TIAA Real Estate Account

05/06/2026 | Press release | Distributed by Public on 05/06/2026 12:41

Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE ACCOUNT'S FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the Account's financial condition and results of operations should be read together with the Consolidated Financial Statements and notes contained in this report, the audited Consolidated Financial Statements and accompanying notes contained in the Account's Annual Report on Form 10-K for the year ended December 31, 2025, filed with the SEC on March 12, 2026 (the "Form 10-K"), and with consideration to the sub-section entitled "Forward-Looking Statements," which begins below, the section entitled "Item 1A. Risk Factors" of the Account's 2025 Form 10-K and the section entitled "Item 1.A Risk Factors" of this Quarterly Report on Form 10-Q and the Account's previous Quarterly Reports on Form 10-Q, as such risk factors may be updated in subsequent reports. The past performance of the Account is not indicative of future results.
Forward-looking Statements
Some statements in this Form 10-Q which are not historical facts may be "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about management's expectations, beliefs, intentions or strategies for the future, include the assumptions and beliefs underlying these forward-looking statements, and are based on current expectations, estimates and projections about the real estate industry, domestic and global economic conditions, including conditions in the credit and capital markets, employment rates, the sectors, markets and businesses in which the Account invests and operates, and the transactions described in this Form 10-Q. While management believes the assumptions underlying any of its forward-looking statements and information to be reasonable, such information may be subject to uncertainties and may involve certain risks which may be difficult to predict and are beyond management's control. These risks and uncertainties could cause actual results to differ materially from those contained in any forward-looking statement. These risks and uncertainties include, but are not limited to, the risks associated with the following:
•Acquiring, owning and selling real property and real estate investments, including risks related to general economic and real estate market conditions, the risk that the Account's properties become too concentrated (whether by geography, sector or by tenant mix) and the risk that the sales price of a property might differ from its estimated or appraised value;
•Property valuations, including the fact that the Account's appraisals are generally obtained on a quarterly basis and there may be periods in between appraisals of a property during which the value attributed to the property for purposes of the Account's daily accumulation unit value may be more or less than the actual realizable value of the property;
•Financing the Account's properties, including the risk of default on loans secured by the Account's properties (which could lead to foreclosure);
•Contract owner transactions, in particular that (i) significant net contract owner transfers out of the Account may impair our ability to pursue or consummate new investment opportunities, (ii) significant net contract owner transfers into the Account may result, on a temporary basis, in our cash holdings and/or holdings in liquid non-real estate-related investments exceeding our long-term targeted holding levels and (iii) high levels of cash and liquid non-real estate-related investments in the Account during times of appreciating real estate values can impair the Account's overall return;
•Joint ventures and real estate funds, including the risk that the Account may have limited rights with respect to the joint venture or that a co-venturer or fund manager may have financial difficulties;
•Governmental regulatory matters such as zoning laws, rent control laws, and property and other taxes;
•Potential liability for damage to the environment or injury to individuals caused by hazardous substances used or found on its properties, as well as risks associated with federal and state environmental laws, that may impose restrictions on the manner in which a property may be used;
•Certain catastrophic losses that may be uninsurable, as well as risks related to climate-related changes and hazards, which could adversely impact the Account's investment returns;
•ESG criteria used to assess economic risk or financial opportunity projections in the evaluation of commercial real estate investments may not materialize in the way we have anticipated, resulting in the Account
subsequently underperforming relative to other investment vehicles that did not utilize such ESG criteria in selecting and managing portfolio properties;
•Countries with emerging market, foreign commercial real properties, foreign real estate loans, foreign debt investments and foreign securities investments that may experience unique risks such as changes in currency exchange rates, imposition of market controls or currency exchange controls, seizure, expropriation or nationalization of assets, political, social or diplomatic events or unrest (for example, the wars in Ukraine and Gaza), regulatory and taxation risks and risks associated with enforcing judgments in foreign countries that could cause the Account to lose money;
•Investments in REITs, including changes in the value of the underlying properties or by the quality of any credit extended, as well as exposure to market risk due to changing conditions in the financial markets;
•Investments in mortgage-backed securities, which are subject to the same risks inherent in real estate investing, making mortgage loans and investing in debt securities. For example, the underlying mortgage loans may experience defaults, are subject to prepayment risks and are sensitive to economic conditions impacting the credit markets generally;
•Risks associated with the Account's investments in mortgage or mezzanine loans, including (i) borrower default that results in the Account being unable to recover its original investment, (ii) liens that may have priority over the Account's security interest, (iii) a deterioration in the financial condition of tenants, and (iv) changes in interest rates for the Account's variable-rate mortgage loans and other debt instruments;
•Risks associated with the Account's investments in, and leasing of, single-family real estate include risks relating to the condition of the properties, the credit quality and employment stability of the tenants, and compliance with applicable local laws regarding the acquisition and leasing of single family real estate (which may include manufactured housing);
•Investment securities issued by U.S. Government agencies and U.S. Government-sponsored entities, including the risk that the issuer may not have their securities backed by the full faith and credit of the U.S. Government, which could adversely affect the pricing and value of such securities;
•Risks associated with investments in liquid, fixed-income investments and real estate-related liquid assets (which could include, from time to time, registered or unregistered REIT securities and CMBS), and non-real estate-related liquid assets,
•Conflicts of interests associated with TIAA serving as investment manager of the Account and provider of the liquidity guarantee while also serving as an investment manager to other real estate accounts or funds;
•Lending securities, which has the Account bear the market risk with respect to the investment of collateral or a portion of the income generated by interest paid by the securities lending agent on the cash collateral balance;
•The Account's requirement to sell property in the event that TIAA owns too large of a percentage of the Account's accumulation units, which sales could occur at a time or price that is not optimal for the Account's returns; and
•The tax rules applicable to the contracts vary and your rights under a contract may be subject to the terms of your employer's retirement plan itself, regardless of the terms of the contract. We cannot provide detailed information on all tax aspects of owning the contracts. Tax rules may change without notice, and we cannot predict whether, when, or how tax rules could change or what, if any, tax legislation will actually be proposed or enacted;
•Continued liquidity risks within the Account's portfolio. Additional detail regarding the recent triggering of the Account's Liquidity Guarantee is included below in the sub-section entitled "Liquidity and Capital Resources."
More detailed discussions of certain of these risk factors are contained in the section of the Form 10-K entitled "Item 1A. Risk Factors" and "Part II, Item 1A, Risk Factors" in this Report and also in the section below entitled "Quantitative and Qualitative Disclosures About Market Risk." These risks could cause actual results to differ materially from historical experience or management's present expectations.
Caution should be taken not to place undue reliance on management's forward-looking statements, which represent management's views only as of the date that this report is filed. Neither management nor the Account undertake any obligation to update publicly or revise any forward-looking statement, whether as a result of new information, changed assumptions, future events or otherwise.
Commercial real estate market statistics discussed in this section are obtained by the Account from sources that management considers reliable, but some of the data are preliminary for the period ended March 31, 2026 and may be subsequently revised. Prior period data may have been adjusted to reflect updated calculations. Investors should not rely exclusively on the data presented below in forming a judgment regarding the current or prospective performance of the commercial real estate market generally.
ABOUT THE TIAA REAL ESTATE ACCOUNT
The Account was established, under the laws of New York, in February 1995 as a separate account of TIAA and interests in the Account were first offered to eligible contract owners on October 2, 1995. The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account's performance.
Investment Objective and Strategy
The Real Estate Account seeks to generate favorable total returns primarily through the rental income and appreciation of a diversified portfolio of directly held, private real estate investments and real estate-related investments, while offering investors guaranteed, daily liquidity.
Real Estate-Related Investments. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. These investments may consist of:
•Direct ownership interests in domestic and foreign real estate;
•Direct ownership of real estate through interests in joint ventures;
•Indirect interests in real estate through real estate-related securities: such as
◦private real estate limited partnerships and limited liability companies (collectively, "real estate funds");
◦real estate operating businesses;
◦investments in equity or debt securities of domestic and foreign companies whose operations involve real estate (i.e., that primarily own, develop or manage real estate) which may not be real estate investment trusts ("REITs");
◦domestic or foreign loans, including conventional commercial mortgage loans, participating mortgage loans, secured domestic and foreign mezzanine loans, subordinated loans and collateralized mortgage obligations, including commercial mortgage-backed securities ("CMBS"), collateralized mortgage obligations ("CMOs"),and other similar investments; and
◦public and/or privately placed, domestic and foreign, registered and unregistered equity investments in REITs, which investments may consist of registered or unregistered common or preferred stock interests.
The Account's principal strategy is to purchase direct ownership interests in income-producing real estate, including the four primary sectors of industrial, multi-family, office, and retail, as well as alternative real estate sectors (defined as real estate outside of the four primary sectors noted above). The Account targets holding between 65% and 85% of the Account's net assets in such direct ownership interests.
In addition, the Account is authorized to hold up to 25% of its net assets in liquid real estate-related securities, including publicly traded REITs and CMBS. Management intends that the Account will not hold more than 10% of net assets in such securities on a long-term basis. As of March 31, 2026, the Account did not hold any publicly traded REITs or CMBS.
In making commercial real estate investments within the Account, TIAA seeks to make investments that are suitable from a financial perspective, taking into account the potential financial impacts associated with industry recognized environmental, social and governance ("ESG") criteria to the extent that such criteria are reasonably expected to impact the financial performance of the investment and not to achieve a desired outcome or as an investment
qualification or screen. TIAA believes awareness, and, as appropriate, implementation of ESG criteria in commercial real estate holdings is beneficial to total long-term returns for the Account Ultimately, the Account will make an investment decision that incorporates ESG criteria only to the extent that the criteria are reasonably expected to enhance our understanding of the investment's ability to achieve desired returns for the Account.
Liquid, Fixed-Income Investments. The Account will invest the remaining portion of its assets (targeted to be between 15% and 25% of its net assets) in the following types of liquid, fixed income investments:
•U.S. Treasury or U.S. Government agency securities;
•Intermediate-term or long-term government related instruments, such as bond or other fixed-income securities issued by U.S. Government agencies, U.S. states or municipalities or U.S. Government-sponsored entities as well as foreign governments and their agencies (including those in emerging markets) and supranational or multinational organizations (e.g., European Union);
•Intermediate-term or long-term non-government related instruments, such as corporate debt securities, domestic- or foreign mezzanine or other debt, and structured securities, (e.g. unsecured debt obligations with a return linked to the performance of an underlying asset). Such structured securities may include asset-backed securities ("ABS") issued by domestic or foreign entities, mortgage backed securities ("MBS"), residential mortgage backed securities ("RMBS"), debt securities of foreign governments, and collateralized debt ("CDO"), collateralized bond ("CBO") and collateralized loan ("CLO") obligations, but only if such non-government related instruments are investment-grade securities;
•Money market instruments and other cash equivalents. These will usually be high-quality, short-term debt instruments, including U.S. Government or government agency securities, commercial paper, certificates of deposit, bankers' acceptances, repurchase agreements, interest-bearing time deposits, and corporate debt securities; and
•To a limited extent, privately issued (or non-publicly traded) debt securities, including Rule 144A securities, issued by domestic and foreign companies that do not primarily own or manage real estate, but only if such domestic and foreign privately issued debt securities are investment-grade securities.
However, the Account's liquid, fixed-income investments may comprise less than 15% of its net assets especially during and following periods of significant net contract owner outflows. In addition, the Account, on a temporary basis, may hold in excess of 25% of its net assets in liquid, fixed-income investments, particularly during times of significant inflows into the Account and/or a lack of attractive real estate-related investments available in the market.
Liquid Securities Generally. Primarily due to management's need to manage fluctuations in cash flows, in particular during and following periods of significant contract owner net transfer activity into or out of the Account, the Account may, on a temporary or long term basis (i) exceed the upper end of its targeted holdings (currently 35% of the Account's net assets) in liquid securities of all types including both publicly traded non-real estate-related liquid investments and liquid real estate-related securities, such as REITs and structured securities (including ABS, RMBS, CMBS and MBS), or (ii) be below the low end of its targeted holdings in such liquid securities (currently 15% of the Account's net assets).
The portion of the Account's net assets invested in liquid investments of all types may exceed the upper end of its target, for example, if (i) the Account receives a large inflow of money in a short period of time, in particular due to significant contract owner transfer activity into the Account, (ii) the Account receives significant proceeds from sales or financings of direct real estate assets, (iii) there is a lack of attractive direct real estate investments available on the market, and/or (iv) the Account anticipates more near-term cash needs, including to acquire or improve direct real estate investments, pay expenses or repay indebtedness. Conversely, the portion of the Account's net assets invested in liquid investments of all types may exceed the lower end of its target, for example, during and immediately following periods of significant net contract owner outflows.
Foreign Investments. The Account may also make foreign real estate, foreign real estate-related investments and foreign liquid, fixed-income investments. Under the Account's investment guidelines, investments in direct foreign real estate and real estate loans, together with foreign real estate-related securities and foreign liquid, fixed-income
investments may not comprise more than 25% of the Account's net assets. However, management does not intend such foreign investments, in the aggregate, to exceed 10% of the Account's net assets. As of March 31, 2026, the fair value of the Account's foreign real estate investments was $178.0 million, or 0.8% of net assets.
In managing any domestic or foreign mezzanine debt or other domestic or foreign loans or securities, the Account may enter into certain derivatives transactions (including forward currency contracts and swaps, futures contracts, put and call options and other hedging transactions) in order to hedge against the risks of exchange rate uncertainties, interest rate uncertainties and foreign currency or market fluctuations impacting the Account's domestic or foreign investments. The Account does not intend to speculate in such transactions.
FIRST QUARTER 2026 U.S. ECONOMIC AND COMMERCIAL REAL ESTATE OVERVIEW
The Account invests primarily in high-quality, core real estate in order to meet its investment objective of obtaining favorable long-term returns through rental income and the appreciation of its real estate holdings.
Economic Overview and Outlook
Key Macro Economic Indicators*
Actuals Forecast
2025 1Q 2026 2026 2027
Economy(1)
Gross Domestic Product ("GDP")
2.0% 3.1% 2.0% 1.8%
Employment Growth (2)
10 68 32 75
Unemployment Rate 4.4% 4.3% 4.6% 4.5%
Interest Rates(3)
10 Year Treasury 4.2% 4.3% 4.3% 4.3%
Sources: Bureau of Economic Analysis, Bureau of Labor Statistics, Federal Reserve and Moody's Analytics
*Data subject to revision
(1)GDP growth rates are annual rates. Quarterly unemployment rates are the reported value for the final month of the quarter while annual values represent a twelve-month average.
(2)Values presented in thousands. Forecast values represent average monthly employment growth in the respective periods.
(3)Treasury rates are an average over the stated period.
Global economic growth continued at a solid pace at the start of 2026 led by improved activity in the U.S. and Europe and unexpected strength in China's economy. Geopolitical pressures have intensified driven by the conflict in the Middle East, introducing an additional layer of risk into the global economic outlook. Energy importing nations in Europe and Asia are particularly exposed, but rising energy prices will put upward pressure on inflation and long-term interest rates in most major economies.
The U.S. economy reaccelerated in the first quarter as GDP grew at an estimated 3.1% annualized pace after slowing significantly at the end of 2025. Improved consumer spending and continued business investment in AI capacity helped drive stronger activity during the quarter, pushing year-over-year growth up to 3.0%. Rising oil prices stemming from the conflict with Iran caused inflation to jump to the highest point in nearly three years at the end of the quarter. However, the economy received a boost from the Supreme Court decision ruling many of the tariffs implemented in 2025 as unlawful. In addition, several tax cuts and other provisions in the One Big Beautiful Bill Act took effect at the start of the year, providing support for manufacturing activity and consumer spending. Labor market conditions showed modest improvement during the quarter, though the environment remained soft overall, with the economy adding an average of 68,000 jobs per month. Job growth continued to be uneven across sectors, as traditional office-using industries experienced employment contraction while education and healthcare remained a consistent source of job creation.
The Federal Reserve held short-term interest rates steady during the quarter, adopting a wait and see posture as policymakers assessed the potential economic fallout from the conflict in Iran. Federal officials have signaled that they are unlikely to respond directly to inflation caused by energy price shocks but remain concerned about inflation expectations in the economy. Markets now expect only one rate cut throughout the remainder of 2026, with additional cuts likely in 2027. Yields on 10-year Treasuries jumped following the first attacks in Iran, finishing the first quarter at 4.34% from 4.18% at the end of 2025.
Economic conditions in Europe continued to improve in the first quarter, supported by stronger growth in the United Kingdom and expansionary fiscal policy in Germany. The developed economies in Europe are net importers of energy, however, and will be impacted more acutely by the recent conflict in Iran. Central banks in the region are in a favorable position as inflation has trended towards target in most European economies in recent quarters, but rate hikes have become increasingly likely given rising oil and natural gas prices.
In Asia, China's economy expanded 5.0% year-over-year in the first quarter of 2026, surpassing expectations and providing a positive catalyst for broader regional growth. While reduced U.S. tariffs have served as a meaningful tailwind for Asian economies, the full implications of the ongoing Middle East conflict on the region remain uncertain. Similar to Europe, the majority of Asia's largest economies are net energy importers, with significant exposure through the contested Strait of Hormuz, leaving them vulnerable to inflationary pressures and downside risks to economic growth should tensions in the Middle East persist.
Real Estate Market Conditions and Outlook
Like the broader macroeconomy, the outlook for commercial real estate faces an additional layer of risk stemming from macroeconomic and geopolitical uncertainty. An extended period of renewed high inflation in the U.S. economy could translate to higher long-term interest rates and slower economic activity, with negative implications for property values and fundamentals performance. However, commercial real estate is relatively well positioned among asset classes for resilience in this kind of environment. For one, property values in the commercial sector already experienced a significant adjustment period spanning from the end of 2022 to the beginning of 2024, primarily triggered by the sharp rise in long-term interest rates during 2022. This previous correction reduces the probability of another substantial drop in valuations and creates a favorable opportunity for those looking to invest as the market enters a fresh expansion phase. Additionally, new construction activity has been tapering across most property types, which should provide some stability to property market fundamentals even in an adverse macroeconomic environment
The Account returned 0.61% in the first quarter of 2026 and 3.60% since March 31, 2025. The Account had slight appreciation in property values in the first quarter and property fundamentals remain strong. Future transaction activity will be consistent with the Account's multi-year strategy of reducing exposure to anticipated underperforming sectors such as traditional office and regional malls and increasing allocations to anticipated outperforming sectors such as housing, industrial, necessity retail, and alternatives.
Data for the Account's top five markets in terms of market value as of March 31, 2026 are provided below. The five markets presented below represent 40.0% of the Account's total real estate portfolio. Across all markets, the Account's properties are 90.7% leased.
Top 5 Metro Areas by Fair Market Value Account % Leased Number of Property Investments Metro Area Fair Value as a % of Total RE Portfolio* Metro Area Fair Value as a % of Total Investments*
Riverside-San Bernardino-Ontario, CA 91.3% 6 8.6% 7.3%
Washington-Arlington-Alexandria, DC-VA-MD-WV 88.2% 17 8.5% 7.2%
Dallas-Fort Worth-Arlington, TX 95.2% 12 8.4% 7.1%
Los Angeles-Long Beach-Anaheim, CA 88.8% 19 8.4% 7.1%
Atlanta-Sandy Springs-Roswell, GA 92.0% 8 6.1% 5.1%
*Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.
Office
The office sector continues to exhibit signs of recovery. Net absorption remained positive for a third consecutive quarter, and vacancy fell by 11 basis points over the quarters. Additionally, we see attractive opportunities emerging for high-quality assets. Newer properties have collectively seen improving occupancy since early 2024. Starts are at near record lows, leading to virtually no new supply over the mid-term and net negative supply after factoring in demolitions and conversions of obsolete space into other uses. The result will likely be a shortage of high-quality space. However, demand is expected to remain historically weak due to flat employment growth in the
primary office-using sectors. Prices bottomed early last year, falling 40% from the peak and have increased by 4.4% since. A supply shortage of quality assets combined with comparatively high going-in yields are starting to drive a compelling relative value opportunity.
Vacancy nationwide had a modest decrease from 14.1% in the fourth quarter of 2025 to 14.0% in the first quarter of 2026, as reported by CoStar. Leasing activity decreased to 82.9% in the first quarter of 2026, a 0.6% regression from the fourth quarter of 2025. Management attributes the decline in occupancy to ongoing tenant downsizing, which they believe is primarily driven by the continued adoption of hybrid work arrangements and prevailing macroeconomic conditions. Additionally, uneven demand across the sector has contributed to elevated vacancy levels. The vacancy rate within the Account's office portfolio increased from 16.5% in the fourth quarter of 2025 to 17.1% in the first quarter of 2026. The increase in the San Diego metro area was primarily due to reduced leasing activity and the lagged impact of negative vacancy recorded throughout most of 2025. In the Dallas and New York metro areas, vacancy rates have risen as economic uncertainty and the continued adoption of hybrid work models have softened tenant demand and driven relocations across both markets. Additionally, a trend has accelerated, with tenants increasingly favoring newer, higher-quality assets over older building stock, creating challenges for legacy office properties.
Account Vacancy Market
Vacancy*
Top 5 Office Metropolitan Areas Total Sector
by Metro Area
($M) 		% of Total
Investments 		Q1 2026 Q4 2025 Q1 2026 Q4 2025
All Office
17.1 % 16.5 % 14.0 % 14.1 %
Washington-Arlington-Alexandria, DC-VA-MD-WV $ 727.6 2.9 % 20.8 % 20.8 % 17.6 % 17.7 %
Dallas-Fort Worth-Arlington, TX 627.8 2.5 % 9.3 % 9.0 % 17.9 % 17.9 %
San Diego-Carlsbad, CA 618.4 2.5 % 11.0 % 5.4 % 12.5 % 12.5 %
New York-Newark-Jersey City, NY-NJ-PA 332.1 1.3 % 9.8 % 8.6 % 13.2 % 13.4 %
Houston-The Woodlands-Sugar Land, TX 306.2 1.2 % 10.5 % 11.9 % 19.8 % 19.7 %
*Source: CoStar. Market vacancy is defined as the percentage of space available for rent. The Account's vacancy is defined as the percentage of unleased square footage.
Industrial
Industrial fundamentals were relatively stable in the first quarter, with vacancy in the sector increasing to 7.5% in the first quarter of 2026 according to Costar. Demand growth registered 30.6 million square feet during the quarter, up from 23.9 million square feet in the first quarter of 2025. Supply growth, which drove much of the vacancy increase in 2023-2024, continues to outpace demand but hit an 8-year low of 48.3 million square feet in the first quarter of 2026. New construction starts continue to hover near decade-lows, so supply growth should remain subdued in coming quarter. Demand growth remains hampered by macroeconomic uncertainty and consolidation efforts among occupiers, which has prompted a flight to quality in the sector that will likely continue throughout the remainder of 2026. Consequently, well-located functional industrial space remains an attractive target for investment, well-positioned to outperform as fundamentals continue to stabilize in coming quarters.
The national industrial vacancy rate increased to 7.5% in the first quarter of 2026, compared to 7.4% in the previous quarter, as reported by CoStar. The average vacancy rate of the industrial properties held by the Account increased from 8.7% in the fourth quarter of 2025 to 9.3% in the first quarter of 2026. The increase was driven by a combination of multiple lease expirations, subdued tenant demand, and new supply outpacing absorption. Conversely, the Los Angeles and Miami metro markets demonstrated improved fundamentals, with vacancy rates compressing as heightened port activity and a constrained development inventory combined to strengthen tenant demand.
Account Vacancy Market
Vacancy*
Top 5 Industrial Metropolitan Areas Total Sector
by Metro Area
($M) 		% of Total
Investments 		Q1 2026 Q4 2025 Q1 2026 Q4 2025
All Industrial
9.3 % 8.7 % 7.5 % 7.4 %
Riverside-San Bernardino-Ontario, CA $ 1,828.8 7.3 % 8.7 % 8.7 % 8.8 % 8.8 %
Dallas-Fort Worth-Arlington, TX 750.9 3.0 % 1.9 % 1.9 % 8.7 % 9.0 %
Los Angeles-Long Beach-Anaheim, CA 595.4 2.4 % 14.9 % 15.3 % 6.6 % 6.2 %
Seattle-Tacoma-Bellevue, WA 592.0 2.4 % 17.7 % 17.7 % 9.7 % 9.4 %
Miami-Fort Lauderdale-West Palm Beach, FL 574.9 2.3 % 1.4 % 2.9 % 7.4 % 6.7 %
*Source: CoStar. Market vacancy is defined as the percentage of space available for rent. The Account's vacancy is defined as the percentage of unleased square footage.
Multi-Family
The multifamily sector continued toward a more balanced supply-demand dynamic after a historic wave of new deliveries and absorption in recent years. Preliminary data from Costar shows that net absorption in the first quarter of 2026 registered approximately 83,000 units, down over 30% from the 121,000 units absorbed during the same period in 2025. Apartment demand faces some headwinds from reduced immigration trends, but affordability challenges in the for-sale housing market will continue to provide support in coming quarters. Like other sectors, reduced construction activity will help stabilize vacancy for the apartment market over the medium term and we expect apartment fundamentals to gradually improve as the pipeline of projects currently under construction is exhausted.
The national apartment vacancy rate modestly increased to 7.1% in the first quarter of 2026 compared to 7.0% in the previous quarter, as reported by CoStar. The vacancy rate of the Account's apartment properties decreased from 6.9% in the fourth quarter of 2025 to 5.4% in the first quarter of 2026. The decrease was driven by robust tenant demand and elevated lease renewal activity, coupled with a deceleration in new construction deliveries.
Account Vacancy Market
Vacancy*
Top 5 Apartment Metropolitan Areas Total Sector
by Metro Area
($M) 		% of Total
Investments 		Q1 2026 Q4 2025 Q1 2026 Q4 2025
All Apartment
5.4 % 6.9 % 7.1 % 7.0 %
Washington-Arlington-Alexandria, DC-VA-MD-WV $ 759.0 3.0 % 4.7 % 7.5 % 7.4 % 7.1 %
Los Angeles-Long Beach-Anaheim, CA 609.4 2.4 % 5.0 % 6.7 % 5.2 % 5.0 %
Miami-Fort Lauderdale-West Palm Beach, FL 510.1 2.0 % 4.2 % 6.0 % 5.8 % 5.8 %
Atlanta-Sandy Springs-Roswell, GA 371.8 1.5 % 5.5 % 7.1 % 10.1 % 9.9 %
Tampa-St. Petersburg-Clearwater, FL 301.5 1.2 % 4.3 % 6.8 % 8.8 % 8.7 %
*Source: RealPage. Market vacancy is the percentage of units vacant. The Account's vacancy is defined as the percentage of unleased square footage..
Retail
Retail fundamentals have shown resilience despite uncertainty pertaining to changing US policy, a slowing economy, and growing pressure on discretionary spending. Vacancy rates modestly increased from historic lows due to store closures that occurred in the first half of 2025, however, the vacancy rate started to improve in the second half of the year on the back of stable leasing activity. Vacancy rates are forecast to improve in the first quarter of 2026 as leasing activity translates to move-ins and absorption of vacant space. Construction activity
remains at historic lows, which provides a buffer for occupancy rates should demand moderate. Leasing continues to be dominated by smaller format, freestanding, or in-line spaces with service-based tenants leading growth. The mall sector continues to see a performance gap determined by quality and relevance with consumers with Class A and higher-rated malls maintaining strong performance while lower-rated properties see higher turnover. Meanwhile, necessity-based and grocery-anchored retail properties demonstrate defensive characteristics, as grocery spending typically remains relatively inelastic during periods of economic uncertainty.
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 national vacancy rate for retail increased from 4.3% in the fourth quarter of 2025 to 4.4% in the first quarter of 2026. The average vacancy rate of the retail properties held by the Account decreased from 9.3% to 7.4% over the period. In contrast, vacancy within the neighborhood, community, and strip center sector edged higher, pressured by major lease terminations and property dispositions. The lifestyle and mall segment experienced meaningful vacancy compression, supported by robust retailer leasing activity, particularly for high-quality space, alongside the successful backfilling of previously vacated locations. Similarly, power center vacancy continued its downward trajectory, driven by the sustained expansion of necessity based retailers and the productive absorption of previously vacant spaces.
Account Vacancy
Market
Vacancy*
Total Exposure
($M) 		% of Total Investments Q1 2026 Q4 2025 Q1 2026 Q4 2025
All Retail 7.4 % 9.3 % 4.4 % 4.3 %
Lifestyle & Mall $ 1,138.4 4.5 % 4.3 % 9.0 % 8.8 % 8.6 %
Neighborhood, Community & Strip 1,041.1 4.1 % 11.3 % 9.6 % 6.2 % 6.1 %
Power Center** 338.7 1.3 % 10.5 % 11.5 % 4.9 % 4.6 %
*Source: CoStar. Market vacancy is the percentage of space available for rent. The Account's vacancy is defined as the percentage of unreleased square footage.
**The Power Center designation is reserved for properties with three or more anchor units. Anchor units are leased to large retailers such as department stores, home improvement stores, and warehouse clubs. Properties with the Neighborhood, Community and Strip designation consist of two or less anchor units.
Hotel
Consistent with the fourth quarter, the first quarter of 2026 continued to benefit from the recovery in business and group travel, while leisure and event travel remained modestly resilient despite rising economic uncertainty. Looking ahead, hotel occupancy faces potential headwinds stemming from ongoing geopolitical tensions, though the full impact on performance remains to be determined.
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 March 31, 2026, occupancy of the property increased to 63.9%, as compared to 60.2% in the previous quarter. ADR and RevPAR were $165.27 and $105.63, respectively, for the first quarter of 2026, as compared to $153.98 and $159.54, respectively, in the prior quarter.
INVESTMENTS
As of March 31, 2026, the Account had total net assets of $22.7 billion, a 0.1% decrease from December 31, 2025.
As of March 31, 2026, the Account held 84.1% of its total investments in real estate and real estate joint ventures. The Account also held a real estate operating business representing 4.3% of total investments, real estate funds representing 3.2% of total investments, U.S treasury securities representing 2.8% of total investments, investments
in loans receivable, including those with related parties, representing 2.3% of total investments, U.S. government agency notes representing 1.9% of total investments and U.S. short term repos representing 1.4% of total investments.
The outstanding principal on loans payable on the Account's wholly-owned real estate portfolio as of March 31, 2026 was $0.6 billion. The Account's proportionate share of outstanding principal on loans payable within its joint venture investments was $2.5 billion, which is netted against the underlying properties when determining the joint venture investment's fair value presented on the Consolidated Schedules of Investments. As of March 31, 2026, the total outstanding principal on the Account's portfolio was $5.1 billion, inclusive of loans payable within the joint venture investments, $256.2 million in loans collateralized by a loan receivable, $160.0 million outstanding on the Account's line of credit and $1,600.0 million in senior notes payable. This amount represented a loan-to-value ratio of 18.1%.
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 March 31, 2026. For information regarding the Account's diversification of real estate assets by region and property type, see Note 3-Concentrations of Risk.
Ten Largest Real Estate Investments
Property Investment Name Ownership Percentage City State Type
Gross Real Estate Fair Value(1)
Debt Fair Value(2)
Net Real Estate Fair Value(3)
Property as a
% of Total
Real Estate
Portfolio(4)
Property as a
% of Total
Investments(5)
Simpson Housing Portfolio 80.0% Various U.S.A. Apartment $ 1,020.9 $ 481.4 $ 539.5 4.3% 3.7%
Ontario Industrial Portfolio 100.0% Ontario CA Industrial 945.4 - 945.4 4.0% 3.4%
Fashion Show 50.0% Las Vegas NV Retail 821.1 420.0 401.1 3.5% 3.0%
Campus Pointe Consolidation 43.44% San Diego CA Office 622.6 - 622.6 2.6% 2.3%
Lincoln Centre 100.0% Dallas TX Office 586.9 - 586.9 2.5% 2.1%
Storage Portfolio II 90.0% Various U.S.A. Storage 577.8 171.7 406.1 2.4% 2.1%
The Florida Mall 50.0% Orlando FL Retail 531.1 307.5 223.6 2.3% 1.9%
Dallas Industrial Portfolio 100.0% Dallas TX Industrial 512.1 - 512.1 2.2% 1.9%
1001 Pennsylvania Avenue 100.0% Washington D.C. Office 420.4 - 420.4 1.8% 1.5%
Seavest MOB 98.8% Various U.S.A. Office 410.3 73.4 336.9 1.7% 1.5%
(1)The Account's share of the fair value of the property investment, gross of debt.
(2)Debt fair values are presented at the Account's ownership interest.
(3)The Account's share of the fair value of the property investment, net of debt.
(4)Total real estate portfolio is the aggregate fair value of the Account's wholly-owned properties and the properties held within a joint venture, gross of debt.
(5)Total investments are the aggregate fair value of all investments held by the Account, gross of debt. Total investments, as calculated within this table, will vary from total investments, as calculated in the Account's Schedule of Investments, as joint venture investments are presented in the Schedule of Investments at their net equity position in accordance with accounting principles generally accepted in the United States (U.S. GAAP").
Results of Operations
Three months ended March 31, 2026 compared to Three months ended March 31, 2025
Net Investment Income
The following table shows the results of operations for the three months ended March 31, 2026 and 2025 and the dollar and percentage changes for those periods (dollars in millions).
For the Three Months Ended March 31, Change
2026 2025 $ %
2
Real estate income, net:
Rental income $ 303.8 $ 321.8 $ (18.0) (5.6) %
Real estate property level expenses:
Operating expenses 82.6 82.9 (0.3) (0.4) %
Real estate taxes 43.4 45.9 (2.5) (5.4) %
Interest expense 11.1 20.1 (9.0) (44.8) %
Total real estate property level expenses 137.1 148.9 (11.8) (7.9) %
Real estate income, net 166.7 172.9 (6.2) (3.6) %
Income from real estate joint ventures 43.2 51.5 (8.3) (16.1) %
Income from real estate funds 3.4 12.2 (8.8) (72.1) %
Interest income
25.5 36.4 (10.9) (29.9) %
TOTAL INVESTMENT INCOME 238.8 273.0 (34.2) (12.5) %
Expenses:
Investment management charges 18.3 18.6 (0.3) (1.6) %
Administrative charges 15.0 15.4 (0.4) (2.6) %
Distribution charges 2.5 3.1 (0.6) (19.4) %
Liquidity guarantee charges 15.7 15.6 0.1 0.6 %
Interest expense 20.7 9.6 11.1 115.6 %
TOTAL EXPENSES 72.2 62.3 9.9 15.9 %
INVESTMENT INCOME, NET $ 166.6 $ 210.7 $ (44.1) (20.9) %
The table below illustrates and compares rental income, operating expenses and real estate taxes for properties held by the Account for the three months ended March 31, 2026 and 2025, "same property", as compared to the comparative increases or decreases associated with the acquisition and disposition of properties made in either period.
Rental Income Operating Expenses Real Estate Taxes
Change Change Change
2026 2025 $ % 2026 2025 $ % 2026 2025 $ %
Same Property $ 268.3 $ 282.5 $ (14.2) (5.0) % $ 73.0 $ 71.5 $ 1.5 2.1 % $ 39.9 $ 39.5 $ 0.4 1.0 %
Properties Acquired 27.4 - 27.4 N/M 6.1 - 6.1 N/M 3.8 - 3.8 N/M
Properties Sold 8.1 39.3 (31.2) (79.4) % 3.5 11.4 (7.9) (69.3) % (0.3) 6.4 (6.7) (104.7) %
Impact of Properties Acquired/Sold 35.5 39.3 (3.8) (9.7) % 9.6 11.4 (1.8) (15.8) % 3.5 6.4 (2.9) (45.3) %
Total Property Portfolio $ 303.8 $ 321.8 $ (18.0) (5.6) % $ 82.6 $ 82.9 $ (0.3) (0.4) % $ 43.4 $ 45.9 $ (2.5) (5.4) %
N/M-Not meaningful
Rental Income:
Rental income decreased by $18.0 million, or 5.6%, when compared to the first quarter of 2025, attributable to elevated vacancy levels specifically in the office sector, as well as inflationary pressures impacting overall portfolio performance. Additionally, the prior quarter benefited from certain non-recurring items within the retail sector,
including increased tenant concessions and income recognized from early lease termination payments, which did not repeat in the current quarter.
Operating Expenses:
Operating expenses decreased $0.3 million, or 0.4%, compared to the first quarter of 2025, primarily due to net property dispositions and acquisitions, as reflected in the table above, as well as reduced repairs and maintenance and the absence of non-recurring expenses.
Real Estate Taxes:
Real estate taxes decreased $2.5 million, or 5.4%, when compared to the same quarter in 2025, primarily driven by net disposition and acquisition activity.
Interest Expense:
Interest expense decreased $9.0 million, or 44.8%, primarily due to lower average outstanding principal balance on loans payable, as compared to the same quarter in 2025.
Income from Real Estate Joint Ventures:
Income from real estate joint ventures decreased $8.3 million, or 16.1%, when compared to the same quarter in 2025, as a result of lower distributed income from two multi-family properties located in various locations and a retail mall in Las Vegas, Nevada. Lower distributed income is the result of higher expenses incurred by the Account's joint ventures.
Income from Real Estate Funds:
Income from real estate funds decreased $8.8 million, or 72.1%, when compared to the same quarter in 2025, primarily as a result of lower dividends received primarily from one of the Account's real estate fund investments. Lower dividends are attributable to higher expenses incurred by the Account's real estate funds.
Interest Income:
Interest income decreased $10.9 million, or 29.9%, in comparison to the same quarter of 2025, due to a reduction in the Account's loan receivable portfolio.
Expenses:
Investment management, administrative and distribution expenses charged to the Account by TIAA and one of its affiliates are charged on an at-cost basis and are associated with managing the Account. Investment management charges are comprised primarily of fixed components, but fluctuate based on the size of the Account's portfolio of investments, whereas administrative and distribution charges are comprised of more variable components that generally correspond with movements in net assets. Both distribution services (pursuant to the Distribution Agreement) and administrative services are provided to the Account by Services and TIAA, respectively, on an at cost basis. Investment management expenses decreased by $0.3 million when compared to the prior year first quarter due to a reduction in the Account's rates. Administrative expenses decreased $0.4 million due to a reduction in headcount and professional fees. Distribution charges decreased $0.6 million when compared to the prior year first quarter due to a decrease in the charge rates.
Mortality and expense risk and liquidity guarantee expenses are contractual charges to the Account from TIAA for TIAA's assumption of these risks and provision of the liquidity guarantee. The rate for these charges is established annually and are charged at a fixed rate based on the Account's net assets. There were no mortality and expense risk expenses charged by TIAA in the comparative periods. Liquidity guarantee expenses were $0.1 million higher than the comparable period of 2025 which remained relatively flat for both periods.
Interest expense on the Account's unsecured debt increased $11.1 million when compared to the same quarter of 2025, driven by growth in the Account's senior notes payable.
Net Realized and Unrealized Gains and Losses on Investments and Debt
The following table shows the net realized and unrealized losses on investments and debt for the three months ended March 31, 2026 and 2025 and the dollar and percentage changes for those periods (millions).
For the Three Months Ended March 31, Change
2026 2025 $ %
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT
Net realized gain (loss) on investments:
Real estate properties $ (89.7) $ (187.4) $ 97.7 52.1 %
Real estate joint ventures (61.2) 9.5 (70.7) (744.2) %
Real estate funds 25.7 - 25.7 N/M
Loans receivable (56.0) - (56.0) N/M
Loans payable 34.7 - 34.7 N/M
Total realized gain (loss) on investments (146.5) (177.9) 31.4 17.7 %
Net change in unrealized gain (loss) on:
Real estate properties 26.3 111.2 (84.9) (76.3) %
Real estate joint ventures 60.1 81.1 (21.0) (25.9) %
Real estate funds (22.2) (3.7) (18.5) (500.0) %
Real estate operating business 9.4 (0.2) 9.6 4,800.0 %
Marketable securities (0.2) (0.1) (0.1) (100.0) %
Loans receivable 55.4 0.8 54.6 6,825.0 %
Loans payable (24.8) 4.3 (29.1) (676.7) %
Other unsecured debt 14.9 (6.5) 21.4 329.2 %
Net change in unrealized gain (loss) on investments and debt
118.9 186.9 (68.0) (36.4) %
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND DEBT $ (27.6) $ 9.0 $ (36.6) (406.7) %
N/M-Not meaningful
Real Estate Properties:
Wholly-owned real estate investments experienced net realized and unrealized losses of $63.4 million during the first quarter of 2026, compared to $76.2 million of net realized and unrealized losses during the comparable quarter of 2025. Current period realized losses in the first quarter of 2026 were attributable to the dispositions of two multi-family property in Texas and California; two office properties in Massachusetts and Oregon; and a retail property in Pennsylvania. Unrealized gains were largely attributable to office and multi-family properties, due to increased investor demand and selective rebound in high quality office assets. Prior period realized losses in the first quarter of 2025 were primarily attributable to the dispositions of a multi-family property in Texas and an office property in Washington, DC. Unrealized gains were largely attributable to multi-family and industrial properties, due to stabilized demand and compressed capitalization rates.
Real Estate Joint Ventures:
Real estate joint ventures experienced net realized and unrealized losses of $1.1 million during the first quarter of 2026, compared to $90.6 million of net realized and unrealized gains during the first quarter of 2025. Unrealized gains for the current quarter were primarily driven by the Account's joint venture investments in the office and multifamily sectors, reflecting increased market demand and compressed capital rates. Realized loss was attributable to the disposition of a multi-family property in New York. Prior period gains were comprised of unrealized appreciation driven by the Account's joint venture investments in the office and retail sectors, reflecting improved asset-specific performance and reduced leasing concessions, as well as realized gains resulting from the disposition of five student housing properties located across Texas, North Carolina, Indiana, and Florida
Real Estate Funds:
Real estate funds experienced net realized and unrealized gains of $3.5 million during the first quarter of 2026, compared to $3.7 million of net realized and unrealized losses during the comparable period of 2025. Realized gain in the first quarter of 2026 is due to sales within one of the Account's real estate fund portfolio. Unrealized losses in the first quarter of 2026 were driven by unfavorable changes in capitalization rates and lowered investor demand, resulting in unfavorable valuations for the Account's real estate fund investments. Prior period unrealized losses were driven by unfavorable changes in capitalization rates and downward revisions to projected cash flow, resulting in unfavorable valuations for the Account's real estate fund investments.
Real Estate Operating Business:
The Account's real estate operating business experienced unrealized gains of $9.4 million during the first quarter of 2026, compared to $0.2 million of unrealized losses in the first quarter of 2025. Unrealized gains in the first quarter of 2026 were primarily attributable to a reduction in upfront costs and an increase in income derived from core business operations. Prior period unrealized loss was the result of a slightly unfavorable valuation during the quarter.
Marketable Securities:
The Account's marketable securities recognized unrealized losses of $0.2 million during the first quarter of 2026, driven by fluctuations in U.S. Treasury rates during the period. Compared to unrealized losses of $0.1 million recorded in the first quarter of 2025, representing a modest increase period over period.
Loans Receivable, including those with related parties:
Loans receivable, including those with related parties, experienced net realized and unrealized losses of $0.6 million during the first quarter of 2026, compared to $0.8 million of net realized and unrealized gains during the comparable quarter of 2025. The current period net realized and unrealized losses are primarily attributed to the foreclosure of a loan collateralized by an office portfolio and payoff of two loans collateralized by office properties. Additionally, unfavorable valuations on a loan during the period also contributed to the losses recognized during the quarter. The appraised values of the collateral asset properties were lower than the principal value of the loans, which resulted in the unfavorable valuation of the loans receivable. The comparable period unrealized gains are mainly attributed to the favorable valuations of four loans during the period.
Loans Payable:
Loans payable experienced net realized and unrealized gains of $9.9 million in the first quarter of 2026, compared to $4.3 million of unrealized gains during the comparable quarter of 2025. The net gains recognized in the first quarter of 2026 were primarily driven by the disposition of a property and the forgiveness of debt related to an office property in Portland, Oregon, along with the widening of credit spreads and rising market interest rates during the period. The unrealized gains recorded in the first quarter of 2025 were similarly driven by the disposition of a property with associated mortgage debt in Washington, D.C., alongside tightening credit spreads and rising market interest rates.
Other Unsecured Debt:
The Account's other unsecured debt experienced unrealized gains of $14.9 million in the first quarter of 2026, compared to $6.5 million of unrealized losses during the comparable quarter of 2025. The unrealized gains recognized in the current period were primarily attributable to widening credit spreads and the stabilization of market interest rates. The unrealized losses recorded in the prior period were driven by unfavorable shifts in the risk-free yield curve and changes in market assumptions resulting from prevailing political pressures.
Liquidity and Capital Resources
As of March 31, 2026 and December 31, 2025, the Account's cash and cash equivalents and non-real estate-related marketable securities had a value of $1.6 billion and $1.8 billion, respectively (7.1% and 7.9% of the Account's net assets at such dates, respectively). The Account's liquid assets continue to be available to purchase suitable real estate properties, meet the Account's debt obligations, expense needs, and contract owner redemption requests (i.e.,
contract owner transfers, withdrawals or benefit payments). In addition, as disclosed in the Account's 2025 Form 10-K, the Account is able to meet its short-term and long-term liquidity needs through cash provided by operating activities, the available borrowing capacity under its Credit Agreement and the liquidity guarantee provided by TIAA as described below.
Liquidity Guarantee
The liquidity guarantee ensures that the account will be able to meet its cash requirements with respect to redeeming accumulation unit contract owners, both in the short- and long-term. In accordance with the liquidity guarantee obligation, TIAA guarantees that all contract owners in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. The Account pays TIAA a fee for the risks associated with providing the liquidity guarantee through a daily deduction from the Account's net assets.
Although the Account experienced mixed net contract owner outflows and inflows during the first quarter of 2026, the TIAA General Account was not required to purchase any liquidity units this period. TIAA's ownership is approximately 4.01% of the outstanding accumulation units of the Account as of March 31, 2026. The independent fiduciary, which has the right to adjust the percentage of total accumulation units that TIAA's ownership should not exceed (the "trigger point"), has established the trigger point at 45% of the outstanding accumulation units.
Net Investment Income
Net investment income continues to be an additional source of liquidity for the Account. Net investment income was $166.6 million for the three months ended March 31, 2026, as compared to $210.7 million for the comparable period of 2025. The decrease in total net investment income is described more fully in the Results of Operations section.
Leverage
As of March 31, 2026, the Account's ratio of outstanding principal amount of debt (inclusive of the Account's proportionate share of debt held within its joint venture investments, senior notes payable and any loans outstanding on the Account's Credit Agreement) to total gross asset value (i.e., a "loan -to-value ratio") was 18.1%. The Account intends to maintain its loan-to-value ratio at or below 30% (this ratio is measured at the time of incurrence and after giving effect thereto). The Account's total gross asset value, for these purposes, is equal to the total fair value of the Account's assets (including the fair value of the Account's net equity interest in joint ventures), with no reduction associated with any indebtedness on such assets.
The Account's Credit Agreement, which is a $1.4 billion unsecured line of credit or credit facility, is used to facilitate near-term investment objectives, as further described in Note 12-Credit Facility. As of March 31, 2026, the Account had $160.0 million outstanding on the line of credit. The Account exercised the second of three extension options to extend the facility's termination date to September 20, 2026. The Account plans to exercise its remaining option before the facility's scheduled maturity in 2026, which extension is subject to customary representations, warranties and closing conditions.
As of March 31, 2026, the total principal outstanding for mortgages on properties held directly by the Account (three of which are collateralized by a loan receivable), the Credit Agreement and senior notes payable were $2.6 billion. There are four mortgage obligations secured by real estate investments wholly-owned by the Account, totaling $238.7 million, that are scheduled to mature within the next twelve months. The Account currently has sufficient liquidity in the form of cash and cash equivalents, short-term securities, and available capacity on the Account's line of credit under the Credit Agreement that can be drawn to meet its current mortgage obligations.
In times of high net inflow activity, in particular during times of high net contract owner transfer inflows, management may determine to apply a portion of such cash flows to make prepayments of indebtedness prior to scheduled maturity, which would have the effect of reducing the Account's loan-to-value ratio.
Statements of Cash Flows
The following table sets forth the Account's sources and uses of cash flows for the three months ended March 31, 2026 and 2025 (in millions)
As of Three Months Ended March 31,
2026 2025
Cash flows provided by (used in):
Operating activities $ 143.9 $ 246.0
Financing activities $ (170.6) $ (351.4)
The following provides information regarding the Account's cash flows from operating and financing activities for the three months ended March 31, 2026.
Operating Activities: The Account's operating cash flows are primarily impacted by net investment income and the purchase or sale of investments and debt. Cash provided by operating activities for the three months ended March 31, 2026, as compared to the prior year period, decreased by approximately $102.1 million. This decline was primarily driven by:
•$223.6 million decrease of payables for securities purchased;
•$171.5 million of lower proceeds from disposition of other investments; and
•$124.3 million of higher purchases of real estate properties;
Offsetting the decrease in cash provided by operating activities above was the following;
• $408.5 million in net decrease in purchases of real estate joint ventures and funds, a larger net decrease in other investments, and an increase in the proceeds from the payoffs of loans receivables.
Financing Activities: The Account's financing cash flows are primarily impacted by contract owner transactions and repayments of debt. For the period ended March 31, 2026, cash used in financing activities decreased $180.8 million compared to the comparable period in 2025, primarily driven by:
•A decrease in net debt repayments of $224.2 million.
Long-Term Financing and Capital Needs
The Account expects to meet its long-term liquidity requirements, such as debt maturities, property acquisitions and financing of development activities, through the use of unsecured debt and credit facilities, proceeds received from the disposition of certain properties and joint ventures, along with cash generated from operations after all distributions. The Account has a significant number of unencumbered properties available to secure additional mortgage borrowings should unsecured capital be unavailable or the cost of alternative sources of capital be too high. The value of and cash flow from these unencumbered properties are in excess of the requirements the Account must maintain in order to comply with covenants under its unsecured notes and Credit Agreement.
A summary of the Account's outstanding debt is as follows (in millions):
March 31, 2026 December 31, 2025
Principal Balance % of Total Principal Balance % of Total
Secured $ 847.1 32.5 % $ 892.4 33.6 %
Unsecured 1,760.0 67.5 % 1,760.0 66.4 %
Total $ 2,607.1 100.0 % $ 2,652.4 100.0 %
Fixed Rate Debt:
Secured $ 530.7 20.4 % $ 531.8 20.1 %
Unsecured 1,600.0 61.4 % 1,600.0 60.3 %
Fixed Rate Debt $ 2,130.7 81.8 % $ 2,131.8 80.4 %
Floating Rate Debt:
Secured $ 316.4 12.1 % $ 360.6 13.6 %
Unsecured 160.0 6.1 % 160.0 6.0 %
Floating Rate Debt $ 476.4 18.2 % $ 520.6 19.6 %
Total $ 2,607.1 100.0 % $ 2,652.4 100.0 %
Recent Transactions
The following describes property and property-related transactions by the Account during the first quarter of 2026. Except as noted, the expenses for operating the properties purchased are either borne or reimbursed, in whole or in part, by the property tenants, although the terms vary under each lease.
Real Estate Properties and Joint Ventures
Purchases
Property Name
Purchase Date
Ownership Percentage Sector Location
Net Purchase Price(1)
Boggs Road 01/27/2026 100.00% Industrial Duluth, GA $ 27.3
Cedars Road 01/27/2026 100.00% Industrial Lawrenceville, GA 24.0
Southside Industrial Bldg 1 and 2 01/27/2026 100.00% Industrial Atlanta, GA 24.3
Southside Industrial Bldg 3 01/27/2026 100.00% Industrial Atlanta, GA 35.3
Overmeyer Bldg 1 and 2 01/27/2026 100.00% Industrial Forest Park, GA 27.2
Progress Center Bldg 1 and 2 01/27/2026 100.00% Industrial Lawrenceville, GA 20.7
Lakes Parkway Bldg 1 and 2 01/28/2026 100.00% Industrial Lawrenceville, GA 46.3
Laval Boulevard 01/28/2026 100.00% Industrial Lawrenceville, GA 43.0
(1) Represents the purchase price net of closing costs.
Sales
Property Name Transaction Date Ownership Percentage Sector Location
Net Sales Price(1)
Realized Gain (Loss) on Disposition(2)
1619 Walnut 01/08/2026 100.00% Retail Philadelphia, PA $ 5.0 $ (19.8) $ (19.8)
Fort Point Creative Exchange Portfolio(3)
01/13/2026 100.00%
Office
Boston, MA
55.3 (46.9) (46.9)
MiMA
01/22/2026 21.00% Apartment New York, NY 17.2 (33.9) (33.9)
Park Creek
02/18/2026 100.00%
Apartment
Fort Worth, TX 49.7 (1.0) (1.0)
Five Oak
02/24/2026 100.00%
Office
Portland, OR
9.8 (26.5) (26.5)
Allure at Camarillo 03/16/2026 100.00% Apartment Camarillo, CA 68.9 4.5
(1) Represents the sales price, less selling expenses.
(2) Majority of the realized gain (loss) was previously recognized as unrealized gains (losses) in the Account's Consolidated Statements of Operations.
(3) Partial disposition of portfolio investments (34 Farnsworth, 44 Farnsworth and 332 Congress).
Financings
New Debt
Property Name Transaction Date Interest Rate Sector Maturity Date Principal Amount
Five Oaks(1)
03/02/2026
6.75%
Office
03/06/2031 $ 71.4
(1) Property held within Four Oaks Place joint venture.
Debt Payoff
Property Name Transaction Date Interest Rate Sector Maturity Date Principal Amount
MiMA(1)
01/22/2026 NYS HFA Bonds Multi-family 11/01/2041 $ 67.2
Five Oak(1)
02/24/2026 1.47% + SOFR Office 08/09/2029 44.2
Five Oaks(2)
03/02/2026
4.43%
Office 01/01/2026 70.8
TREA SV Littleton - SV MOB Denver(3)
03/05/2026
5.62% + SOFR
Office 03/05/2026 15.7
(1) Debt was extinguished with the sale of the property
(2) Property held within Four Oaks Place joint venture.
(3) Property held within Seavest MOB Portfolio.
Loan Receivable
Payoff
Description Transaction Date Interest Rate Sector Maturity Date Principal Amount
SCG Oakland Portfolio(1)
01/16/2026
4.36% + SOFR
Office - Debt Asset 06/01/2023 $ 56.0
TREA SV 355 West 52nd Street - Seavest II 02/02/2026
5.20%
Office - Debt Asset 06/01/2029 28.5
Charles River Plaza North 02/25/2026
6.08%
Office - Debt Asset 04/06/2029 100.0
(1) The collateral property was foreclosed by the senior lender and the Account's mezzanine loan was extinguished.
Critical Accounting Estimates
Management's discussion and analysis of the Account's financial condition and results of operations is based on the
Account's Consolidated Financial Statements, which have been prepared in accordance with U.S. GAAP. The preparation of the Account's financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Management considers the valuation of real estate properties and valuation of real estate joint ventures to be critical accounting estimates because they involve a significant level of estimation uncertainty and have a material impact on the Account's financial condition and results of operations.
There have been no material changes to the Account's critical accounting policies described in the Account's Annual Report on Form 10-K for the year ended December 31, 2025.
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