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Commentary
Nuveen Global Cities REIT
Nuveen Global Cities REIT, Inc. (GCREIT) has entered 2025 on strong footing despite substantial geopolitical and economic volatility being displayed in the public markets. GCREIT’s returns are positive and gaining momentum having had five quarters of positive returns and with a Q2’25 total net return of 1.08%, we experienced our second best quarter since Q2’22.
| Total returns (%) | Inception Date | 1 month | YTD | 1 year | 5 years | ITD |
|---|---|---|---|---|---|---|
| Class T with max. 3.5% load | 01 Jan 2019 | -3.26 | -2.22 | -1.06 | 6.66 | 6.33 |
| Class T with no sales load | 01 Jan 2019 | 0.24 | 1.32 | 2.52 | 7.42 | 6.91 |
| Class S with max. 3.5% load | 01 Dec 2019 | -3.25 | -2.19 | -1.01 | 6.74 | 5.88 |
| Class S with no sales load | 01 Dec 2019 | 0.25 | 1.34 | 2.57 | 7.49 | 6.55 |
| Class D with max. 1.5% load | 01 Jun 2018 | -1.21 | 0.10 | 1.59 | 7.68 | 7.05 |
| Class D with no sales load | 01 Jun 2018 | 0.29 | 1.62 | 3.13 | 8.01 | 7.28 |
| Class I | 01 May 2018 | 0.31 | 1.74 | 3.39 | 8.29 | 7.52 |
GCREIT has constructed and managed a portfolio that has proven to be resilient to the pressures on real estate in recent years. Now, GCREIT may be positioned to capture potential upside through this recovery given the following:
- GCREIT’s sector overweights to the fast-recovering sectors like industrial, healthcare, and groceryanchored retail may support the recovery.
- GCREIT has a contemporary portfolio having invested 37% of its direct real estate investments since repricing of the market began second half of 2022.
- Through scaling up leverage from 22% to our target 25- 40%, we believe GCREIT has dry powder today to take advantage of the attractive entry point for real estate.
- Operationally sound fundamentals, as evidenced by GCREIT’s healthy balance sheet, durable cash flow, and high occupancy rates of 96%.
- Pricing driven by external third-party valuations which are not based on market sentiment or geopolitical volatility, but rather based on market evidence including transaction data, leasing fundamentals, and specific property cash flow expectations.
- GCREIT’s consistent monthly distributions are benefitted by potential tax efficiency with 91% of its 2024 distribution classified as return of capital.
Distribution payments are not guaranteed; and GCREIT may pay distributions from sources other than cash flow from operations, including, without limitation, the sale of assets, repayments of real estate debt investments, return of capital or offering proceeds, and advances or the deferral of fees and expenses, that may be subject to reimbursement to the adviser or its affiliates.
Where does real estate stand today?
After a material rebalancing after the rate hiking cycle of 2022, private real estate is off to a strong start in 2025. Total returns for global real estate have been positive for four consecutive quarters.1 Transaction activity is up 12% year over year,2 and investors continue to be significantly below their target allocation to real estate.3 However, recent uncertainty caused by tariffs has raised questions about the economy and budding recovery in real estate.
Real estate risk can be broadly grouped into three categories: 1) property values, 2) supply and 3) demand. Real estate values have reset significantly, new construction is at the lowest levels in over a decade and demand risk can be mitigated by investing in the right sector, market and property. We believe private real estate has largely been de-risked and remains in a relatively strong position compared to other asset classes.
1) Property values have reset significantly1
U.S. real estate values fell for nine consecutive quarters cumulating in a value decline of 20% from Q2 2022. Nevertheless, values found a floor in the U.S. in Q4 2024 and the asset class has seen moderate appreciation for two consecutive quarters,4 indicating the beginnings of a recovery. While inflation, tariffs and other geopolitical factors could lead a strain on the broader economy we believe the realized re-pricing helps to de-risk private real estate. Additionally, we believe increased construction costs caused by tariffs could provide support for property values over the long-term.
2) Supply risk ahead is muted5
The real estate downturn of 2023/2024 was made worse by elevated levels of deliveries that peaked in Q4 of 2023 resulting in pressure on occupancies and rent growth. Since then, increased construction costs have caused a sharp decline in construction starts. U.S. delivery levels over the next two years are set to be the lowest in a decade for the multifamily and industrial markets and the lowest on record in the office and retail markets, which bodes well for property fundamentals.6 A silver lining of potential tariffs is the increased cost of construction materials. While not welcomed by real estate developers, for the owners of existing assets we believe it means there is likely to be less pressure on assets due to new supply, allowing a longer runway with stable occupancies and growing rents.
3) Demand risk mitigated by demographic megatrends and structural imbalances
Current macroeconomic uncertainty has the potential to slow leasing activity. We believe this risk can be mitigated by continuing to focus on markets and property subtypes where demand is underpinned by megatrends and structural imbalances. Namely, medical office buildings and grocery anchored retail we believe should fair well. Healthcare properties, which GCREIT has a 23% allocation, are well positioned as national vacancies are at all time lows.8 We believe an aging population and increasing health care costs will only support continued demand. Grocery anchored retail, which represents 13% of GCREIT’s allocation, tends to be resilient through cycles9 as consumers may eat out less or trade down to generics, but demand for groceries is fairly inelastic and surrounding necessity retail tends to hold-up well.9
Additionally, there has been little supply growth over the past ten years and market rents are 40% below levels that justify new construction;10 the landlord will continue to have pricing power as the supply/demand imbalance increasingly favors demand.
Tax deferral and diversification opportunity: Nuveen Real Estate Exchange
We are pleased to announce that Nuveen has launched a 1031 real estate exchange platform designed to help advisors and their clients strategically reposition real estate assets into institutionally managed investment opportunities. Structured as an Umbrella Partnership Real Estate Investment Trust (UPREIT) program, the new solution provides a potential path for property owners to convert proceeds from real estate sales into a diversified ownership interest in Nuveen Global Cities Real Estate Investment Trust (GCREIT).
Nuveen’s 1031 UPREIT program helps investors address key planning objectives, such as capital gains deferral, estate transition and portfolio diversification, all while gaining access to the firm’s institutional-quality global real estate strategy. Nuveen’s 1031 UPREIT program allows the conversion of proceeds from qualifying property sales into interests in a Delaware Statutory Trust (DST) owning real estate. Over time, GCREIT, at its election, may cause the DST interests to be exchanged for operating partnership (OP) units in GCREIT, providing the opportunity for full participation in the income potential and future liquidity of a diversified global REIT portfolio – without requiring active property management.
We believe in the appealing investment period for real estate, and specifically, GCREIT. GCREIT’s commitment to quality, diversification and strategic portfolio construction seeks to offer investors a competitive advantage.
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1 MSCI Global Quarterly Property Index MSCI Global Quarterly Property Index, Q1 2025 data as of 6 June 2025 data release; Nuveen Real Estate Research.
2 Real Capital Analytics, 30 Jun 2025.
3 Bloomberg, Nuveen Real Estate Research, Nuveen Portfolio Strategy & Solutions, 2 May 2025.
4 NCREIF ODCE, Q1 2025; Nuveen Real Estate Research.
5 CoStar, Q1 2025.
6 Nuveen Real Estate Research, May 2025.
7 CoStar, Q4 2024, data as of 6 Jan 2025, Nuveen Real Estate Research.
8 Revista, Q1 2025, Nuveen Real Estate Research, May 2025.
9 Nuveen Real Estate Research, May 2025.
10 CoStar, May 2025.
Clients should consult their professional advisors before making any tax or investment decisions. This information should not replace a client’s consultation with a professional advisor regarding their tax situation. Neither Nuveen nor any of its affiliates or their employees provide legal or tax advice. Tax rates and IRS regulations are subject to change at any time, which could materially affect the information provided herein.
A copy of the Nuveen Global Cities REIT, Inc. prospectus is available at www.nuveen.com/gcreit.
Important disclosures:
All portfolio data in this commentary is as of 31 Dec 2024, unless otherwise disclosed
This material contains forward-looking statements about our business, including, in particular, statements about our plans, strategies and objectives. You can generally identify forwardlooking statements by our use of forward-looking terminology such as “may,” “will,” “expect,” “intend,” “anticipate,” “estimate,” “believe,” “continue” or other similar words. These statements include our plans and objectives for future operations, including plans and objectives relating to future growth and availability of funds, and are based on current expectations that involve numerous risks and uncertainties. Assumptions relating to these statements involve judgments with respect to, among other things, future economic, competitive and market conditions and future business decisions, all of which are difficult or impossible to accurately predict and many of which are beyond our control. Although we believe the assumptions underlying the forward-looking statements, and the forward- looking statements themselves, are reasonable, any of the assumptions could be inaccurate and, therefore, there can be no assurance that these forward-looking statements will prove to be accurate and our actual results, performance and achievements may be materially different from that expressed or implied by these forward-looking statements. In light of the significant uncertainties inherent in these forward-looking statements, the inclusion of this information should not be regarded as a representation by us or any other person that our objectives and plans, which we consider to be reasonable, will be achieved.
You should carefully review the “Risk Factors” section of our prospectus for a discussion of the risks and uncertainties that we believe are material to our business, operating results, prospects and financial condition. Except as otherwise required by federal securities laws, we do not undertake to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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.
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.
1031 exchanges involve strict timing requirements and complex qualification rules. Failure to meet these requirements may result in immediate tax liability. Investments in DSTs and OP units are illiquid and may not be suitable for all investors. GCREIT has sole discretion over whether and when to exchange DST interests for OP units. The firm has not considered the actual or desired investment objectives, goals, or factual circumstances of any individual investor, and each investor should carefully consider whether this strategy is appropriate for their particular circumstances and risk tolerance.
Risk factors:
Nuveen Global Cities REIT, Inc. is a non-listed REIT, which offers limited liquidity as compared to other products, such as publicly listed REITs. Investors in Nuveen Global Cities REIT, Inc. are not receiving publicly listed shares. An investment in Nuveen Global Cities REIT, Inc. involves a high degree of risk, including the same risks associated with an investment in real estate investments, including fluctuations in property values, higher expenses or lower expected income, currency movement risks and potential environmental liabilities. Please consider all risks carefully prior to investing in any particular strategy, including the following risks for Nuveen Global Cities REIT, Inc.:
There is no assurance that we will achieve our investment objectives.
You will not have the opportunity to evaluate our future investments before we make them, and we may not have the opportunity to evaluate or approve investments made by entities in which we invest, such as the International Affiliated Funds, which makes your investment more speculative.
Since there is no public trading market for shares of our common stock, repurchase of shares by us will likely be the only way to dispose of your shares. Our share repurchase plan provides stockholders with the opportunity to request that we repurchase their shares on a monthly basis, but we are not obligated to repurchase any shares and may choose to repurchase only some, or even none, of the shares that have been requested to be repurchased in any particular month in our discretion. In addition, repurchases are subject to available liquidity and other significant restrictions. Further, our board of directors may modify or suspend our share repurchase plan if it deems such action to be in our best interest and the best interest of our stockholders. As a result, our shares should be considered as having only limited liquidity and at times may be illiquid.
The purchase and repurchase price for shares of our common stock is generally based on our prior month’s NAV (subject to material changes as described above) and is not based on any public trading market. While we obtain independent periodic appraisals of our properties the appraisal of properties is inherently subjective, and our NAV may not accurately reflect the actual price at which our assets could be liquidated on any given day.
Our board of directors may also determine to terminate our share repurchase plan if required by applicable law or in connection with a transaction in which our stockholders receive liquidity for their shares of our common stock, such as a sale or merger of our company or listing of our shares on a national securities exchange.
We have no employees and are dependent on our Advisor and its affiliates to conduct our operations. Our Advisor will face conflicts of interest as a result of, among other things, the allocation of investment opportunities among us and Other Nuveen Real Estate Accounts, the allocation of time of investment professionals and the fees that we pay to our Advisor.
We cannot guarantee that we will make distributions, and if we do we may fund such distributions from sources other than cash flow from operations, including, without limitation, the sale of assets, repayments of real estate debt investments, borrowings, return of capital or offering proceeds, and advances or the deferral of fees and expenses, that may be subject to reimbursement to the adviser or its affiliates and we have no limits on the amounts we may pay from such sources.
This is a “best efforts” offering. If we are not able to raise a substantial amount of capital in the near term, our ability to achieve our investment objectives could be adversely affected.
There are limits on the ownership and transferability of our shares.
If we fail to qualify as a REIT and no relief provisions apply, our NAV and cash available for distribution to our stockholders could materially decrease.
Our investments in International Affiliated Funds may be subject to currency, inflation or other governmental and regulatory risks specific to the countries in which the International Affiliated Funds operate and own assets.
The defined terms have the meanings assigned to them in the prospectus.
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