Nuveen Global Cities REIT Portfolio Update

Richard Kimble
Lead Portfolio Manager, Global Cities REIT
  • Managing Director, Portfolio Management, Nuveen
  • Gracie Coburn
    Assistant Portfolio Manager, Global Cities REIT
  • Director
  • Vienna city skyline
    Nuveen Global Cities REIT, Inc.’s strategy is focused on durable income, diversification across global cities and property sectors, and achieving long-term appreciation through active investment and asset management.

    Portfolio highlights
    • Nuveen Global Cities REIT’s Class I shares total net return in December was 1.29% and year-to-date was 3.59%.1,2
    • The change from the previous month was driven primarily by increased valuations in the property portfolio and property level income.
    • Current monthly distribution rate is 5.36% (Class I shares)3
    • The portfolio has grown to $639m in gross asset value, consisting of direct and indirect investments in 44 properties located across leading global cities.4,5
    • We achieved these returns all while conservatively managing risk in the portfolio, with leverage of 27.73% for the month end.6

    Portfolio update

    While continued economic recovery will vary across sectors and industries, we believe certain real estate sectors such as industrial, technology, and medical-related properties will benefit from macroeconomic trends such as ecommerce growth and increased reliance on technology and healthcare. Nuveen Global Cities REIT’s portfolio consists of a combined 49% allocation to industrial and medical office in the United States, as of December 31, 2020. In terms of operations, the REIT’s U.S. portfolio is now 99% leased7 and rent collections have rebounded with 98% of rent collected in December. The operational stability supports the important features of the Nuveen Global Cities REIT: stable, tax-efficient yields and strong relative value.

    Additionally, the portfolio continues to benefit from moderate leverage, which equates to less volatility and less downside risk8; high occupancy rates; very limited lease expirations over the next 12 months; overweighting industrial with an underweighting to retail and office; no material exposure to hospitality, gaming, leisure, or senior housing, which are anticipated to be the most negatively affected sectors in the near term; and disciplined city selection, which improves liquidity and resiliency through cycles.

    Acquisitions update

    Some of the fundamental changes that were already underway in the real estate market, driven by technology and demographics, accelerated as a result of the pandemic. The reliance on e-commerce and flexible working practices are examples. Distinct winners and losers will emerge, with resilient assets in demand while others potentially becoming obsolete. The amplified growth in e-commerce has resulted in increased demand for industrial buildings providing tailwinds for the industrial sector. Therefore, the Global Cities REIT continues to maintain an overweight to the industrial sector (37% allocation). The latest acquisition for the REIT added to its industrial portfolio:

    Rittiman is an off-market portfolio acquisition consisting of two well-located, infill industrial assets in the San Antonio metropolitan area. San Antonio has a strong demographic outlook, low historic risk relative to other major industrial markets, and high employment diversity. Overall, the portfolio is 95% leased and was acquired at a cost approximately 30% below the estimated replacement cost. These assets are strategically located in close proximity to downtown San Antonio and the San Antonio International Airport. Further, the location provides easy access to a dense residential population, ample warehouse labor, and corporate decision makers in Alamo Heights and Terrell Hills.

    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 trillion of assets under management as of 31 December 2020. TIAA’s $300 million investment into the Nuveen Global Cities REIT remains a key feature, providing true co-alignment and attention from Nuveen Real Estate and its leadership team.

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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,” “anticipates,” “likely,” or the negative versions of these words or other comparable words thereof. These may 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 in light of the COVID-19 pandemic, the state of financial markets, and the impact of the pandemic on our tenants and the general economy. 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 December 31, 2019, 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.

    1 Returns shown are preliminary. Net total returns are calculated by share class using the time weighted return formula and derived by dividing (1) the respective aggregate share class’s monthly net operating income (after appreciation, fees and expenses) by (2) the share class’s previous month’s ending NAV plus the proceeds from share issuances for the current month. Actual individual investor performance may differ from the aggregated share class performance. All returns shown assume reinvestment of distributions pursuant to Nuveen Global Cities REIT Inc’s (“GCREIT” or “NREIT”) distribution reinvestment plan, are derived from unaudited financial information and are net of all GCREIT expenses, including general and administrative expenses, transaction related expenses, management fees, and share class specific fees, but exclude the impact of early repurchase deductions on the repurchase of shares that have been outstanding for less than one year. 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 T shares and Class S shares listed as (No sales load) exclude up-front selling commissions and dealer manager fees. 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. Past performance is historical and not a guarantee of future results.For the year ended 31 Dec 2019 and the nine months ended 30 Sep 2020, we reported GAAP net income (loss) of $5.7 million and $1.2 million, respectively.
    2 NAV 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 30 Sep 2020, our NAV per share was approximately $10.46, $10.43, $10.35 and $10.34, per Class I, Class D, Class T and Class S share, respectively, and total stockholders’ equity per share was approximately $9.00, $8.91, $8.87 and $9.18 per Class I, Class D, Class T and Class S 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 2019 and the nine months ended 30 Sep 2020 were covered 93% and 72%, respectively, from GAAP cash flow from operations and 7% and 28%, respectively, from debt 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), plus the investment in commercial mortgage loans measured at fair value, plus cash and other assets.
    5 GCREIT directly owns 16 properties and has exposure to 28 additional properties owned by the International Affiliated Funds in which we have made an investment.
    6 Leverage 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 and other assets.
    7Reflects directly-owned real estate property investments only and does not include investments in debt securities. Percentage leased is weighted by the total real estate asset value of all directly-owned real estate properties and includes all leased square footage as of the date indicated.
    8 There is no assurance that downside protection will be achieved.

    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 Nov 2020, 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.