications*


(101)						The following financial information from the Quarterly Report on Form 10-Q for the period ended June 30, 2023 (Unaudited), formatted in XBRL (Extensible Business Reporting Language): (i) the Consolidated Statements of Assets and Liabilities as of June 30, 2023 (Unaudited), (ii) the Consolidated Statements of Operations for the three and six months ended June 30, 2023 and 2022 (Unaudited), (iii) the Consolidated Statements of Changes in Net Assets for the three and six months ended June 30, 2023 and 2022 (Unaudited), (iv) the Consolidated Statements of Cash Flows for the six months ended June 30, 2023 and 2022 (Unaudited), and (v) the Notes to the Consolidated Financial Statements (Unaudited).**
(104)						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101).**

*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 by reference to Exhibit 10.1 to the Account's Current Report on Form 8-K, filed with the Commission on February 16, 2022 (File No. 33-92990).

(16)Previously filed and incorporated herein by reference to Exhibit 4(J)(1) and 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).

(17)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).

(18)Previously filed and incorporated herein by reference to Exhibit 4(L)(1) and 4(L)(2) to the Account's Current Report on Form 10-K, filed with the Commission on March 12, 2020 (File No. 33-92990).

(19)Previously filed and incorporated herein by reference to Exhibit 4(M) to the Account’s Current Report on Form 10-K, filed with the Commission on March 11, 2021 (File No. 33-92990).

(20)Previously filed and incorporated herein by reference to Exhibit 4(N) to the Account’s Current Report on Form 10-K, filed with the Commission on March 11, 2021 (File No. 33-92990).

(21)Previously filed and incorporated herein by reference to Exhibit 4(O) to the Account’s Current Report on Form 10-K, filed with the Commission on March 11, 2021 (File No. 33-92990).

(22)Previously filed and incorporated herein by reference to Exhibit 4(P) to the Account’s Current Report on Form 10-K, filed with the Commission on March 11, 2021 (File No. 33-92990).

(23)Previously filed and incorporated herein by reference to Exhibit 4(Q) to the Account’s Current Report on Form 10-K, filed with the Commission on March 11, 2021 (File No. 33-92990).

(24)Previously filed and incorporated herein by reference to Exhibit 4(C)(2) to the Account’s Current Report on Form 10-K, filed with the Commission on March 9, 2023 (File No. 33-92990).

(25)Previously filed and incorporated herein by reference to Exhibit 4(E)(3) to the Account’s Current Report on Form 10-K, filed with the Commission on March 9, 2023 (File No. 33-92990).

(26)Previously filed and incorporated herein by reference to Exhibit 4(E)(4) to the Account’s Current Report on Form 10-K, filed with the Commission on March 9, 2023 (File No. 33-92990).

(27)Previously filed and incorporated herein by reference to Exhibit 4(F)(3) to the Account’s Current Report on Form 10-K, filed with the Commission on March 9, 2023 (File No. 33-92990).

(28)Previously filed and incorporated herein by reference to Exhibit 4(F)(4) to the Account’s Current Report on Form 10-K, filed with the Commission on March 9, 2023 (File No. 33-92990).

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, on the 4th day of August 2023.


	TIAA REAL ESTATE ACCOUNT

	By:	TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

	By:	/s/ Colbert Narcisse
August 4, 2023		Colbert Narcisse Senior Executive Vice President, Chief Product & Business Development Officer, Teachers Insurance and Annuity Association of America (Principal Executive Officer)

August 4, 2023	By:	/s/ Christopher Baraks
		Christopher Baraks Senior Vice President, Chief Accounting Officer and Corporate Controller of Teachers Insurance and Annuity Association of America (Principal Financial and Accounting Officer)