Nuveen Global Cities REIT Portfolio Update
Nuveen Global Cities REIT, Inc. (Global Cities REIT) is continuing to seek value for our investors on a global scale, while constructing and managing a portfolio that can provide resilience through both short-term and long-term market impacts. While real estate property fundamentals continue to remain strong in most sectors and most markets, capital market headwinds exist in the form of higher interest rates and decreased liquidity triggering downward pressure on valuations for private real estate. Management believes these market disruptions will provide attractive buying opportunities in 2023.
With this said, the REIT has seen write downs in the portfolio which are expected in the current market environment. Positive April returns were primarily driven by the REIT’s income return with modest valuation increases to the U.S. direct property portfolio as well as the real estate securities sleeve that were offset by value declines in the international portfolio.
Nuveen Global Cities REIT’s portfolio is positioned well in this environment given its 1) allocation 2) leverage and 3) approach to interest rates. 1) The REIT has a combined 82% allocation to industrial, housing, healthcare, and selfstorage, all of which have proven to be resilient to current economic headwinds, as evidenced by the REIT’s healthy balance sheet, durable cash flow, and high occupancy rates of 98%. 2) The REIT’s conservative leverage position (16.66% LTV) allows for downside protection in a negative return environment and dry powder on our credit facility for the opportunity to invest in re-priced assets in a distressed setting. 3) Additionally, the REIT’s 6% allocation to floating rate mortgage originations provides increasing investment income, which offsets rising interest rate expenses, allowing the REIT to avoid cash flow erosion and be interest rate agnostic.
Performance highlights
- Global Cities REIT’s Class I shares total net return in April was 0.28% and the 1-year was 0.10%.1,2
- Further, the since inception Class I share total net return was 10.00%.
- Current monthly distribution rate is 5.41% (Class I shares).3
- The portfolio has grown to $2.81B in gross asset value, consisting of direct and indirect investments in 496 properties located across leading global cities.4,5
- We achieved these returns all while conservatively managing risk in the portfolio, with leverage of 16.66% for the month end.
- The REIT’s cash flow maintained its quality and durability with high occupancy at 98% and stable rent collections in the high 90s%.
Investment highlight - Brighton Self-Storage
In March 2023, Global Cities REIT closed on a core, purpose-built self-storage facility in Denver, CO. The property was built in 2003 and has 716 individual storage units. The property is located in Brighton, 25 miles northeast of downtown Denver. The submarket is expected to grow by 60% over the next 20 years according to traffic data, making it the fastest growing segment off I-76 with 28k cars driving by daily. Population demographics are strong with 3-mile median household income of $113k and expected population growth of 2.7% per annum from 2022 to 2027.
The self-storage sector has been a desirable property type over the last decade due to its low capital expenditure needs, low operational intensity, and low obsolescence risk. Given the inherent non-cyclical demand drivers and thus stable demand, this property type is considered defensive and has ultimately outperformed traditional sectors throughout multiple real estate cycles. Going forward, self-storage is projected to continue outperforming given the sector’s favorable net operating income growth forecast and low capital expenditures relative to traditional sectors.
Nuveen Real Estate, remains fully capable of investing and supporting all of its client portfolios and is committed to the welfare of its employees and clients. We have the benefit of the resources, preparations, and strategy across Nuveen Real Estate and its parent, TIAA, a 100-year-old company with more than $1.1 trillion of assets under management as of 31 Mar 2023. TIAA’s $300 million investment into Global Cities REIT remains a key feature, providing true co-alignment and attention from Nuveen Real Estate and its leadership team.
We believe that Global Cities REIT’s commitment to quality, diversification, and strategic portfolio construction will continue to offer investors a competitive advantage.
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Certain information contained in this document constitutes “forward-looking statements” within the meaning
of the federal securities laws and the Private Securities Litigation Reform Act of 1995. These forward-looking
statements can be identified by the use of forward-looking terminology, such as “believes,” “expects,”
“potential,” “continues,” “may,” “will,” “should,” “seeks,” “predicts,” “intends,” “plans,” “estimates,”
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include our ability to successfully navigate through the current economic uncertainty, our financial projections
and estimates and their underlying assumptions, statements about plans, objectives and expectations with
respect to future operations, and statements regarding future performance. Such forward-looking statements
are inherently uncertain and there are or may be important factors that could cause actual outcomes or results
to differ materially from those indicated in such statements. We believe such factors include the financial
condition of our company and our portfolio and the state of financial markets. We believe these factors also
include but are not limited to those described under the section entitled “Risk Factors” in our Annual Report
on Form 10-K for the year ended 31 Dec 2022, and any such updated factors included in our periodic filings
with the Securities and Exchange Commission. Except as otherwise required by federal securities laws, we
undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of
new information, future developments or otherwise.
Performance data shown represents past performance and does not predict or guarantee
future results.
1 r. Class T shares and Class S shares listed as (With sales
load) reflect the returns after the maximum upfront selling commission and dealer manager fees
of 3.5%. Class D shares listed as (With sales load) reflect the returns after the maximum upfront
selling commission of 1.5%. Class T shares, Class S shares, and Class D shares listed as (No sales
load) exclude up-front selling commissions and dealer manager fee. Returns are annualized for
periods longer than one year. The returns have been prepared using unaudited data and valuations of
the underlying investments in GCREIT’s portfolio, which are estimates of fair value and form the basis for
GCREIT’s NAV. Valuations based upon unaudited reports from the underlying investments may be subject
to later adjustments, may not correspond to realized value and may not accurately reflect the price at
which assets could be liquidated. Performance data shown represents past performance and does
not predict or guarantee future results.. For the year ended 31 Dec 2022 and the three months ended 31
Mar 2023, we reported GAAP net losses of $(54.1) million and $(3.3) million, respectively.
2NAV is calculated in accordance with the valuation guidelines approved by our board of directors. NAV is
not a measure used under generally accepted accounting principles in the United States (“GAAP”), and
you should not consider NAV to be equivalent to stockholders’ equity or any other GAAP measure. As of 31
Mar 2023, our NAV per share was approximately $12.42, $12.29, $12.46 and $12.41, per Class T, Class
S, Class D and Class I share, respectively, and total stockholders’ equity per share was approximately
$10.03, $9.92, $10.06 and $10.02 per Class T, Class S, Class D and Class I share, respectively. For a full
reconciliation of NAV to stockholders’ equity and a discussion of the limitations and risks associated with
our valuation methodology, please see the “Management’s Discussion and Analysis of Financial Condition
and Results of Operation - NAV Per Share” section of our annual and quarterly reports filed with the SEC,
which are available at www.nuveen.com/gcreit. For information on how we calculate NAV, see the “Net
Asset Value Calculation and Valuation Guidelines” section of our prospectus.
3 Distribution rate reflects the most recently approved monthly annualized distributions divided by the prior
month’s net asset value. Distributions paid during the year ended 31 Dec 2022 and the three months ended
31 Mar 2023 were covered 92% and 56%, respectively, from GAAP cash flow from operations and 8% and
44%, respectively, from debt and financing proceeds.
4 Total asset value is measured as the gross asset value of real estate properties (based on fair value),
the investment in our real estate-related securities measured at fair value, the equity investment in
unconsolidated International Affiliated Funds (which includes the allocable share of the International
Affiliated Funds’ income and expense, realized gains and losses and unrealized appreciation or
depreciation), any investments in commercial mortgage loans measured at fair value, plus cash and other
assets, excluding restricted cash.
5 GCREIT directly owns 461 properties, including 384 single family homes, and has exposure to 35 additional
properties owned by the International Affiliated Funds in which we have made an investment.
6Leverage is measured using, as the numerator, property-level and entity-level debt and as the denominator,
the gross asset value of real estate assets (calculated using the greater of fair value and cost of gross real
estate assets including investment in our securities portfolio, our loan portfolio, and our allocable share of
investments in unconsolidated International Affiliated Funds), inclusive of property-level and entity-level
debt, plus cash, other assets and excluding restricted cash.
7Inception dates for each share class are: 01 Jan 2019 for Class T shares, 01 Dec 2019 for Class S shares,
01 Jun 2018 for Class D shares, and 01 May 2018 for Class I shares.
The information provided does not take into account the specific objectives or circumstances of any particular
investor, or suggest any specific course of action. Financial professionals should independently evaluate the
risks associated with products or services and exercise independent judgment with respect to their clients. All
information is as of 30 Apr 2023, unless otherwise disclosed.
Nuveen Real Estate is a real estate investment management holding company owned by Teachers Insurance
and Annuity Association of America (TIAA). Nuveen Securities, LLC, member FINRA and SIPC, is the dealer
manager for the Nuveen Global Cities REIT, Inc. offering.
Diversification of an investor’s portfolio does not assure a profit or protect against loss in a declining market.
