CALCULATION OF REGISTRATION FEE
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* | The securities are not issued in predetermined amounts or units, and the maximum aggregate offering price is estimated solely for purposes of determining the registration fee pursuant to Rule 457(o) under the Securities Act. |
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The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and we are not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION, DATED MAY 1, 2007
PROSPECTUS________________, 2007______,2008
TIAA REAL ESTATE ACCOUNT
A Tax-Deferred Variable Annuity Option Offered by Teachers Insurance and Annuity Association of America
This prospectus tells you about the TIAA Real Estate Account, an investment option offered through individual and group variable annuity contracts issued by TIAA. Please read it carefully before investing and keep it for future reference.
The Real Estate Account, which we refer to sometimes as “the Account” in this prospectus, invests primarily in real estate and real estate-related investments. TIAA, one of the largest and most experienced mortgage and real estate investors in the nation, manages the Account’s assets.
The value of your investment in the Real Estate Account will go up or down depending on how the Account performs and you could lose money. The Account’s performance depends mainly on the value of the Account’s real estate and other real estate-related investments, and the income generated by those investments. The Account’s returns could go down if, for example, real estate values or rental and occupancy rates, or the value of real estate related securities, decrease due to general economic conditions and/or a weak market for real estate generally. Property operating costs and government regulations, such as zoning or environmental laws, could also affect a property’s profitability. TIAA does not guarantee the investment performance of the Account, and you will bear the entire investment risk. For a detailed discussion of the specific risks of investing in the Account, see “Risks,”“Risks” on page 11.
We take deductions daily from the Account’s net assets for the Account’s operating and investment management expenses. The Account also pays TIAA for bearing mortality and expense risks and for providing a liquidity guarantee. The current estimated annual expense deductions from the Account’s net assets total 0.630%.%.
The Real Estate Account is designed as an option for retirement and tax-deferred savings plans for employees of nonprofit institutions. TIAA offers the Real Estate Account under the following annuity contracts:
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| RA and GRAs (Retirement Annuities and Group Retirement Annuities) |
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| SRAs (Supplemental Retirement Annuities) |
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| GSRAs (Group Supplemental Retirement Annuities) |
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| Retirement Choice and Retirement Choice Plus Annuity |
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| GAs (Group Annuities) and Institutionally-Owned GSRAs |
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| Classic and Roth IRAs (Individual Retirement Annuities) including SEP IRAs (Simplified Employee Pension Plans) |
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| Keoghs |
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| ATRAs (After-Tax Retirement Annuities) |
Note that state regulatory approval may be pending for certain of these contracts and they may not currently be available in your state.
TheNeither the Securities and Exchange Commission (SEC) nor any state securities commission has not approved or disapproved of these securities or passed upon the adequacy of the information in this prospectus. Any representation to the contrary is a criminal offense.
An investment in the Real Estate Account is not a bank deposit and is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency.
TABLE OF CONTENTS
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Management’s Discussion and Analysis of Financial Condition and Results of Operations |
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Please see Appendix B for definitions of certain special terms used in this prospectus.
The Real Estate Account securities offered by this prospectus are only being offered in those jurisdictions where it is legal to do so. No person may make any representation to you or give you any information about the offering that is not in the prospectus. If anyone provides you with information about the offering that is not in the prospectus, you shouldn’t rely on it.
ABOUT THE REAL ESTATE ACCOUNT AND TIAA
The TIAA Real Estate Account was established in February 1995 as a separate account of Teachers Insurance and Annuity Association of America (TIAA). TIAA is a life insurance company founded in 1918 by the Carnegie Foundation for the Advancement of Teaching. Its home office is at 730 Third Avenue, New York, NY 10017-3206 and its telephone number is 212 490-9000. In addition to issuing variable annuities, whose returns depend upon the performance of certain specified investments, TIAA also offers traditional fixed annuities.
With its 60 years in the real estate business and interests in properties located across the U.S. and internationally, TIAA is one of the nation’s largest and most experienced investors in mortgages and real estate equity interests. As of December 31, 2006,2007, TIAA’s general account had a mortgage and real property portfolio of approximately $25.2$22.1 billion.
TIAA is the companion organization of the College Retirement Equities Fund (CREF), the first company in the United States to issue a variable annuity. Together, TIAA and CREF form the principal retirement system for the nation’s education and research communities and one of the largest pension systems in the U.S., based on assets under management. TIAA-CREF servesTIAA and CREF serve approximately 3.23.3 million people and over 15,000 institutions. As of December 31, 2006,2007, TIAA’s assets were approximately $184$196.4 billion; the combined assets for TIAA and CREF totaled approximately $392$417.8 billion.
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.
More information about the Account may be obtained by writing us at 730 Third Avenue, New York, New York 10017-3206, calling us at 877 518-9161 or visiting our website at www.tiaa-cref.org.
THE ACCOUNT’S INVESTMENT OBJECTIVE AND STRATEGY
Investment Objective:The Real Estate Account seeks favorable long-term returns primarily through rental income and appreciation of real estate investments owned by the Account. The Account also will invest in publicly traded securities and other investments that are easily converted to cash to make redemptions, purchase or improve properties or cover other expenses.
Investment Strategy:The Account intends to invest between 75 percent and 9085 percent of its assets directly in real estate or real estate-related investments. The Account’s principal strategy is to purchase direct ownership interests in income-producing real estate, such as office, industrial, retail, and multi-family residential properties. The Account can also invest in other real estate or real estate-related investments through joint ventures, real estate partnerships or real estate equity securities. To a limited extent, the Account can also invest in conventional mortgage loans, participating mortgage loans, common or preferred stock of companies whose operations involve real estate (i.e., that primarily own or manage real estate), and collateralized mortgage obligations, including commercial mortgage-backed securities and other similar investments. The Account may also make foreign investments, which are expected to comprise no more than 25 percent of the Account’s total assets.
The Account will invest the remaining portion of its assets in government and corporate debt securities, money market instruments and, at times, stock of companies that do not primarily own or manage real estate. In some circumstances, the Account can increase the portion of its assets invested in debt securities or money market instruments. This could happen if the Account
TIAA Real Estate Account § Prospectus 3
receives a large inflow of money in a short period of time, there is a lack of attractive real estate investments available on the market, or the Account anticipates a need to have more cash available.
The amount the Account invests in real estate and real estate-related investments at a given time will vary depending on market conditions and real estate prospects, among other factors. As of December 31, 2006,2007, the Account’s net assets totaled $14,132,692,512.$17,660,536,799. At December 31, 2006,2007, the Account held a total of 121111 real estate propertiesproperty investments (including its interests in 12 real estate-related joint ventures), and one remaining equity interest in a joint venture in which the Account sold its real estate investment during the third quarter of 2007, representing 80.03%77.91% of the Account’s total investment portfolio (“Total Investments”).
TIAA Real Estate AccountProspectus|3
As of that date, the Account also held investments in a mortgage loan receivable, representing 0.48%0.38% of Total Investments, real estate equity securities, representing 3.99% of Total Investments, commercial mortgage backed securities (CMBSs), representing 0.55%2.24% of Total Investments, real estate limited partnerships, representing 1.80%1.74% of Total Investments, commercial paper, representing 10.79%9.23% of Total Investments, certificates of deposit, representing 2.22% of Total Investments, variable notes, representing 0.26% of Total Investments, bankers acceptance, representing 0.20% of Total Investments, and government agency bonds, representing 2.36%5.82% of Total Investments.
Risks:An investment in the Account is subject to the risks associated with real estate investing, including the risks of acquiring, owingowning and selling real property, interest rate risk, market risk, credit risk, and regulatory and environmental risks. Further risks include the risks associated with making mortgage loan investments and investing in mortgage-backed securities, liquid investments and foreign real estate investments. These risks, among others, are described in “Risks” beginning on page 11.12. You may lose money by investing in this Account.
4 Prospectus § TIAA Real Estate Account
The bar chart and performance table below helps illustrate some of the risks of investing in the Account, and how investment performance during the accumulation period varies. The bar chart shows the Account’s total return during the accumulation period over the last ten calendar years and the performance table shows the Account’s returns during the accumulation period for the one-, three-, five- and ten-year periods through December 31, 2006.2007. How the Account has performed in the past is not necessarily an indication of how it will perform in the future.
AVERAGE ANNUAL TOTAL RETURN (AS OF DECEMBER 31, 2006)2007)
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14.04% | 13.53% | 10.22% | 9.43% | |||
13.80% | 13.96% | 12.35% | 9.79% | |||
SUMMARY OF ACCOUNT’S EXPENSE DEDUCTIONS
Deductions are made each valuation dayValuation Day from the net assets of the Account for various services required to manage investments, administer the Account and the contracts, and to cover certain risks borne by TIAA. The current annualServices are performed at cost by TIAA and TIAA-CREF Individual & Institutional Services, LLC (“Services”), a registered broker-dealer and wholly owned subsidiary of TIAA. In particular, TIAA performs investment management services and administration services for the Account, and Services provides distribution services for the Account. Because services are provided at cost, we expect that expense deductions are:will be relatively low. TIAA guarantees that in the aggregate, the expense charges will never be more than 2.50% of average net assets per year.
4|ProspectusTIAA Real Estate Account§ Prospectus 5
The estimated annual expense deduction rate that appears in the expense table below reflects an estimate of the amount we expect to deduct to approximate the costs that the Account will incur from May 1, 2008 through April 30, 2009:
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Total Annual Expense Deduction1,2 |
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1 | TIAA guarantees that the total annual expense deduction will not exceed an annual rate of 2.50% of average net assets. |
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2 | TIAA currently does not impose a fee on transfers from the Account, but reserves the right to impose a fee on transfers from the Account in the future. |
Effective January 1, 2008, TIAA commenced performing the administration functions previously performed for the Account by Services (which include receiving and allocating premiums, calculating and making annuity payments and providing recordkeeping and other services). Distribution services for the Account, which include, without limitation, distribution of the annuity contracts, advising existing annuity contract owners in connection with their accumulations and providing assistance in designing, installing and providing administrative services to retirement plans for participating institutions and contract owners, continue to be performed by Services. Services is a wholly owned subsidiary of TIAA.
TIAA or subsidiaries of TIAA perform theseand Services provide administration and distribution services, at cost.as applicable, on an at-cost basis. Since expenses are charged at cost, the expenses described are estimates for the year based on projected expense and asset levels. Administration charges also include certain costs associated with providing recordkeeping and other services to participants in retirement plans administered by TIAA-CREF entities that offer other pension products in addition to the Account. A portion of these administration expenses are allocated to the Account in accordance with applicable allocation procedures. Any differences between actual and estimated expenses are adjusted quarterly. The expenses identified in the table above do not include any fees which may be imposed by your employer under a plan maintained by your employer. For more detailed information, see “Expense Deductions” on page 57.73.
The following table shows you an example of the expenses you would incur on a hypothetical investment of $1,000 in the TIAA Real Estate Account over several periods. The table assumes a 5% annual return on assets and an annual expense
6Prospectus§ TIAA Real Estate Account
deduction equal to 0.785%. Remember that these%. These figures do not represent actual expenses or investment performance, which may differ.
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1 Year | $ | 8 |
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ABOUT THE ACCOUNT’S INVESTMENTS — IN GENERAL
DIRECT INVESTMENTS IN REAL ESTATE
Direct Purchase:The Account will generally buy direct ownership interests in existing or newly constructed income-producing properties, including office, industrial, retail, and multi-family residential properties. The Account will invest mainly in established properties with existing rent and expense schedules or in newly constructed properties with predictable cash flows or in which a seller agrees to provide certain minimum income levels. On occasion, the Account also might invest in real estate development projects.
TIAA Real Estate AccountProspectus|5
Purchase-Leaseback Transactions:Although it has not yet done so, the Account can enter into purchase-leaseback transactions (leasebacks) in which it typically willwould buy land and income-producing improvements on the land (such as buildings), and simultaneously lease the land and improvements to a third party (the lessee). Leasebacks are generally for very long terms. Usually, the lessee is responsible for operating the property and paying all operating costs, including taxes and mortgage debt. The Account can also give the lessee an option to buy the land and improvements.
In some leasebacks, the Account may purchase only the land under an income-producing building and lease the land to the building owner. In those cases, the Account will oftenlikely would seek to share (or “participate”) in any increase in property value from building improvements or in the lessee’s revenues from the building above a base amount. The Account can invest in leasebacks that are subordinated to other interests in the land, buildings, and improvements (e.g., first mortgages); in that case, the leaseback interest willwould be subject to greater risks.
INVESTMENTS IN MORTGAGES
General:The Account can originate or acquire interests in mortgage loans, generally on the same types of properties it might otherwise buy. These mortgage loans may pay fixed or variable interest rates or have “participating” features (as described below). Normally the Account’s mortgage loans will be secured by properties that have income-producing potential. They usually will not be insured or guaranteed by the U.S. government, its agencies or anyone else. They usually will be non-recourse, which means they won’t be the borrower’s personal obligations. Most will be first mortgage loans on existing income-producing
TIAA Real Estate Account§Prospectus7
property, with first-priority liens on the property. These loans may be amortized (i.e., principal is paid over the course of the loan), or may provide for interest-only payments, with a balloon payment at maturity.
Participating Mortgage Loans:The Account may make mortgage loans which permit the Account to share (have a “participation”) in the income from or appreciation of the underlying property. These participations let the Account receive additional interest, usually calculated as a percentage of the income the borrower receives from operating, selling or refinancing the property. The Account may also have an option to buy an interest in the property securing the participating loan.
Managing Mortgage Loan Investments:TIAA can manage the Account’s mortgage loans in a variety of ways, including:
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| • | consenting to a sale of the property subject to a mortgage loan, |
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| • | selling the mortgage loans, or portions of them, before maturity |
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OTHER REAL ESTATE-RELATED INVESTMENTS
Real Estate Investment Trusts:The Account may invest in real estate investment trusts (REITs), which are publicly owned entities that lease, manage, acquire, hold mortgages on, and develop real estate. Normally the Account will buy the common or preferred stock of a REIT, although at times it may purchase REIT debt securities. REITs seek to maximize share value and increase cash flows by acquiring and developing new real estate projects, upgrading existing properties or renegotiating existing arrangements to increase rental rates and occupancy levels. REITs must distribute at least 90% of their taxable income to shareholders in order to benefit from a special tax structure, which means they may pay high dividends. The value of a particular REIT can be affected by such factors as cash flow, the skill of its management team, and defaults by its lessees or borrowers.
Stock of Companies Involved in Real Estate Activities:The Account can invest in common or preferred stock of companies whose business involves real estate. These stocks may be listed on U.S. or foreign stock exchanges or traded over-the-counter in the U.S. or abroad.
Mortgage-Backed Securities:The Account can invest in mortgage-backed securities and other mortgage-related or asset-backed instruments, including commercial mortgage-backed securities (CMBSs), residential mortgage-backed securities, mortgage-backed securities issued or guaranteed by agencies or instrumentalities of the U.S. government, non-agency mortgage instruments, and collateralized mortgage obligations that are fully collateralized by a portfolio of mortgages or mortgage-related securities. Mortgage-backed securities are
8Prospectus§ TIAA Real Estate Account
instruments that directly or indirectly represent a participation in, or are secured by and payable from, one or more mortgage loans secured by real estate. In most cases, mortgage-backed securities distribute principal and interest payments on the mortgages to investors. Interest rates on these instruments can be fixed or variable. Some classes of mortgage-backed securities may be entitled to receive mortgage prepayments before other classes do. Therefore, the prepayment risk for a particular instrument may be different than for other mortgage-related securities.
Investment Vehicles Involved in Real Estate Activities:The Account can hold interests in limited partnerships, funds, and other commingled investment vehicles involved in real estate-related activities, including owning, financing, managing, or developing real estate.
NON-REAL ESTATE-RELATED INVESTMENTS
The Account can also invest in:
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| • | U.S. government or government agency securities |
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| • | 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, |
TIAA Real Estate AccountProspectus|7
bankers’ acceptances, repurchase agreements, interest-bearing time deposits, and corporate debt securities | ||
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| • | Corporate debt or asset-backed securities of U.S. or foreign entities, or debt securities of foreign governments or multi-national organizations, but only if they’re investment-grade and rated in the top four categories by a nationally recognized rating organization (or, if not rated, deemed by TIAA to be of equal quality) |
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| • | Common or preferred stock, or other ownership interests, of U.S. or foreign companies that aren’t involved in real estate, to a limited extent |
FOREIGN REAL ESTATE AND OTHER FOREIGN INVESTMENTS
The Account may invest in foreign real estate or real estate-related investments. It might also invest in securities or other instruments of foreign government or private issuers. While the percentage will vary, we expect that foreign investments will comprise no more than 25 percent of the Account’s total assets.
Depending on investment opportunities, the Account’s foreign investments could at times be concentrated in one or two foreign countries. We will consider the special risks involved in foreign investing before investing in foreign real estate and won’t invest unless our standards are met.
TIAA Real Estate Account§Prospectus9
GENERAL INVESTMENT AND OPERATING POLICIES
STANDARDS FOR REAL ESTATE INVESTMENTS
General Criteria for Buying Real Estate or Making Mortgage Loans:Before the Account purchases real estate or makes a mortgage loan, TIAA will consider such factors as:
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| • | the location, condition, and use of the underlying property |
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| • | its operating history, and its future income-producing capacity |
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| • | the quality, operating experience, and creditworthiness of the borrower |
TIAA will analyze the fair market value of the underlying real estate, taking into account the property’s operating cash flow (based on the historical and projected levels of rental and occupancy rates and expenses), as well as the general economic conditions in the area where the property is located.
Diversification:We haven’t placed percentage limitations on the type and location of properties that the Account can buy. However, the Account seeks to diversify its investments by type of property and geographic location. How much the Account diversifies will depend upon whether suitable investments are available and how much the Account has available to invest.
Special Criteria for Making Mortgage Loans:Ordinarily, the Account will only make a mortgage loan if the loan, when added to any existing debt, will not exceed 85 percent of the appraised value of the mortgaged property when the loan is made, unless the Account is compensated for taking additional risk.
8|ProspectusTIAA Real Estate Account
Selling Real Estate Investments:The Account doesn’t 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 which have either maximized in value, underperformed or represent properties needing significant capital infusions in the future. The Account will reinvest any sale proceeds that it doesn’t need to pay operating expenses or to meet redemption requests (e.g., cash withdrawals or transfers).
OTHER REAL ESTATE-RELATED POLICIES
Appraisals:The Account will rely on TIAA’s own analysis, to appraisealong with an independent external appraisal, in connection with the purchase of a property by the Account. The Account will normally receive an independent external appraisal performed by a third party appraisal firm at or before the time it buys a real estate asset, and the Account also generally obtains an independent appraisal when it first buys it. After that, themakes mortgage loans. The Account’s properties and mortgage loans will then be appraised or valued once a year by an independent state-certified appraiser who is a member of a professional appraisal organization. In addition, TIAA’s appraisal staff will perform a valuation of each real estate property on a quarterly basis and on occasion, the Account will obtain independent apraisalsappraisals on a quarterly basis. While the Account usually won’t receive an independent appraisal before it buys real estate, it will get an independent appraisal when it makes mortgage loans. See “Valuing the Account’s Assets” on page 54.68.
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Borrowing:The Account may borrow money and assume or obtain a mortgage on a property —i.e., make leveraged real estate investments. In addition, to meet short-term cash needs, the Account may obtain a line of credit with terms requiring that the Account secure a loan with one or more of its properties. The Account’s total borrowings may not exceed 30% of the Account’s total net asset value at the time of incurrence. (InIn calculating the 30% limit, we will include only the Account’s actual percentage interest in any borrowings and not that of any joint venture partner.) The Account may only borrow up to 70% of the then current value of a property, although construction loans may be for 100% of costs incurred in developing the property. Except for construction loans, any mortgage loans on a property will be non-recourse, meaning that if the Account defaults on its loan, the lender will have recourse only to the property encumbered or the joint venture owning the property, and not to any other assets of the Account. When possible, the Account will seek to have loans mature at different times to limit the risks of borrowing.
The Account will not obtain mortgage financing from TIAA or any of its affiliates. However, the Account may place an intra-company mortgage on an Account property held by a subsidiary for tax planning or other purposes. This type of mortgage will not be subject to the general limitations on borrowing described above.
When the Account assumes or obtains a mortgage on a property, it will bear the expense of mortgage payments. It will also be exposed to certain additional risks, which are described in “Risks“Risks—Risks of Borrowing” on page 12.16.
Joint Investments:The Account can hold property jointly through general or limited partnerships, joint ventures, leaseholds, tenancies-in-common, or other
TIAA Real Estate AccountProspectus|9
legal arrangements. However, the Account will not hold real property jointly with TIAA or its affiliates.
Discretion to Evict or Foreclose:TIAA may, in its discretion, evict defaulting tenants or foreclose on defaulting borrowers to maintain the value of an investment, when it decides that it is in the Account’s best interests.
Property Management and Leasing Services:The Account usually will hire a localnational or regional independent third party property management company to perform the day-to-day management services for each of the Account’s properties, including supervising any on-site personnel, negotiating maintenance and service contracts, and providing advice on major repairs and capital improvements. The localproperty manager will also recommend changes in rent schedules and create marketing and advertising programs to attain and maintain goodhigh levels of occupancy rates by responsible tenants. The Account may also hire independent third party leasing companies to perform or coordinate leasing and marketing services to fill any vacancies. The fees paid to the localproperty management company, along with any leasing commissions and expenses, will reduce the Account’s cash flow from a property.
Insurance:We will try to arrange for, or require proof of, comprehensive insurance, including liability, fire, and extended coverage, for the Account’s real
TIAA Real Estate Account§Prospectus11
property and properties securing mortgage loans or subject to purchase-leaseback transactions. The Account’s insurance policies on its properties currently include some coverage for earthquakes and terrorist acts, but we can’t assure you that it will be adequate to cover all losses. We also can’t assure you that we will be able to obtain coverage for earthquakes and terrorist acts at an acceptable cost, if at all, whenat the currenttime a policy expires.
OTHER POLICIES
Liquid Assets:At times, a significant percentage of the Account may be invested in liquid assets (which may or may not be real estate-related) while we look for suitable real property investments. The Account can temporarily increase the percentage of its liquid assets under some circumstances, including the rapid inflow of participants’ funds, lack of suitable real estate investments, or a need for greater liquidity.
Investment Company Act of 1940:WeThe Account has not registered, and we intend to operate the Account so that it will not have to register, as an “investment company” under the Investment Company Act of 1940 (the 1940 Act). This will require monitoring the Account’s portfolio so that it won’t have more than 40 percent of total assets, other than U.S. government securities and cash items, in investment securities. As a result, the Account may be unable to make some potentially profitable investments, it may be unable to sell assets it would otherwise want to sell or it may be forced to sell investments in investment securities before it would otherwise want to do so.
Changing Operating Policies or Winding Down:Under the terms of the contracts and in accordance with applicable insurance law, TIAA can decide to change, in its sole discretion, the operating policies of the Account or to wind it down. If the Account is wound down, you may need to transfer your accumulations or annuity income to TIAA’s traditional annuity or any CREF account available under
10|ProspectusTIAA Real Estate Account
your employer’s plan. All investors in the Account will be notified in advance if we decide to change a significant policy or wind down the Account.
The value of your investment in the Account will go up and downfluctuate based on the value of the Account’s assets and the income the assets generate.The potential risk of investing in the Account is moderate. You can lose money by investing in the Account. The value of an investment in the Account will fluctuate based on the value of the Account’s assets and the income the assets generate. There is risk associated with an investor attempting to “time” an investment in the Account’s units, or effecting a redemption of an investor’s units. The Account’s assets and income can be affected by many factors, and you should consider the specific risks presented below before investing in the Account. Please refer to the section entitled “Statements Regarding Forward-Looking Information,” which is contained in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
12Prospectus§ TIAA Real Estate Account
RISKS OF REAL ESTATE INVESTING
General Risks of Acquiring and Owning Real Property:The Account is subject to the risks inherent in acquiring and owning real property, including:including in particular the following:
• | Economic Conditions.The economic conditions in the markets where the Account’s properties are located may be adversely impacted by factors which include: | ||
• | general global economic conditions; | ||
• | a weak market for real estate generally and/or in specific locations; | ||
• | availability of financing; | ||
• | an oversupply of, or a reduced demand for, certain types of real estate properties; | ||
• | business closings, industry slowdowns, employment losses and related factors; | ||
• | natural disasters, terrorist attacks and/or other man-made events; and | ||
• | decline in population or shifting demographics. | ||
The incidence of some or all of these factors could reduce occupancy or rental rates and the market value of the Account’s real properties. Further, the Account may experience periods in which its investments are geographically concentrated, either regionally or in certain markets with similar demographics. Also, the Account may experience periods in which its tenant base is concentrated within a particular industry sector. In these events, the Account’s income and performance may be adversely impacted disproportionately by deteriorating economic conditions in those areas or industry sectors in which the Account’s investments are concentrated.
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| • | Competition. The Account may face competition for real estate investments from multiple sources, including individuals, corporations, insurance companies or other insurance company separate accounts, as well as real estate limited partnerships, real estate investment funds, commercial developers, pension plans, other institutional and |
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| In addition, the Account’s properties may be located close to properties that are owned by other real estate investors and that compete with the Account for tenants. These competing properties may be better located and more |
TIAA Real Estate Account§Prospectus13
suitable for tenants than our properties, resulting in a competitive advantage for these other properties. We may also face similar competition from other properties that may be developed in the future. This competition may limit the Account’s ability to lease space, increase its costs of securing tenants, limit our ability to maximize our rents and/or require the Account to make capital improvements it otherwise would not, in order to make its properties more attractive to prospective tenants. | ||
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| • | A property may be unable to attract |
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| • | The Account could lose revenue if tenants do not pay rent when contractually obligated, or if the Account is forced to terminate a lease for nonpayment. |
• | Tenants may default under a lease at one of the Account’s properties, and in the event of any such default, we may experience a delay in, or an inability to effect, the enforcement of our rights against that tenant. Further, any disputes with tenants could | |
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| • | In the event a tenant vacates its space at an Account property, whether as a result of a default, the expiration of the lease term or otherwise, we may not be able to re-lease the vacant space for as much as the rent payable under the previous lease or not at all. Also, we may not be able to re-lease such space without incurring substantial expenditures for tenant improvements and other lease-up related costs, while still being obligated for any mortgage payments, real estate taxes and other expenditures related to the property. |
• | In some instances, our properties may be specifically suited to and/or outfitted for the particular needs of a certain tenant based on the type of business the tenant operates. For example, many companies desire space with an open floor plan. We may have difficulty obtaining a new tenant for any vacant space in our properties, particularly if the floor plan limits the types of businesses that can use the space without major renovation, which may require us to incur substantial expense in re-planning the space. | |
• | The Account owns and operates retail properties, which, in addition to the risks listed above, are subject to specific risks, including variations in rental revenues due to customary “percentage rent” clauses which may be in place for retail tenants and the insolvency and/or closing of an anchor tenant. Under certain circumstances, the leases may allow other tenants in a retail property to terminate their leases, reduce or withhold rental payments. The insolvency and/or closing of an anchor tenant may also cause such tenants to fail to renew their leases at expiration. | |
• | Operating Costs. A property’s | |
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reimbursed by tenants | ||
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| • | Terrorism and Acts of War and Violence.Terrorist attacks may harm our property investments and therefore your investment return. The Account cannot assure you that there will not be further terrorist attacks against the United States, U.S. businesses or elsewhere in the world. These attacks or armed conflicts may |
General Risks of Selling Real Estate Investments:Among the risks of selling real estate investments are:
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| • | The sale price of an Account property might differ from its estimated or appraised value, leading to losses or reduced profits to the Account. |
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| • | The Account may need to provide financing to a purchaser if no cash buyers are available. |
• | For any particular property, the Account may be required to make expenditures for improvements to, or to correct defects in, the property before the Account is able to market and/or sell the property. |
Appraisal Risks:Real estate appraisals are only estimates of property values based on a professional’s opinion and may not be accurate predictors of the amount the Account would actually receive if it sold a property. Appraisals can be subjective in certain respects and rely on a variety of assumptions and conditions at that property or in the market (including, without limitation, a potential lack of recent transaction activity in such market) in which the property is located, which may change materially after the appraisal is conducted. If an appraisal is too high, the Account’s value could go down upon reappraisal or if the property is sold for a lower price than the appraisal. If appraisals arean appraisal is too low, those who redeem prior to an adjustment to the valuation or a property sale will have received less than their pro rata share of the value of the Account’s assets. Further, as the Account
TIAA Real Estate Account§Prospectus15
generally obtains appraisals only on a quarterly basis, and there willmay be circumstances in the interim in which the true value of a property is not reflected in the Account’s daily net asset value calculation.calculation or in the Account’s periodic financial statements. This disparity may be more apparent when the commercial and/or residential real estate markets experience an overall and possibly dramatic decline in property values in a relatively short period of time between appraisals.
Risks of Borrowing:The Account acquires some of its properties subject to existing financing or by borrowing new funds at the time of purchase, and may from time to time place new leverage on, or increase the leverage already placed on, existing properties the Account owns. The Account may borrow, in the aggregate, either directly or through its joint venture investments, an amount up to 30% of the Account’s Total Net Assets, and the Account may borrow up to 70% of the then-current value of a particular property. Among the risks of borrowing money and investing in a property subject to a mortgage are:
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| • | Regardless of the quality of the Account’s property for which financing is sought, general economic conditions, or the market conditions then in effect in the real estate finance industry, may hinder the Account’s ability to obtain financing for its property investments on favorable terms or at all. Such unfavorable terms might include high interest rates, increased fees and costs and restrictive covenants applicable to the Account’s operation of the property. |
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| • | If the Account obtains a mortgage loan that involves a balloon payment, there is a risk that the Account may not be able to make the lump sum principal payment due under the loan at the end of the loan term, or otherwise obtain adequate |
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| • | If the Account takes out variable-rate loans, the Account’s returns may be volatile when interest rates are volatile. Further, to the extent that the Account takes out fixed-rate loans and interest rates subsequently decline, this may cause the Account to pay interest at above-market rates for a significant period of time. |
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| • | The market valuation of mortgage loans payable could have an adverse impact on the Account’s performance. |
A general disruption in the credit markets, such as the credit markets have been recently experiencing, may aggravate some or all of these risks.
Investment Risk Associated with Participant Transactions.The amount we have available to invest in new properties and other real estate related assets will depend, in large part, on the level of participant premiums coming into the
16Prospectus§ TIAA Real Estate Account
Account, as well as the level of net participant transfers into or out of the Account. If the amount of such premiums and/or net participant transfers into the Account were to experience a significant decline for a period of time, we may not have enough available funds to pursue, or consummate, every new investment opportunity presented to us that is otherwise attractive to the Account. This, in turn, could harm the Account’s returns.
Regulatory Risks:Government regulation at the federal, state and local levels, including, without limitation, zoning laws, rent control or rent stabilization laws, laws regulating housing on the Account’s multifamily residential properties, the Americans with Disabilities Act, property taxes and fiscal, accounting, environmental or other government policies, could operate or change in a way that hurtsadversely affects the Account and its properties. For example, these regulations could raise
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the cost of owning, improving or maintaining properties, present barriers to otherwise desirable investment opportunities or make it harder to sell, rent, finance, or refinance properties either on economically desirable terms, or at all, due to the increased costs associated with regulatory compliance.
Environmental Risks:The Account may be liable for damage to the environment or injury to individuals caused by hazardous substances used or found on its properties. Under various environmental regulations, the Account may also be liable, as a current or previous property owner or mortgagee, for the cost of removing or cleaning up hazardous substances found on a property, even if it didn’t know of and wasn’t responsible for the hazardous substances. If any hazardous substances are present or the Account doesn’t properly clean up any hazardous substances, or if the Account fails to comply with regulations requiring it to actively monitor the business activities on its premises, the Account may have difficulty selling or renting a property or be liable for monetary penalties. Further, environmental laws may impose restrictions on the manner in which a property may be used, the tenants which may be allowed, or the manner in which businesses may be operated, which may require the Account to expend funds, and such laws may also cause the most ideal use of the property to differ from that originally contemplated and as a result could impair the Account’s returns. The cost of any required cleanup relating to a single real estate investment (including remediating contaminated property) and the Account’s potential liability for environmental damage, including performancepaying personal injury claims and performing under indemnification obligations to third parties, to a single real estate investment could exceed the value of the Account’s investment in a property, the property’s value, or in an extreme case, a significant portion of the Account’s assets.
Uninsurable Losses:Certain catastrophic losses (e.g., from earthquakes, wars, terrorist acts, nuclear accidents, floods or environmental or industrial hazards or accidents) may be uninsurable or so expensive to insure against that it is economically disadvantageous to buy insurance for them. If a disaster that we haven’t insured against occurs, or if the insurance contains a high deductible, the Account could lose both its original investment and any future profits from the property affected. In addition, some leases may permit a tenant to terminate its
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obligations in certain situations, regardless of whether those events are fully covered by insurance. In that case, the Account would not receive rental income from the property while that tenant’s space is vacant.
Risks of Developing Real Estate or Buying Recently Constructed Properties:If the Account chooses to develop a property or buys a recently constructed property, it may face the following risks:
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| • | In developing real estate, there may be delays or unexpected increases in the cost of property development and construction due to strikes, bad weather, material shortages, increases in material and labor costs or other events. |
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| • | Because external factors may have changed from when the project was originally conceived (e.g., slower growth in local economy, higher interest rates, or overbuilding in the area), the property |
Risks of Joint Ownership:Investing in joint venture partnerships or other forms of joint property ownership may involve special risks.
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| • | The co-venturer may have interests or goals inconsistent with those of the Account. |
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| • | If a co-venturer doesn’t follow the Account’s instructions or adhere to the Account’s policies, the jointly-owned properties, and consequently the Account, might be exposed to greater liabilities than expected. |
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| • | The Account may have limited rights pursuant to the terms of the joint venture, including the right to operate, manage or dispose of a property. |
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| • | A co-venturer can make it harder for the Account to transfer its property interest, particularly if the co-venturer has the right to decide whether and when to sell the property. |
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| • | The co-venturer may be unable to fulfill its obligations (such as to fund its pro rata share of expenditures or guarantee obligations of the venture) during the term of such agreement or may become insolvent or bankrupt, either of which could expose the Account to greater liabilities than expected. |
Risks with Purchase-Leaseback Transactions:The major risk of purchase leaseback transactions is that the third party lessee will not be ableunable to make required payments to the Account. If the leaseback interest is subordinate to other interests in the real property, such as a first mortgage or other lien, the risk to the Account increases because the lessee may have to pay the senior lienholder to prevent foreclosure before it pays the Account. If the lessee defaults or the leaseback is terminated prematurely, the Account might not recover its investment unless the property is sold or leased on favorable terms.
RISKS OF MAKING MORTGAGE LOAN INVESTMENTS
General Risks of Mortgage Loans:The Account will be subject to the risks inherent in making mortgage loans, including:
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| • | The borrower may default on the loan, requiring that the Account foreclose on the underlying property to protect the value of its mortgage loan. Since its mortgage loans are usually non-recourse, the Account must rely solely on the value of a property for its security. |
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| • | The larger the mortgage loan compared to the value of the property securing it, the greater the loan’s risk. Upon default, the Account may not be able to sell the property for its estimated or appraised value. Also, certain liens on the property, such as mechanic’s or tax liens, may have priority over the Account’s security interest. |
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| • | A deterioration in the financial condition of tenants, which could be caused by general or local economic conditions or other factors beyond the control of the Account, or the bankruptcy or insolvency of a major tenant, may adversely affect the income of a property, which could increase the likelihood that the borrower will default under its obligations. |
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| • | The borrower may |
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| • | If interest rates are volatile during the loan period, the Account’s variable-rate mortgage loans could have volatile yields. Further, to the extent the Account makes mortgage loans with fixed interest rates, it may receive lower yields that that which is then available in the market if interest rates rise generally. |
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• | Prepayment Risks:The Account’s mortgage loan investments will usually be subject to the risk that the borrower repays a loan early. Also, we may be unable to reinvest the proceeds at as high an interest rate as the original mortgage loan rate. | |
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• | Interest Limitations:The interest rate we charge on mortgage loans may inadvertently violate state usury laws that limit rates, if, for example, state law changes during the loan term. If this happens, we could incur penalties or may | |
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• | Risks of Participations:Participating mortgages are subject to the following additional risks: | |
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| • | The participation feature, in tying the Account’s returns to the performance of the underlying asset, might generate insufficient returns to make up for the higher interest rate the loan would have obtained without the participation feature. |
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| • | In very limited circumstances, a court |
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RISKS OF INVESTING IN REAL ESTATE INVESTMENT TRUST (“REIT”) SECURITIES
Investments in REIT securities are subject to many of the same general risks associated with direct real property ownership. In particular, equity REITs may be affected by changes in the value of the underlying property owned by the trust, while mortgage REITs may be affected by the quality of any credit extended. In addition to these risks, because REIT investments are securities, they may be exposed to market risk and potentially significant price volatility due to changing conditions in the financial markets and, in particular, changes in overall interest rates.rates, regardless of the value of the underlying real estate such REIT may own.
In addition, REITs are tax regulated entities established to invest in real estate-related assets. REITs do not pay federal income taxes if they distribute most of their earnings to their shareholders and meet other tax requirements. As a result, REITs are subject to tax risk in continuing to qualify as a REIT.
RISKS OF MORTGAGE-BACKED SECURITIES
Mortgage-backed securities are subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. In particular, these types of investments may be subject to prepayment risk or extension risk (i.e., the risk that borrowers will repay the loans earlier or later than anticipated). If the underlying mortgage assets experience faster than anticipated prepayments of principal, the Account could fail to recoup some or all of its initial investment in these securities, since the original price paid by the Account was based in part on assumptions regarding the receipt of interest payments. If the underlying mortgage assets are repaid later than anticipated, the Account could lose the opportunity to reinvest the anticipated cash flows at a time when interest rates might be rising. The rate of prepayments depends on a variety
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of geographic, social and other functions, including prevailing market interest rates and general economic factors. Further, the underlying mortgage loans may experience defaults with greater frequency than projected when such mortgages were underwritten, which would impact the values of these securities, and could hamper our ability to sell such securities.
TheImportantly, the market value of these securities is also highly sensitive to changes in interest rates.rates, liquidity of the secondary market and economic conditions impacting financial institutions and the credit markets generally. Note that the potential for appreciation, which could otherwise be expected to result from a decline in interest rates, may be limited by any increased prepayments. Further, volatility and disruption in the mortgage market and credit markets generally (such as has recently been the case) may cause there to be a very limited secondary market for these securities and they may be harder to sell than other securities.
CONFLICTS OF INTEREST WITHIN TIAA
TIAA and its affiliates (including Teachers Advisors, Inc., its wholly owned subsidiary) have interests in other real estate programs and accounts and also engage in other business activities and as such, they will have conflicts of interest in
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allocating their time between the Account’s business and these other activities. Also, the Account may be buying properties at the same time as TIAA affiliates that may have similar investment objectives to those of the Account. There is also a risk that TIAA will choose a property that provides lower returns to us than a property purchased by TIAA and its affiliates. Further, the Account will likely acquire properties in geographic areas where TIAA and its affiliates own properties. In addition, the Account may desire to sell a property at the same time another TIAA affiliate is selling a property in an overlapping market. Conflicts could also arise because some properties owned by TIAA and its affiliates may compete with the Account’s properties for tenants. Among other things, if one of the TIAA entities attracts a tenant that we are competing for, we could suffer a loss of revenue due to delays in locating another suitable tenant. TIAA has adopted allocation policies and procedures applicable to the purchasing conflicts scenario, but the resolution of such conflicts may be economically disadvantageous to the Account. As a result of TIAA’s and its affiliates’ obligations to other current and potential TIAA-sponsored investment vehicles with similar objectives to those of the Account, we cannot assure you that the Account will be able to take advantage of every attractive investment opportunity that otherwise is in accordance with the Account’s investment objectives. For a discussion of the relevant allocation policies and procedures TIAA has established, see “Establishing and Managing the Account – the Role of TIAA – Conflicts of Interest.”
RISKS OF LIQUID INVESTMENTS
The Account’s investments in marketable securities and mortgage loans receivable are subject to the following general risks:
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| • | Financial Risk— The risk, for debt securities, that the issuer will not be able to pay principal and interest when due and, for common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value. |
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| • | Market Risk— The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets and, particularly for debt securities, changes in overall interest rates. |
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| • | Interest Rate Volatility— The risk that interest rate volatility may affect the Account’s current income from an investment. |
Further, to the extent that a significant portion of the Account’s net assets at any particular time are comprised of cash, cash equivalents and marketable securities, the Account’s returns may suffer as compared to the return that could have been generated by more profitable investments.
RISKS OF FOREIGN INVESTMENTS
In addition to other investment risks noted above, foreign investments present the following special risks:
• | The value of foreign investments or rental income can increase or decrease due to changes in currency rates, currency exchange control regulations, |
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possible expropriation or confiscatory taxation, political, social, and economic developments, and foreign regulations. | ||
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| • | Foreign real estate markets may have different liquidity and volatility attributes than U.S. markets. |
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| • | The Account may, but is not required to, seek to hedge its exposure to changes in currency rates, which could involve extra costs. |
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NO OPPORTUNITY FOR PRIOR REVIEW OF PURCHASE
Investors do not have the opportunity to evaluate the economic or financial merit of the purchase of a property or other investment before the Account completes the purchase, so investors will need to rely solely on TIAA’s judgment and ability to select investments consistent with the Account’s investment objective and policies. Further, the Account may change its investment objective and pursue specific investments without the consent of the Account’s investors.
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RISKS OF REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940
The Account has not registered, and management intends to continue to operate the Account so that it will not have to register, as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Generally, a company is an “investment company” and required to register under the Investment Company Act if, among other things, it holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities, or it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of such company’s total assets (exclusive of government securities and cash items) on an unconsolidated basis.
If the Account were obligated to register as an investment company, the Account would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things, limitations on capital structure, restrictions on certain investments, compliance with reporting, record keeping, voting and proxy disclosure requirements and other rules and regulations that could significantly increase its operating expenses and reduce its operating flexibility. To maintain compliance with the exemptions from the Investment Company Act, the Account may be unable to sell assets it would otherwise want to sell and may be unable to purchase securities it would otherwise want to purchase, which might materially adversely impact the Account’s performance.
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ESTABLISHING AND MANAGING THE ACCOUNT —THE ROLE OF TIAA
ESTABLISHING THE ACCOUNT
TIAA’s Board of Trustees established the Real Estate Account as a separate account of TIAA under New York law on February 22, 1995. The Account is regulated by the State of New York Insurance Department (NYID) and the insurance departments of some other jurisdictions in which the annuity contracts are offered. Although TIAA owns the assets of the Real Estate Account, and the Account’s obligations are obligations of TIAA, the Account’s income, investment gains, and investment losses are credited to or charged against the assets of the Account without regard to TIAA’s other income, gains, or losses. Under New York insurance law, we can’t charge the Account with liabilities incurred by any other TIAA business activities or any other TIAA separate account.
MANAGING THE ACCOUNT
TIAA employees, under the direction and control of TIAA’s Board of Trustees and its Investment Committee, manage the investment of the Account’s assets,
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following investment management procedures TIAA adopted for the Account. The Account does not have officers, directors or employees. TIAA’s investment management responsibilities include:
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| • | identifying, recommending and purchasing appropriate real estate-related and other investments |
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| • | providing (including by arranging for others to provide) all portfolio accounting, custodial, and related services for the Account |
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| • | arranging for others to provide certain advisory or other management services to the Account’s joint ventures or other investments |
�� TIAA providesand its affiliates provide all services to the Account at cost. For more information about the charge for investment management services, see “Expense Deductions” on page 57.73.
You don’t have the right to vote for TIAA Trustees directly.Trustees. See “Voting Rights” on page 80.99. For information about the Trustees, principalcertain executive officers of TIAA and the Account’s portfolio managment team, see Appendix A of this prospectus on page 212.
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TIAA’s ERISA Fiduciary Status.To the extent that assets of a plan subject to the Employee Retirement Income Security Act of 1974, as amended (ERISA) are allocated to the Account, TIAA will be acting as an “investment manager” and a fiduciary under ERISA with respect to those assets.
LIQUIDITY GUARANTEE
TIAA provides the Account with a liquidity guarantee —i.e., TIAA ensures that the Account has funds available to meet participant transfer or cash withdrawal requests. If the Account can’t fund participant requests from the
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Account, TIAA’s general account will fund them by purchasing Account accumulation units (liquidity units). TIAA guarantees that you can redeem your accumulation units at their accumulation unit value next determined.determined after your transfer or cash withdrawal request is received in good order. Importantly, however, this liquidity guarantee is not a guarantee of the investment performance of the Account or a guarantee of the value of your units. Of course, you can make a cash withdrawal only if allowed by the terms of your plan. The Account pays TIAA for the liquidity guarantee through a daily deduction from the Account’s net assets. See “Expense Deductions” on page 57.
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An independent fiduciary (described below) monitors the Account to ensure, among other things, that TIAA does not own too much of the Account and may require TIAA to redeem some of its liquidity units, particularly when the Account has uninvested cash or liquid investments available. The independent fiduciary may also propose properties for the Account to sell so that TIAA can redeem liquidity units. TIAA does not currently own liquidity units.
CONFLICTS OF INTEREST
TIAA does not accept acquisition or placement fees for the services it provides to the Account. Employees of TIAA may also provide investment advice with respect to investments managed by Teachers Advisors, Inc. (“Advisors”), an indirect, wholly owned subsidiary of TIAA. In addition, TIAA and its affiliates offer (and may
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offer in the future offer) other investment products that are not managed under an “at cost” expense structure. Therefore, TIAA may at times face various conflicts of interest.
For example, TIAA’s general account andGeneral Account, a privately offered core property investment fund (the “core property investment fund”), TIAA-CREF U.S. Real Estate Fund I, L.P (the “U.S. Real Estate Fund” which, along with the TIAA-CREF Asset Management Core Property Fund L.P. (the “Core Property Fund”), whichcore property investment fund, is managed by Advisors,Advisors), may sometimes compete with the Real Estate Account in the purchase of investments. (Each of TIAA’s general accounts,General Account, the Real Estate Account, the core property investment fund and the Core PropertyU.S. Real Estate Fund, together with any other real estate accounts or funds that may be established by TIAA or its affiliates in the future, are herein referred to as an “account.”)
Allocation Procedure. TIAA and its affiliates allocate new investments among the accounts in accordance with a written allocation procedure as adopted by TIAA and modified from time to time. Generally, the portfiolioportfolio managers for each of the accounts will identify acquisition opportunities which conform to the investment strategy of the account. If more than one account expresses an interest and an informal resolution cannot be reached, a special TIAA Allocation Committee, consisting primarily of senior TIAA real estate professionals (including the portfolio managers for each account), will seek to resolve any conflict by considering a number of factors, including the investment strategy of the bidding account, the relative capital available for investment by each account, liquidity requirements, portfolio diversification, whether the property would be at a competitive disadvantage to properties owned by another account in the subject
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market and such other factors deemed relevant by the Allocation Committee.Committee (and subject to any investment limitations or other requirements in the account’s governing documents, Investment Guidelines or applicable laws or regulations (including ERISA and insurance laws)). If this analysis does not determine, by a unanimous vote of the Allocation Committee, which account should participate in a transaction, a strict rotation system will be used whereby the interested account highest on the list will be allowed to participate in the transaction, and then such account will drop to the bottom of the list thereafter. The secretary of the Allocation Committee will prepare a quarterly report describing the allocations made during the previous quarter based on this allocation procedure. This report will also be reviewed by a committee of senior TIAA executives which is separate from the Allocation Committee and which functions as an internal monitor of compliance with this allocation procedure.
Conflicts could also arise because some properties in TIAA’s general accountGeneral Account, the core property investment fund and the Core Property Fundother accounts may compete for tenants with the Real Estate Account’s properties. We will seek to resolve this conflict by determining the tenant’s preference between the two properties, how much the tenant is willing to pay for rent, and which property can best afford to pay any required costs associated with such leasing. Finally, conflicts could potentially arise when two TIAA accounts attempt to sell properties located in the same market or submarket, especially if there are a limited number of potential purchasers.
Many of the personnel of TIAA involved in performing services to the Real Estate Account will have competing demands on their time. The personnel will devote such time to the affairs of the Account as TIAA’s management determines, in its sole discretion exercising good faith, is necessary to properly service the Account. TIAA believes that it has sufficient personnel to discharge its responsibility to the Real Estate Account, the general account,General Account, the core property investment fund and the Core PropertyU.S. Real Estate Fund and to avoid conflicts of interest. TIAA or its affiliates may form other real estate investment vehicles in the future and we will take steps to assure that those vehicles are integrated into these conflict of interest policies.
INDEMNIFICATION
The Account has agreed to indemnify TIAA and its affiliates, including its officers and trustees, against certain liabilities to the extent permitted by law,
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including liabilities under the Securities Act of 1933. The Account may make such indemnification out of its assets.
ROLE OF THE INDEPENDENT FIDUCIARY
Because TIAA’s ability to purchase and sell liquidity units raises certain technical issues under ERISA, TIAA applied for and received a prohibited transaction exemption from the U.S. Department of Labor (PTE 96-76). In connection with the exemption, TIAA has appointed an independent fiduciary for the Real Estate Account, with overall responsibility for reviewing Account
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transactions to determine whether they are in accordance with the Account’s investment guidelines.
Real Estate Research Corporation, a real estate consulting firm whose principal offices are located in Chicago, Illinois, currently serves as the Account’s independent fiduciary. The independent fiduciary’s responsibilities include:
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| • | reviewing and approving the Account’s investment guidelines and monitoring whether the Account’s investments comply with those |
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| • | reviewing and approving valuation procedures for the Account’s |
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| • | approving adjustments to any property valuations that change the value of the property or the Account as a whole above or below certain prescribed levels, or that are made within three months of the annual independent |
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| • | reviewing and approving how the Account values accumulation and annuity |
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| • | approving the appointment of all independent |
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| • | reviewing the purchase and sale of units by TIAA to ensure that the Account uses the correct unit |
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| • | requiring appraisals besides those normally conducted, if the independent fiduciary believes that any of the properties have changed materially, or that an additional appraisal is necessary to |
The independent fiduciary also must monitor TIAA’s ownership in the Account and supervise any winding down of the Account’s operations. Its responsibilities include:
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| • | calculating the percentage of total accumulation units that TIAA’s ownership shouldn’t exceed (the trigger point) and creating a method for changing the trigger |
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| • | approving any adjustment of TIAA’s interest in the Account and requiring an adjustment if TIAA’s investment reaches the trigger |
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| • | participating in any program to reduce TIAA’s ownership in the Account or to facilitate winding down the Account, including selecting properties for sale, providing sales guidelines, and approving those sales that, in the independent fiduciary’s opinion, are |
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A special subcommittee consisting of five (5) independent outside members of the Investment Committee of TIAA’s Board of Trustees appointed Real Estate Research Corporation as the independent fiduciary for a three-year term, starting March 1, 2006. This subcommittee may renew the independent fiduciary appointment, remove the independent fiduciary, or appoint its successor. The independent fiduciary can be removed for cause by the vote of a majoritythree (3) out of the five (5) subcommittee members and will not be reappointed if 40 percenttwo (2) of the subcommittee members disapprove the reappointment. ItThe independent fiduciary can resign after at least 180 days’ written notice.
26Prospectus§TIAA Real Estate Account
TIAA pays the independent fiduciary directly. The investment management charge paid to TIAA includes TIAA’s costs for retaining the independent fiduciary. The independent fiduciary will receive less than 5 percent of its annual income (including payment for its services to the Account) from TIAA and its affiliates.
When you decide as a participant or plan fiduciary to invest in the Account, after TIAA has provided you with full and fair disclosure including the disclosure in this prospectus, you are also acknowledging that you approve and accept Real Estate Research Corporation or any successor to serve as the Account’s independent fiduciary.
THE PROPERTIES — IN GENERAL
As of December 31, 2006,2007, the Account owned a total of 121111 real estate property investments (109(99 of which were wholly owned and 12 of which were held in real estate related joint ventures)ventures and one remaining equity interest in a joint venture in which the Account sold its real estate holdings during the third quarter of 2007) representing 80.03%77.91% of the Account’s total investment portfolio. The real estate portfolio included 49 office properties (six of which were held in joint ventures and one located in London, England), 35 industrial properties (including one held in a joint venture), 23 apartment complexes, 13 retail properties (including four held in joint ventures), and a 75% joint venture interest in a portfolio of storage facilities.included:
• | 46 office properties (five of which were held in joint ventures and one property located in London, United Kingdom), | |
• | 27 industrial properties (including one held in a joint venture), | |
• | 21 apartment complexes, | |
• | 16 retail properties (including five held in joint ventures and one property located in Paris, France), and | |
• | a 75% joint venture interest in a portfolio of storage facilities located throughout the United States. |
Of the 121111 real estate property investments, only 1820 were subject to debt.debt (including seven joint venture property investments).
In the table beginning on the next pageimmediately below you will find general information about each of the Account’s portfolio property investments as of December 31, 2006.2007. The Account’s property investments includeeinclude both properties that are wholly owned by the Account and properties owned by the Account’s joint venture investments. Certain property investments are comprised of a portfolio of properties.
TIAA Real Estate AccountProspectus|§21Prospectus27
OFFICE PROPERTY INVESTMENTS
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Property |
| Location |
| Year |
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| Rentable | )(1) | Percent |
| Annual Avg. | (2) | Market | (3) | ||
1001 Pennsylvania Ave |
| Washington, DC |
| 1987 |
| 2004 |
| 756,603 |
| 100 | % | $ | 37.15 |
| $ | 640,149,632 | (4) |
Fourth & Madison(5) |
| Seattle, WA |
| 2002 |
| 2004 |
| 845,533 |
| 98 | % |
| 27.53 |
| $ | 487,000,000 | (4) |
50 Fremont Street |
| San Francisco, CA |
| 1983 |
| 2004 |
| 817,412 |
| 97 | % |
| 30.25 |
| $ | 478,000,000 | (4) |
1 & 7 Westferry Circus |
| London, UK |
| 1992, 1993 |
| 2005 |
| 386,206 |
| 81 | % |
| 64.08 |
| $ | 436,127,130 | (4)(6) |
Four Oaks Place |
| Houston, TX |
| 1983 |
| 2004 |
| 1,754,334 |
| 96 | % |
| 18.73 |
| $ | 419,270,107 |
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The Newbry |
| Boston, MA |
| 1940-1961 | (7) | 2006 |
| 607,424 |
| 100 | % |
| 26.47 |
| $ | 389,880,008 |
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780 Third Avenue |
| New York, NY |
| 1984 |
| 1999 |
| 487,566 |
| 95 | % |
| 50.01 |
| $ | 375,000,000 |
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Yahoo! Center(8) |
| Santa Monica, CA |
| 1984 |
| 2004 |
| 1,087,952 |
| 92 | % |
| 32.66 |
| $ | 369,402,407 |
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99 High Street |
| Boston, MA |
| 1971 |
| 2005 |
| 731,204 |
| 96 | % |
| 29.99 |
| $ | 344,688,328 | (4) |
Lincoln Centre |
| Dallas, TX |
| 1984 |
| 2005 |
| 1,638,132 |
| 87 | % |
| 16.95 |
| $ | 305,000,000 | (4) |
1900 K Street |
| Washington, DC |
| 1996 |
| 2004 |
| 333,098 |
| 100 | % |
| 44.27 |
| $ | 285,000,000 |
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701 Brickell |
| Miami, FL |
| 1986 | (9) | 2002 |
| 677,667 |
| 94 | % |
| 29.60 |
| $ | 275,941,582 |
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275 Battery(10) |
| San Francisco, CA |
| 1988 |
| 2005 |
| 472,261 |
| 90 | % |
| 34.73 |
| $ | 271,917,498 |
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Mellon Financial Center at One Boston Place(11) |
| Boston, MA |
| 1970 | (9) | 2002 |
| 804,444 |
| 95 | % |
| 38.74 |
| $ | 246,440,493 |
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Wilshire Rodeo Plaza |
| Beverly Hills, CA |
| 1935, 1984 |
| 2006 |
| 261,932 |
| 98 | % |
| 46.81 |
| $ | 230,439,415 | (4) |
1401 H Street NW |
| Washington, D.C. |
| 1992 |
| 2006 |
| 350,635 |
| 100 | % |
| 41.20 |
| $ | 224,576,156 | (4) |
Ten & Twenty Westport Road |
| Wilton, CT |
| 1974(9), 2001 |
| 2001 |
| 538,840 |
| 100 | % |
| 30.07 |
| $ | 183,006,040 |
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980 9th Street and 1010 8th Street(12) |
| Sacramento, CA |
| 1992 |
| 2005 |
| 447,865 |
| 95 | % | $ | 23.66 |
| $ | 178,000,000 |
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Millennium Corporate Park |
| Redmond, VA |
| 1999, 2000 |
| 2006 |
| 536,884 |
| 100 | % |
| 13.80 |
| $ | 158,000,000 |
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Urban Centre |
| Tampa, FL |
| 1984, 1987 |
| 2005 |
| 547,979 |
| 91 | % |
| 21.16 |
| $ | 135,577,463 |
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Pacific Plaza |
| San Diego, CA |
| 2000, 2002 |
| 2007 |
| 215,758 |
| 87 | % |
| 26.48 |
| $ | 127,130,076 | (4) |
Inverness Center |
| Birmingham, AL |
| 1980-1985 |
| 2005 |
| 903,857 |
| 100 | % |
| 12.27 |
| $ | 125,521,529 |
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88 Kearny Street |
| San Francisco, CA |
| 1986 |
| 1999 |
| 228,358 |
| 94 | % |
| 41.48 |
| $ | 123,822,200 |
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Morris Corporate Center III |
| Parsippany, NJ |
| 1990 |
| 2000 |
| 526,052 |
| 78 | % |
| 20.06 |
| $ | 119,600,001 |
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Treat Towers(13) |
| Walnut Creek, CA |
| 1999 |
| 2003 |
| 367,313 |
| 85 | % |
| 23.39 |
| $ | 118,997,021 |
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Prominence in Buckhead(13) |
| Atlanta, GA |
| 1999 |
| 2003 |
| 423,916 |
| 95 | % |
| 27.68 |
| $ | 115,427,071 |
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The Ellipse at Ballston |
| Arlington, VA |
| 1989 |
| 2006 |
| 194,914 |
| 100 | % |
| 32.81 |
| $ | 92,504,000 |
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Oak Brook Regency Towers |
| Oakbrook, IL |
| 1977 | (9) | 2002 |
| 402,318 |
| 78 | % |
| 13.09 |
| $ | 86,891,650 |
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Camelback Center |
| Phoenix, AZ |
| 2001 |
| 2007 |
| 231,345 |
| 94 | % |
| 24.38 |
| $ | 80,000,000 |
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28ProspectusProperties
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Property |
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| Rentable | (1) | Percent |
| Annual Avg. | (2) |
| Market | (3) | |
OFFICE PROPERTY INVESTMENTS |
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1001 Pennsylvania Ave |
| Washington, DC |
| 1987 |
| 2004 |
| 802,390 |
| 100 | % | $ | 34.11 |
| $ | 552,502,209 | (4) |
1 & 7 Westferry Circus |
| London, UK |
| 1992, 1993 |
| 2005 |
| 395,784 |
| 81 | % | $ | 63.96 |
| $ | 428,574,628 | (4)(5) |
50 Fremont Street |
| San Francisco, CA |
| 1983 |
| 2004 |
| 817,412 |
| 94 | % | $ | 30.05 |
| $ | 421,000,000 | (4) |
IDX Tower |
| Seattle, WA |
| 2002 |
| 2004 |
| 845,533 |
| 98 | % | $ | 28.07 |
| $ | 398,990,017 | (4) |
The Newbry |
| Boston, MA |
| 1940-1961 | (6) | 2006 |
| 607,685 |
| 100 | % | $ | 39.72 |
| $ | 370,745,525 |
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Four Oaks Place |
| Houston, TX |
| 1983 |
| 2004 |
| 1,754,366 |
| 96 | % | $ | 17.55 |
| $ | 306,200,984 |
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780 Third Avenue |
| New York, NY |
| 1984 |
| 1999 |
| 487,501 |
| 91 | % | $ | 40.89 |
| $ | 298,000,000 |
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99 High Street |
| Boston, MA |
| 1971 |
| 2005 |
| 731,204 |
| 90 | % | $ | 32.30 |
| $ | 291,806,564 | (4) |
Lincoln Centre |
| Dallas, TX |
| 1984 |
| 2005 |
| 1,635,352 |
| 90 | % | $ | 16.80 |
| $ | 270,000,000 | (4) |
1900 K Street |
| Washington, DC |
| 1996 |
| 2004 |
| 342,884 |
| 100 | % | $ | 40.72 |
| $ | 255,002,226 |
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701 Brickell |
| Miami, FL |
| 1986 | (7) | 2002 |
| 677,667 |
| 96 | % | $ | 30.44 |
| $ | 231,239,379 |
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Embarcadero Center West |
| San Francisco, CA |
| 1988 |
| 2005 |
| 472,261 |
| 87 | % | $ | 30.16 |
| $ | 231,000,000 |
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1401 H Street NW |
| Washington, D.C. |
| 1992 |
| 2006 |
| 348,629 |
| 96 | % | $ | 38.39 |
| $ | 207,806,286 | (4) |
Wilshire Rodeo Plaza |
| Beverly Hills, CA |
| 1935, 1984 |
| 2006 |
| 261,932 |
| 98 | % | $ | 48.32 |
| $ | 204,084,734 | (4) |
161 North Clark Street(8) |
| Chicago, IL |
| 1992 |
| 2003 |
| 1,010,520 |
| 94 | % | $ | 15.10 |
| $ | 189,183,793 |
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Yahoo! Center(9) |
| Santa Monica, CA |
| 1984 |
| 2004 |
| 1,082,952 |
| 99 | % | $ | 32.13 |
| $ | 187,766,625 |
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Mellon Financial Center at One Boston Place(10) |
| Boston, MA |
| 1970 | (7) | 2002 |
| 802,716 |
| 94 | % | $ | 38.17 |
| $ | 177,900,327 |
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Ten & Twenty Westport Road |
| Wilton, CT |
| 1974 | (7), 2001 | 2001 |
| 538,840 |
| 100 | % | $ | 30.03 |
| $ | 175,000,000 |
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980 9th Street and 1010 8th Street(11) |
| Sacramento, CA |
| 1992 |
| 2005 |
| 481,885 |
| 94 | % | $ | 21.58 |
| $ | 168,000,000 |
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Millennium Corporate Park |
| Redmond, VA |
| 1999, 2000 |
| 2006 |
| 536,884 |
| 100 | % | $ | 14.83 |
| $ | 139,107,181 |
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Urban Centre |
| Tampa, FL |
| 1984, 1987 |
| 2005 |
| 549,375 |
| 96 | % | $ | 19.49 |
| $ | 121,000,000 |
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Morris Corporate Center III |
| Parsippany, NJ |
| 1990 |
| 2000 |
| 525,154 |
| 78 | % | $ | 17.12 |
| $ | 114,857,104 |
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Inverness Center |
| Birmingham, AL |
| 1980-1985 |
| 2005 |
| 903,857 |
| 99 | % | $ | 12.00 |
| $ | 112,256,914 |
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Prominence in Buckhead(8) |
| Atlanta, GA |
| 1999 |
| 2003 |
| 424,309 |
| 95 | % | $ | 27.17 |
| $ | 107,256,320 |
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Treat Towers(8) |
| Walnut Creek, CA |
| 1999 |
| 2003 |
| 367,313 |
| 78 | % | $ | 24.63 |
| $ | 94,023,131 |
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88 Kearny Street |
| San Francisco, CA |
| 1986 |
| 1999 |
| 228,470 |
| 99 | % | $ | 43.53 |
| $ | 90,310,024 |
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The Ellipse at Ballston |
| Arlington, VA |
| 1989 |
| 2006 |
| 195,743 |
| 97 | % | $ | 31.61 |
| $ | 85,439,350 |
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Oak Brook Regency Towers |
| Oakbrook, IL |
| 1977 | (7) | 2002 |
| 402,318 |
| 83 | % | $ | 13.64 |
| $ | 83,200,000 |
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Sawgrass Office Portfolio |
| Sunrise, FL |
| 1997-2000 |
| 1997, 1999-2000 |
| 344,009 |
| 97 | % | $ | 13.81 |
| $ | 72,000,000 |
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Centerside I |
| San Diego, CA |
| 1982 |
| 2004 |
| 205,137 |
| 79 | % | $ | 21.25 |
| $ | 67,000,000 |
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Property |
| Location |
| Year |
| Year |
| Rentable | )(1) | Percent |
| Annual Avg. | (2) | Market | (3) | ||
West Lake North |
| Westlake Village, CA |
| 2000 |
| 2004 |
| 198,558 |
| 93 | % |
| 27.58 |
| $ | 68,621,818 |
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Centerside I |
| San Diego, CA |
| 1982 |
| 2004 |
| 202,913 |
| 67 | % |
| 19.06 |
| $ | 67,500,000 |
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The North 40 Office Complex |
| Boca Raton, FL |
| 1983, 1984 |
| 2006 |
| 350,000 |
| 93 | % |
| 10.44 |
| $ | 67,003,544 |
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Parkview Plaza |
| Oakbrook, IL |
| 1990 |
| 1997 |
| 264,461 |
| 95 | % |
| 15.98 |
| $ | 66,066,513 |
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3 Hutton Centre |
| Santa Ana, CA |
| 1985 | (9) | 2003 |
| 197,819 |
| 96 | % |
| 20.04 |
| $ | 64,200,000 |
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8270 Greensboro Drive |
| McLean, VA |
| 2000 |
| 2005 |
| 158,110 |
| 100 | % |
| 35.93 |
| $ | 63,500,000 |
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The Pointe on Tampa Bay |
| Tampa, FL |
| 1982 | (9) | 2002 |
| 250,357 |
| 97 | % |
| 23.93 |
| $ | 60,971,897 |
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One Virginia Square |
| Arlington, VA |
| 1999 |
| 2004 |
| 116,077 |
| 100 | % |
| 17.18 |
| $ | 59,538,690 |
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Capitol Place |
| Sacramento, CA |
| 1988 | (9) | 2003 |
| 167,920 |
| 96 | % |
| 26.72 |
| $ | 53,539,218 |
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Wellpoint |
| Westlake Village, CA |
| 1986, 1998 |
| 2006 |
| 216,751 |
| 100 | % |
| 12.93 |
| $ | 51,000,000 |
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Park Place on Turtle Creek |
| Dallas, TX |
| 1986 |
| 2006 |
| 177,169 |
| 93 | % |
| 22.43 |
| $ | 48,282,785 |
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4200 West Cypress Street |
| Tampa, FL |
| 1989 |
| 2003 |
| 219,815 |
| 100 | % |
| 22.36 |
| $ | 48,043,650 |
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Preston Sherry Plaza |
| Dallas, TX |
| 1986 |
| 2007 |
| 147,008 |
| 95 | % |
| 24.03 |
| $ | 45,500,000 |
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Tysons Executive Plaza II(14) |
| McLean, VA |
| 1988 |
| 2000 |
| 259,614 |
| 81 | % |
| 23.50 |
| $ | 44,178,210 |
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Creeksides at Centerpoint |
| Kent, WA |
| 1985 |
| 2006 |
| 218,712 |
| 84 | % |
| 12.30 |
| $ | 42,000,000 |
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Needham Corporate Center |
| Needham, MA |
| 1987 |
| 2001 |
| 138,259 |
| 87 | % |
| 20.00 |
| $ | 33,275,228 |
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Columbus Portfolio |
| Various, OH |
| 1997-1998 |
| 1999, 2001 |
| 259,686 |
| 92 | % |
| 9.90 |
| $ | 26,314,686 |
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Subtotal—Office Property Investments |
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| 94 | % |
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| $ | 8,332,846,046 |
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INDUSTRIAL PROPERTY INVESTMENTS |
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Ontario Industrial Portfolio(15) |
| Various, CA |
| 1997-1998 |
| 1998, 2000, 2004 |
| 3,981,894 |
| 100 | % |
| 3.08 |
| $ | 355,398,714 | (4) |
Dallas Industrial Portfolio(16)(17) |
| Dallas and Coppell, TX |
| 1997-2001 |
| 2000-2002 |
| 3,684,941 |
| 96 | % |
| 2.98 |
| $ | 154,055,892 |
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Rancho Cucamonga |
| Rancho |
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| 2000-2002 |
| 2000, 2001, 2002, 2004 |
| 1,490,235 |
| 100 | % |
| 3.31 |
| $ | 133,000,000 |
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Seneca Industrial Park |
| Pembroke Park, FL |
| 1999-2001 |
| 2007 |
| 882,182 |
| 96 | % |
| 5.62 |
| $ | 122,334,422 |
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Southern California RA Industrial Portfolio |
| Los Angeles, CA |
| 1982 |
| 2004 |
| 920,078 |
| 98 | % | $ | 6.44 |
| $ | 110,718,042 |
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22TIAA Real Estate Account|§Prospectus29
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Property |
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| Rentable | )(1) | Percent |
| Annual Avg. | (2) | Market | (3) | ||
Chicago Industrial Portfolio(17) |
| Chicago and Joliet, IL |
| 1997-2000 |
| 1998; 2000 |
| 1,427,699 |
| 100 | % |
| 3.94 |
| $ | 86,420,886 |
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Rainier Corporate Park |
| Fife, WA |
| 1991-1997 |
| 2003 |
| 1,104,646 |
| 100 | % |
| 3.52 |
| $ | 81,160,792 |
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Chicago CALEast Industrial |
| Chicago, IL |
| 1974-2005 |
| 2003 |
| 1,280,784 |
| 100 | % |
| 3.62 |
| $ | 77,642,826 |
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Shawnee Ridge Industrial Portfolio |
| Atlanta, GA | �� | 2000-2005 |
| 2005 |
| 1,422,922 |
| 100 | % |
| 3.19 |
| $ | 76,742,231 |
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IDI National Portfolio(19) |
| Various, U.S. |
| 1999-2004 |
| 2004 |
| 3,655,671 |
| 100 | % |
| 3.50 |
| $ | 76,536,044 |
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Regal Logistics Campus |
| Seattle, WA |
| 1999-2004 |
| 2005 |
| 968,535 |
| 100 | % |
| 4.15 |
| $ | 71,000,000 |
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Northern California RA Industrial Portfolio(17) |
| Oakland, CA |
| 1981 |
| 2004 |
| 657,602 |
| 98 | % |
| 4.11 |
| $ | 69,601,997 |
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Atlanta Industrial Portfolio(17) |
| Lawrenceville, GA |
| 1996-1999 |
| 2000 |
| 1,295,440 |
| 95 | % |
| 2.64 |
| $ | 58,300,000 |
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South River Road Industrial |
| Cranbury, NJ |
| 1999 |
| 2001 |
| 858,957 |
| 53 | % |
| 2.57 |
| $ | 53,400,000 |
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GE Appliance East Coast Distribution Facility |
| Perryville, MD |
| 2003 |
| 2005 |
| 1,004,000 |
| 100 | % |
| 2.82 |
| $ | 48,000,000 |
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Pinnacle Industrial/DFW Trade Center |
| Grapevine, TX |
| 2003, 2004, 2006 |
| 2006 |
| 899,200 |
| 100 | % |
| 3.47 |
| $ | 46,700,000 |
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New Jersey CALEast |
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Industrial Portfolio |
| Cranbury, NJ |
| 1982-1989 |
| 2003 |
| 807,773 |
| 50 | % |
| 2.23 |
| $ | 42,225,000 |
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East North Central RA |
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Industrial Portfolio |
| Chicago, IL |
| 1978 |
| 2004 |
| 541,266 |
| 98 | % |
| 4.25 |
| $ | 38,016,397 |
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Broadlands Business Park |
| Elkton, MD |
| 2006 |
| 2006 |
| 756,600 |
| 100 | % |
| 2.85 |
| $ | 35,500,000 |
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Centre Pointe and Valley View |
| Los Angeles County, CA |
| 1965-1989 |
| 2004 |
| 307,685 |
| 58 | % |
| 4.62 |
| $ | 34,142,741 |
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Northeast RA Industrial Portfolio |
| Boston, MA |
| 2000 |
| 2004 |
| 384,000 |
| 88 | % |
| 5.71 |
| $ | 33,300,000 |
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Summit Distribution Center |
| Memphis, TN |
| 2002 |
| 2003 |
| 708,532 |
| 100 | % |
| 2.52 |
| $ | 27,500,000 |
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Airways Distribution Center |
| Memphis, TN |
| 2005 |
| 2006 |
| 556,600 |
| 100 | % |
| 3.20 |
| $ | 24,300,000 |
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Konica Photo Imaging Headquarters |
| Mahwah, NJ |
| 1999 |
| 1999 |
| 168,000 |
| 100 | % |
| 2.87 |
| $ | 23,500,000 |
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30Prospectus§TIAAReal Estate Account
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Property |
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| Rentable | (1) | Percent |
| Annual Avg. | (2) | Market | (3) | |||
Northwest RA Industrial Portfolio |
| Seattle, WA |
| 1996 |
| 2004 |
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| 312,321 |
| 100 | % |
| 3.21 |
| $ | 23,401,540 |
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UPS Distribution Facility |
| Fernley, NV |
| 1998 |
| 1998 |
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| 256,000 |
| 100 | % |
| 3.39 |
| $ | 15,900,000 |
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FEDEX Distribution Facility |
| Crofton, MD |
| 1998 |
| 1998 |
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| 110,842 |
| 100 | % |
| 2.99 |
| $ | 9,900,000 |
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|
| ||
Subtotal—Industrial Property Investments |
|
|
|
|
|
|
|
|
|
| 96 | % |
|
|
| $ | 1,928,697,524 |
|
RETAIL PROPERTY INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DDR Joint Venture(20) |
| Various, U.S. |
| Various |
| 2007 |
|
| 16,183,158 |
| 95 | % | $ | 11.46 |
| $ | 1,028,297,460 |
|
The Florida Mall(21) |
| Orlando, FL |
| 1986 | (9) | 2002 |
|
| 1,061,308 | (22) | 99 | % |
| 41.99 |
| $ | 296,486,153 |
|
Printemps de l’Homme |
| Paris, France |
| 1930 |
| 2007 |
|
| 142,363 |
| 100 | % |
| 84.73 |
| $ | 279,077,542 | (6) |
Florida Retail Portfolio(23) |
| Various, FL |
| 1974-2005 |
| 2006 |
|
| 1,259,554 |
| 95 | % |
| 15.63 |
| $ | 260,879,060 |
|
Miami International |
| Miami, FL |
| 1982 | (9) | 2002 |
|
| 296,746 | (22) | 98 | % |
| 36.41 |
| $ | 109,944,638 |
|
Mazza Gallerie |
| Washington, DC |
| 1975 |
| 2004 |
|
| 293,935 |
| 99 | % |
| 19.84 |
| $ | 97,000,019 |
|
Westwood Marketplace |
| Los Angeles, CA |
| 1950 | (9) | 2002 |
|
| 202,201 |
| 100 | % |
| 29.93 |
| $ | 96,562,192 |
|
Marketfair |
| West Windsor, NJ |
| 1987 |
| 2006 |
|
| 244,469 |
| 99 | % |
| 23.04 |
| $ | 95,500,000 |
|
West Town Mall(21) |
| Knoxville, TN |
| 1972 | (9) | 2002 |
|
| 759,447 | (22) | 97 | % |
| 21.10 |
| $ | 75,826,066 |
|
Publix at Weston Commons |
| Weston, FL |
| 2005 |
| 2006 |
|
| 126,922 |
| 96 | % |
| 23.98 |
| $ | 55,200,000 | (4) |
Plainsboro Plaza |
| Plainsboro, NJ |
| 1987 |
| 2005 |
|
| 206,503 |
| 87 | % |
| 10.67 |
| $ | 51,000,000 |
|
South Frisco Village |
| Frisco, TX |
| 2002 |
| 2006 |
|
| 227,175 |
| 99 | % |
| 13.85 |
| $ | 48,500,000 | (4) |
The Market at Southpark |
| Littleton, CO |
| 1988 |
| 2004 |
|
| 190,104 |
| 98 | % |
| 10.16 |
| $ | 35,800,000 |
|
Suncrest Village |
| Orlando, FL |
| 1987 |
| 2005 |
|
| 93,358 |
| 98 | % |
| 10.89 |
| $ | 19,500,000 |
|
Champlin Marketplace |
| Champlin, MN |
| 1998-1999, 2005 |
| 2007 |
|
| 88,577 |
| 100 | % |
| 13.47 |
| $ | 18,375,000 |
|
Plantation Grove |
| Ocoee, FL |
| 1995 |
| 1995 |
|
| 73,655 |
| 99 | % |
| 11.82 |
| $ | 15,400,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Subtotal—Retail Property Investments |
|
|
|
|
|
|
|
|
|
| 97 | % |
|
|
| $ | 2,583,348,130 |
|
RESIDENTIAL PROPERTY INVESTMENTS(24) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Houston Apartment Portfolio(25) |
| Houston, TX |
| 1984-2004 |
| 2006 |
|
| NA |
| 93 | % |
| NA |
| $ | 296,241,497 |
|
Palomino Park Apartments |
| Denver, CO |
| 1996-2001 |
| 2005 |
|
| NA |
| 92 | % |
| NA |
| $ | 194,001,036 |
|
Kierland Apartment Portfolio(26) |
| Scottsdale, AZ |
| 1996-2000 |
| 2006 |
|
| NA |
| 97 | % |
| NA |
| $ | 170,084,494 |
|
TIAA Real Estate Account§Prospectus31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property |
| Location |
| Year |
| Year |
| Rentable | (1) | Percent |
| Annual Avg. | (2) | Market | (3) | |||
Phoenix Apartment Portfolio(27) |
| Greater Phoenix Area, AZ |
| 1995-1998 |
| 2006 |
|
| NA |
| 96 | % |
| NA |
| $ | 156,109,517 |
|
The Legacy at Westwood Apartments |
| Los Angeles, CA |
| 2001 |
| 2002 |
|
| NA |
| 79 | % |
| NA |
| $ | 126,579,694 |
|
The Colorado |
| New York, NY |
| 1987 |
| 1999 |
|
| NA |
| 98 | % |
| NA |
| $ | 113,033,240 |
|
Larkspur Courts |
| Larkspur, CA |
| 1991 |
| 1999 |
|
| NA |
| 94 | % |
| NA |
| $ | 97,000,000 |
|
Ashford Meadows Apartments |
| Herndon, VA |
| 1998 |
| 2000 |
|
| NA |
| 96 | % |
| NA |
| $ | 94,059,776 |
|
1050 Lenox Park |
| Atlanta, GA |
| 2001 |
| 2005 |
|
| NA |
| 97 | % |
| NA |
| $ | 85,500,000 |
|
Regents Court Apartments |
| San Diego, CA |
| 2001 |
| 2002 |
|
| NA |
| 99 | % |
| NA |
| $ | 69,000,000 |
|
South Florida Apartment |
| Boca Raton and |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Portfolio |
| Plantation, FL |
| 1986 |
| 2001 |
|
| NA |
| 92 | % |
| NA |
| $ | 68,248,605 |
|
The Caruth |
| Dallas, TX |
| 1999 |
| 2005 |
|
| NA |
| 88 | % |
| NA |
| $ | 65,427,458 |
|
Glenridge Walk |
| Atlanta, GA |
| 1996, 2001 |
| 2005 |
|
| NA |
| 94 | % |
| NA |
| $ | 52,900,000 |
|
The Reserve at Sugarloaf |
| Duluth, GA |
| 2000 |
| 2005 |
|
| NA |
| 92 | % |
| NA |
| $ | 52,000,000 | (4) |
The Lodge at Willow Creek |
| Denver, CO |
| 1997 |
| 1997 |
|
| NA |
| 97 | % |
| NA |
| $ | 43,500,000 |
|
The Maroneal |
| Houston, TX |
| 1998 |
| 2005 |
|
| NA |
| 97 | % |
| NA |
| $ | 40,033,822 |
|
Westcreek Apartments |
| Westlake Village, CA |
| 1988 |
| 1997 |
|
| NA |
| 87 | % |
| NA |
| $ | 39,189,673 |
|
Lincoln Woods Apartments |
| Lafayette Hill, PA |
| 1991 |
| 1997 |
|
| NA |
| 95 | % |
| NA |
| $ | 37,917,165 |
|
The Fairways of Carolina |
| Margate, FL |
| 1993 |
| 2001 |
|
| NA |
| 96 | % |
| NA |
| $ | 27,207,661 |
|
Royal St. George |
| W. Palm Beach, FL |
| 1995 |
| 1996 |
|
| NA |
| 96 | % |
| NA |
| $ | 27,000,000 |
|
Quiet Water at Coquina Lakes |
| Deerfield Beach, FL |
| 1995 |
| 2001 |
|
| NA |
| 97 | % |
| NA |
| $ | 26,204,860 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Subtotal—Residential Property Investments |
|
|
|
|
|
|
|
|
|
| 94 | % |
|
|
| $ | 1,881,238,498 |
|
OTHER COMMERCIAL PROPERTY INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Storage Portfolio I(28) |
| Various, U.S. |
| 1972-1990 |
| 2003 |
|
| 2,301,187 |
| 84 | % | $ | 9.83 |
| $ | 81,943,321 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Subtotal—Commercial Property Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 12,926,835,021 |
|
| ||||||||||||||||||
Total—All Property Investments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 14,808,073,519 |
|
32Prospectus§TIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
The North 40 Office Complex |
| Boca Raton, FL |
| 1983, 1984 |
| 2006 |
| 350,004 |
| 100 | % | $ | 10.91 |
| $ | 63,500,000 |
|
8270 Greensboro Drive |
| McLean, VA |
| 2000 |
| 2005 |
| 158,110 |
| 90 | % | $ | 31.68 |
| $ | 62,000,000 |
|
West Lake North Business Park |
| Westlake Village, CA |
| 2000 |
| 2004 |
| 198,558 |
| 100 | % | $ | 28.47 |
| $ | 61,000,000 |
|
Parkview Plaza |
| Oakbrook, IL |
| 1990 |
| 1997 |
| 263,912 |
| 86 | % | $ | 11.77 |
| $ | 59,400,000 |
|
3 Hutton Centre |
| Santa Ana, CA |
| 1985 | (7) | 2003 |
| 197,817 |
| 100 | % | $ | 25.38 |
| $ | 59,011,323 |
|
Monument Place |
| Fairfax, VA |
| 1990 |
| 1999 |
| 221,538 |
| 98 | % | $ | 20.90 |
| $ | 58,600,000 |
|
One Virginia Square |
| Arlington, VA |
| 1999 |
| 2004 |
| 116,077 |
| 100 | % | $ | 31.52 |
| $ | 53,000,000 |
|
The Pointe on Tampa Bay |
| Tampa, FL |
| 1982 | (7) | 2002 |
| 250,357 |
| 100 | % | $ | 23.69 |
| $ | 50,573,824 |
|
Capitol Place |
| Sacramento, CA |
| 1988 | (7) | 2003 |
| 151,803 |
| 96 | % | $ | 27.32 |
| $ | 50,331,828 |
|
Wellpoint |
| Westlake Village, CA |
| 1986, 1998 |
| 2006 |
| 208,000 |
| 100 | % | $ | 13.23 |
| $ | 49,000,000 |
|
Park Place on Turtle Creek |
| Dallas, TX |
| 1986 |
| 2006 |
| 177,169 |
| 98 | % | $ | 24.36 |
| $ | 44,573,669 |
|
4200 West Cypress Street |
| Tampa, FL |
| 1989 |
| 2003 |
| 220,579 |
| 99 | % | $ | 21.61 |
| $ | 43,100,425 |
|
Tysons Executive Plaza II(12) |
| McLean, VA |
| 1988 |
| 2000 |
| 259,614 |
| 97 | % | $ | 24.15 |
| $ | 40,570,382 |
|
Creeksides at CenterPoint |
| Kent, WA |
| 1985 |
| 2006 |
| 218,589 |
| 81 | % | $ | 12.36 |
| $ | 40,508,139 |
|
10 Waterview Boulevard |
| Parsippany, NJ |
| 1984 |
| 1999 |
| 208,601 |
| 58 | % | $ | 12.95 |
| $ | 32,100,000 |
|
9 Hutton Centre |
| Santa Ana, CA |
| 1990 |
| 2001 |
| 149,946 |
| 82 | % | $ | 16.40 |
| $ | 29,000,000 |
|
Columbus Portfolio |
| Various, OH |
| 1997-1998 |
| 1999, 2001 |
| 259,694 |
| 89 | % | $ | 10.00 |
| $ | 24,600,000 |
|
Needham Corporate Center |
| Needham, MA |
| 1987 |
| 2001 |
| 138,684 |
| 75 | % | $ | 13.20 |
| $ | 22,712,550 |
|
Batterymarch Park II |
| Quincy, MA |
| 1986 |
| 2001 |
| 104,718 |
| 53 | % | $ | 10.08 |
| $ | 13,234,314 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Office Property Investments |
|
|
|
|
|
|
|
|
| 92 | % |
|
|
| $ | 7,308,069,775 |
|
INDUSTRIAL PROPERTY INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Ontario Industrial Portfolio(13) |
| Various, CA |
| 1997-1998 |
| 1998, 2000, 2004 |
| 3,584,769 |
| 100 | % | $ | 3.31 |
| $ | 270,000,000 | (4) |
Dallas Industrial Portfolio(14) |
| Dallas and Coppell, TX |
| 1997-2001 |
| 2000-2002 |
| 3,886,541 |
| 90 | % | $ | 2.44 |
| $ | 153,210,519 |
|
Southern California RA Industrial Portfolio |
| Los Angeles, CA |
| 1982 |
| 2004 |
| 920,028 |
| 96 | % | $ | 5.31 |
| $ | 97,558,473 |
|
Cabot Industrial Portfolio |
| Rancho Cucamonga, CA |
| 2000-2002 |
| 2000, 2001, |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2002, 2004 |
| 1,214,475 |
| 100 | % | $ | 3.71 |
| $ | 88,200,000 |
|
Chicago Industrial Portfolio(15) |
| Chicago and Joliet, IL |
| 1997-2000 |
| 1998, 2000 |
| 1,577,606 |
| 90 | % | $ | 3.83 |
| $ | 89,104,640 |
|
Atlanta Industrial Portfolio |
| Lawrenceville, GA |
| 1996-1999 |
| 2000 |
| 1,945,693 |
| 95 | % | $ | 2.18 |
| $ | 77,863,416 |
|
Shawnee Ridge Industrial Portfolio(16) |
| Atlanta, GA |
| 2000-2005 |
| 2005 |
| 1,422,922 |
| 100 | % | $ | 3.05 |
| $ | 76,117,193 |
|
Chicago Caleast Industrial Portfolio |
| Chicago, IL |
| 1974-2005 |
| 2003 |
| 1,493,706 |
| 93 | % | $ | 2.52 |
| $ | 74,999,590 |
|
Northern California RA Industrial Portfolio |
| Oakland, CA |
| 1981 |
| 2004 |
| 741,456 |
| 93 | % | $ | 4.06 |
| $ | 71,317,741 |
|
IDI National Portfolio(17) |
| Various, U.S. |
| 1999-2004 |
| 2004 |
| 3,655,671 |
| 98 | % | $ | 3.30 |
| $ | 70,348,753 |
|
TIAA Real Estate AccountProspectus|23
Properties(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Property |
| Location |
| Year Built |
| Year |
| Rentable | (1) | Percent |
| Annual Avg. | (2) |
| Market | (3) | |
INDUSTRIAL PROPERTY INVESTMENTS(continued) |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Rainier Corporate Park |
| Fife, WA |
| 1991-1997 |
| 2003 |
| 1,104,646 |
| 97 | % | $ | 4.03 |
| $ | 69,362,219 |
|
IDI Kentucky Portfolio |
| Various, KY |
| 1998-2000 |
| 1998, 2000, 2005 |
| 1,437,022 |
| 100 | % | $ | 3.24 |
| $ | 66,552,034 |
|
Regal Logistics Campus |
| Seattle, WA |
| 1999-2004 |
| 2005 |
| 968,535 |
| 100 | % | $ | 4.15 |
| $ | 66,000,000 |
|
South River Road Industrial |
| Cranbury, NJ |
| 1999 |
| 2001 |
| 858,957 |
| 100 | % | $ | 4.24 |
| $ | 60,600,000 |
|
Memphis Caleast Industrial Portfolio |
| Memphis, TN |
| 1996-1997 |
| 2003 |
| 1,600,232 |
| 100 | % | $ | 2.01 |
| $ | 52,500,000 |
|
GE Appliance East Coast Distribution Facility |
| Perryville, MD |
| 2003 |
| 2005 |
| 1,004,000 |
| 100 | % | $ | 2.82 |
| $ | 48,000,000 |
|
Pinnacle Industrial/DFW Trade Center |
| Grapevine, TX |
| 2003, 2004, 2006 |
| 2006 |
| 899,200 |
| 100 | % | $ | 3.49 |
| $ | 45,874,807 |
|
New Jersey Caleast Industrial Portfolio |
| Cranbury, NJ |
| 1982-1989 |
| 2003 |
| 807,773 |
| 50 | % | $ | 2.23 |
| $ | 41,920,988 |
|
East North Central RA Industrial Portfolio |
| Chicago, IL |
| 1978 |
| 2004 |
| 541,266 |
| 96 | % | $ | 4.65 |
| $ | 37,503,284 |
|
Broadlands Business Park |
| Elkton, MD |
| 2006 |
| 2006 |
| 756,690 |
| 100 | % | $ | 2.85 |
| $ | 35,002,731 |
|
Centre Pointe and Valley View |
| Los Angeles County, CA |
| 1965-1989 |
| 2004 |
| 307,685 |
| 100 | % | $ | 4.10 |
| $ | 32,385,980 |
|
Northeast RA Industrial Portfolio |
| Boston, MA |
| 2000 |
| 2004 |
| 384,000 |
| 100 | % | $ | 5.60 |
| $ | 30,900,000 |
|
1900 South Burgundy Place |
| Ontario, CA |
| 1988-1999 |
| 2006 |
| 397,125 |
| 100 | % | $ | 3.69 |
| $ | 28,045,226 |
|
Summit Distribution Center |
| Memphis, TN |
| 2002 |
| 2003 |
| 708,532 |
| 100 | % | $ | 2.52 |
| $ | 26,300,000 |
|
Eastgate Distribution Center |
| San Diego, CA |
| 1996 |
| 1997 |
| 200,000 |
| 100 | % | $ | 7.02 |
| $ | 25,558,962 |
|
Airways Distribution Center |
| Memphis, TN |
| 2005 |
| 2006 |
| 556,600 |
| 100 | % | $ | 3.20 |
| $ | 24,857,278 |
|
Konica Photo Imaging Headquarters |
| Mahwah, NJ |
| 1999 |
| 1999 |
| 168,000 |
| 100 | % | $ | 11.25 |
| $ | 23,100,000 |
|
Weber Distribution |
| Rancho Cucamonga, CA |
| 1988 |
| 2006 |
| 275,760 |
| 100 | % | $ | 4.04 |
| $ | 20,800,000 |
|
Northwest RA Industrial Portfolio |
| Seattle, WA |
| 1996 |
| 2004 |
| 312,321 |
| 100 | % | $ | 3.51 |
| $ | 20,684,499 |
|
Landmark at Salt Lake City (Building #4) |
| Salt Lake City, UT |
| 2000 |
| 2000 |
| 328,508 |
| 85 | % | $ | 2.77 |
| $ | 16,509,871 |
|
Mideast RA Industrial Portfolio |
| Wilmington, DE |
| 1989 |
| 2004 |
| 266,141 |
| 90 | % | $ | 3.22 |
| $ | 16,014,758 |
|
UPS Distribution Facility |
| Fernley, NV |
| 1998 |
| 1998 |
| 256,000 |
| 100 | % | $ | 4.07 |
| $ | 15,000,000 |
|
FEDEX Distribution Facility |
| Crofton, MD |
| 1998 |
| 1998 |
| 110,842 |
| 100 | % | $ | 7.18 |
| $ | 8,500,000 |
|
Mountain RA Industrial Portfolio |
| Phoenix, AZ |
| 1989 |
| 2004 |
| 136,704 |
| 100 | % | $ | 2.14 |
| $ | 6,605,429 |
|
Butterfield Industrial Park(18) |
| El Paso, TX |
| 1980-1981 |
| 1995 |
| 183,510 |
| 100 | % | $ | 2.39 |
| $ | 5,100,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Industrial Property Investments |
|
|
|
|
|
|
|
|
| 96 | % |
|
|
| $ | 1,892,398,391 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
24|ProspectusTIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
RETAIL PROPERTY INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Florida Retail Portfolio(19) |
| Various, FL |
| 1974-2005 |
| 2006 |
| 1,259,554 |
| 100 | % | $15.94 |
| $ | 265,396,677 |
|
The Florida Mall(20) |
| Orlando, FL |
| 1986 | (7) | 2002 |
| 921,370 | (21) | 99 | % | $37.71 |
| $ | 237,919,775 |
|
West Town Mall(20) |
| Knoxville, TN |
| 1972 | (7) | 2002 |
| 761,357 | (21) | 97 | % | $19.18 |
| $ | 126,214,963 |
|
Miami International Mall(20) |
| Miami, FL |
| 1982 | (7) | 2002 |
| 290,299 | (21) | 97 | % | $37.03 |
| $ | 97,300,131 |
|
Marketfair |
| West Windsor, NJ |
| 1987 |
| 2006 |
| 235,144 |
| 99 | % | $20.74 |
| $ | 94,058,427 |
|
Westwood Marketplace |
| Los Angeles, CA |
| 1950 | (7) | 2002 |
| 202,201 |
| 100 | % | $29.95 |
| $ | 91,467,954 |
|
Mazza Gallerie |
| Washington, DC |
| 1975 |
| 2004 |
| 293,935 |
| 98 | % | $18.46 |
| $ | 86,350,179 |
|
Publix at Weston Commons |
| Weston, FL |
| 2005 |
| 2006 |
| 126,922 |
| 97 | % | $22.04 |
| $ | 54,411,436 | (4) |
Plainsboro Plaza |
| Plainsboro, NJ |
| 1987 |
| 2005 |
| 218,653 |
| 90 | % | $11.55 |
| $ | 50,900,000 |
|
South Frisco Village |
| Frisco, TX |
| 2002 |
| 2006 |
| 227,175 |
| 99 | % | $13.47 |
| $ | 47,014,065 | (4) |
The Market at Southpark |
| Littleton, CO |
| 1988 |
| 2004 |
| 190,080 |
| 96 | % | $12.03 |
| $ | 35,800,000 |
|
Suncrest Village |
| Orlando, FL |
| 1987 |
| 2005 |
| 93,358 |
| 100 | % | $ 9.48 |
| $ | 17,009,378 |
|
Plantation Grove |
| Ocoee, FL |
| 1995 |
| 1995 |
| 73,655 |
| 100 | % | $12.31 |
| $ | 15,010,406 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Retail Property Investments |
|
|
|
|
|
|
| 98 | % |
|
| $ | 1,218,853,391 |
| ||
OTHER COMMERCIAL PROPERTY INVESTMENTS |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Storage Portfolio I(22) |
| Various, U.S. |
| 1972-1990 |
| 2003 |
| 2,226,549 |
| 83 | % | $ 9.64 |
| $ | 74,864,074 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Commercial Property Investments |
|
|
|
|
|
|
| 94 | % |
|
| $ | 10,494,185,631 |
| ||
RESIDENTIAL PROPERTY INVESTMENTS(23) |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Houston Apartment Portfolio(24) |
| Houston, TX |
| 1984-2004 |
| 2006 |
| NA |
| 93 | % | NA |
| $ | 306,042,523 |
|
Kierland Apartment Portfolio(25) |
| Scottsdale, AZ |
| 1996-2000 |
| 2006 |
| NA |
| 96 | % | NA |
| $ | 206,100,000 |
|
Palomino Park Apartments |
| Denver, CO |
| 1996-2001 |
| 2005 |
| NA |
| 92 | % | NA |
| $ | 184,000,000 |
|
Phoenix Apartment Portfolio(26) |
| Greater Phoenix Area, AZ |
| 1995-1998 |
| 2006 |
| NA |
| 94 | % | NA |
| $ | 182,900,000 |
|
The Legacy at Westwood Apartments |
| Los Angeles, CA |
| 2001 |
| 2002 |
| NA |
| 94 | % | NA |
| $ | 110,231,593 |
|
The Colorado |
| New York, NY |
| 1987 |
| 1999 |
| NA |
| 99 | % | NA |
| $ | 100,000,000 |
|
Larkspur Courts |
| Larkspur, CA |
| 1991 |
| 1999 |
| NA |
| 93 | % | NA |
| $ | 93,043,346 |
|
Ashford Meadows Apartments |
| Herndon, VA |
| 1998 |
| 2000 |
| NA |
| 92 | % | NA |
| $ | 89,091,341 |
|
1050 Lenox Park |
| Atlanta, GA |
| 2001 |
| 2005 |
| NA |
| 97 | % | NA |
| $ | 79,470,836 |
|
Regents Court Apartments |
| San Diego, CA |
| 2001 |
| 2002 |
| NA |
| 92 | % | NA |
| $ | 67,800,000 |
|
South Florida Apartment Portfolio |
| Boca Raton and Plantation, FL |
| 1986 |
| 2001 |
| NA |
| 96 | % | NA |
| $ | 65,099,785 |
|
The Caruth |
| Dallas, TX |
| 1999 |
| 2005 |
| NA |
| 96 | % | NA |
| $ | 60,007,237 |
|
The Reserve at Sugarloaf |
| Duluth, GA |
| 2000 |
| 2005 |
| NA |
| 99 | % | NA |
| $ | 49,500,000 | (4) |
Glenridge Walk |
| Atlanta, GA |
| 1996, 2001 |
| 2005 |
| NA |
| 97 | % | NA |
| $ | 48,710,574 |
|
The Lodge at Willow Creek |
| Denver, CO |
| 1997 |
| 1997 |
| NA |
| 96 | % | NA |
| $ | 39,501,399 |
|
The Maroneal |
| Houston, TX |
| 1998 |
| 2005 |
| NA |
| 95 | % | NA |
| $ | 39,113,694 |
|
TIAA Real Estate AccountProspectus|25
Properties(continued)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property |
| Location |
| Year Built |
| Year |
| Rentable | (1) | Percent |
| Annual Avg. | (2) |
| Market | (3) |
RESIDENTIAL PROPERTY INVESTMENTS(23)(continued) |
|
|
|
|
|
|
|
|
| |||||||
Lincoln Woods Apartments |
| Lafayette Hill, PA |
| 1991 |
| 1997 |
| NA |
| 93 | % | NA |
| $ | 37,781,555 |
|
Westcreek Apartments |
| Westlake Village, CA |
| 1988 |
| 1997 |
| NA |
| 95 | % | NA |
| $ | 35,300,000 |
|
The Legends at Chase Oaks |
| Plano, TX |
| 1997 |
| 1998 |
| NA |
| 98 | % | NA |
| $ | 29,025,236 |
|
The Fairways of Carolina |
| Margate, FL |
| 1993 |
| 2001 |
| NA |
| 96 | % | NA |
| $ | 25,309,965 |
|
Royal St. George |
| W. Palm Beach, FL |
| 1995 |
| 1996 |
| NA |
| 97 | % | NA |
| $ | 25,000,000 |
|
Quiet Water at Coquina Lakes |
| Deerfield Beach, FL |
| 1995 |
| 2001 |
| NA |
| 95 | % | NA |
| $ | 24,006,100 |
|
The Greens at Metrowest Apartments |
| Orlando, FL |
| 1990 |
| 1995 |
| NA |
| 91 | % | NA |
| $ | 21,011,825 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||
Residential Property Investments |
|
|
|
|
|
|
|
|
| 95 | % |
|
| $ | 1,918,047,009 |
|
Total—All Property Investments |
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 12,412,232,640 |
|
|
|
(1) | The square footage is an approximate measure and is subject to periodic remeasurement. |
|
|
(2) | Based on total contractual rent |
|
|
(3) | Market value reflects the value determined in accordance with the procedures described in the Account’s prospectus and as stated in the Statement of |
|
|
(4) | Market value shown represents the Account’s interest gross of debt. |
|
|
(5) |
|
|
|
(6) | 1 & 7 Westferry Circus is located in the United Kingdom, and the market value reflects the Account’s interest gross of debt. Printemps de l’Homme is located in France. The market value of each property is converted from local currency to U.S. Dollars at the exchange rate as of December 31, 2007. |
(7) | This property was substantially renovated in 1961, 2004 and 2006. |
|
|
|
|
(8) |
|
| Formerly known as “Colorado Center”, this property is held in a 50%/50% joint venture with Equity Office Properties Trust. Market value shown reflects the value of the Account’s interest in the joint venture, net of debt. |
|
|
(9) | Undergone extensive renovations since original construction. |
(10) | Formerly known as “Embarcadero Plaza.” |
(11) | The Account purchased a 50.25% interest in a private REIT, which owns this property. A 49.70% interest is owned by Societe Immobiler Trans-Quebec, and .05% is owned by 100 individuals. Market value shown reflects the value of the Account’s interest in the joint venture. |
|
|
| Formerly known as “U.S. Bank Plaza.” |
|
|
|
|
(14) | This investment property is held in a 50%/50% joint venture with Tennessee Consolidated Retirement System. Market value shown reflects the value of the Account’s interest in the joint venture. |
26|ProspectusTIAA Real Estate Account
|
|
| The Ontario Industrial Portfolio contains six investment properties, including one portfolio which consists of |
|
|
|
|
|
|
(16) |
|
|
|
(17) |
|
(18) | Formerly known as “Cabot Industrial Portfolio”. As of January 31, 2007 the Weber Distribution property |
TIAA Real Estate Account§ Prospectus 33
(19) | Property held in a 60%/40% joint venture with Industrial Development International. Market value shown reflects the value of the Account’s interest in the joint venture, net of debt. |
|
|
|
|
|
|
| These property investments are held in 50%/50% joint ventures with the Simon Property Group. Market values shown reflect the value of the Account’s interest in the joint ventures, net of debt. |
(22) | Reflects the square footage owned by the joint venture. |
(23) | This investment property |
|
|
|
|
|
|
|
|
| For the average unit size and annual average rent per unit for each residential property, see “Residential Properties” below. |
|
|
| The Houston Apartment Portfolio contains 11 properties that are a mix of two and three-story luxury garden style apartments and are located in Houston, Texas. |
|
|
| The Kierland Apartment Portfolio contains three properties that are a mix of two and three-story luxury garden style apartments and are located in Scottsdale, Arizona. |
|
|
| The Phoenix Apartment Portfolio contains four properties that are a mix of two and three-story luxury garden style apartments and are located in the greater Phoenix area in Arizona. |
(28) | Property held in 75%/25% joint venture with Storage USA. Market value shown reflects the value of the Account’s interest in the joint venture, net of debt. |
34 Prospectus§TIAA Real Estate AccountProspectus|27
COMMERCIAL (NON-RESIDENTIAL) PROPERTIES
At December 31, 2006,2007, the Account held 9890 commercial (non-residential) property investments in its portfolio, including a portfolio of storage facilities located throughout the United States. Twelve of these propertiesproperty investments were held through joint ventures, and 1819 were subject to mortgages.mortgages (including seven joint venture property investments). Although the terms vary under each lease, certain expenses, such as real estate taxes and other operating expenses, are paid or reimbursed in whole or in part by the tenants.
Management believes that the Account’s portfolio is well diversified by both property type and geographic location. The portfolio consists of: 49 office properties containing approximately 23 million square feet located in 13 states, the District of Columbia and the United Kingdom; 35 industrial properties containing 35
• | 46 office properties containing approximately 21 million square feet located in 14 states, the District of Columbia and the United Kingdom; | |
• | 27 industrial properties containing approximately 30 million square feet located in 11 states, including a 60% interest in a portfolio of industrial properties located throughout the United States; and | |
• | 16 retail properties containing approximately 21.4 million square feet located in eight states, the District of Columbia, the United Kingdom and Paris, France. |
One of the retail property investments is an 85% interest in a portfolio of industrial propertiescontaining 65 individual retail shopping centers located throughout the United States;Eastern and 13 retail properties containing approximately five million square feet located in six states and the District of Columbia.Southeastern states. In addition, the Account has a 75% interest in a portfolio of storage facilities located throughout the United States containing approximately 2.22.3 million square feet.
As of December 31, 2006,2007, the average overall occupancy rate of the Account’s commercial real estate portfolio was 94%95%. On an average basis, the Account’s office properties were 92%94% leased, industrial properties were 96% leased, retail properties were 98%97% leased and the storage portfolio was 83%84% leased.
Major Tenants:The following table liststables list the Account’s major commercial tenants based on the total space they occupied as of December 31, 2006,2007 in the Account’s properties.
|
|
|
|
|
|
|
|
|
|
|
|
| Occupied |
| Percentage of |
| Percentage of |
| |||
MAJOR INDUSTRIAL TENANTS |
|
|
|
|
|
|
|
|
|
|
Walmart |
|
| 1,099,112 |
|
| 3.1 | % |
| 1.8 | % |
Gap |
|
| 1,045,000 |
|
| 3.0 | % |
| 1.7 | % |
General Electric |
|
| 1,004,000 |
|
| 2.9 | % |
| 1.6 | % |
Priority Fulfillment Services |
|
| 993,120 |
|
| 2.8 | % |
| 1.6 | % |
Regal West |
|
| 968,535 |
|
| 2.8 | % |
| 1.5 | % |
Tyco Healthcare |
|
| 800,000 |
|
| 2.3 | % |
| 1.3 | % |
TNT |
|
| 756,600 |
|
| 2.2 | % |
| 1.2 | % |
Hewlett Packard |
|
| 708,532 |
|
| 2.0 | % |
| 1.1 | % |
Kaz |
|
| 700,000 |
|
| 2.0 | % |
| 1.1 | % |
Del Monte |
|
| 689,660 |
|
| 2.0 | % |
| 1.1 | % |
28|ProspectusTIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
|
| Occupied |
| Percentage of |
| Percentage of |
| |||
MAJOR OFFICE TENANTS |
|
|
|
|
|
|
|
|
|
|
Deloitte & Touche |
|
| 517,705 |
|
| 2.3 | % |
| 0.8 | % |
Yahoo! |
|
| 476,740 |
|
| 2.1 | % |
| 0.8 | % |
Southern Company Services, Inc |
|
| 448,004 |
|
| 2.0 | % |
| 0.7 | % |
Mellon (Boston Co) |
|
| 361,623 |
|
| 1.6 | % |
| 0.6 | % |
Microsoft |
|
| 361,528 |
|
| 1.6 | % |
| 0.6 | % |
Crowell & Moring |
|
| 320,539 |
|
| 1.4 | % |
| 0.5 | % |
BHP Petroleum |
|
| 316,638 |
|
| 1.4 | % |
| 0.5 | % |
Accenture |
|
| 302,730 |
|
| 1.3 | % |
| 0.5 | % |
Met Life Insurance |
|
| 289,433 |
|
| 1.3 | % |
| 0.5 | % |
IDX Systems |
|
| 284,631 |
|
| 1.3 | % |
| 0.5 | % |
|
|
|
|
|
|
|
|
|
|
|
|
| Occupied |
| Percentage of |
| Percentage of |
| |||
MAJOR RETAIL TENANTS |
|
|
|
|
|
|
|
|
|
|
Publix |
|
| 313,859 |
|
| 6.4 | % |
| 0.5 | % |
JC Penney |
|
| 196,931 |
|
| 4.0 | % |
| 0.3 | % |
Belk |
|
| 162,501 |
|
| 3.3 | % |
| 0.3 | % |
Parisian |
|
| 143,278 |
|
| 2.9 | % |
| 0.2 | % |
Saks & Co. |
|
| 127,727 |
|
| 2.6 | % |
| 0.2 | % |
Neiman Marcus |
|
| 124,314 |
|
| 2.5 | % |
| 0.2 | % |
Bed Bath & Beyond |
|
| 101,100 |
|
| 2.1 | % |
| 0.2 | % |
Expo Design |
|
| 98,350 |
|
| 2.0 | % |
| 0.2 | % |
Old Navy |
|
| 82,075 |
|
| 1.7 | % |
| 0.1 | % |
Regal Cinema |
|
| 76,580 |
|
| 1.6 | % |
| 0.1 | % |
|
|
|
|
|
|
|
|
|
|
|
MAJOR OFFICE TENANTS |
| Occupied |
| Percentage of |
| Percentage of |
| |||
Deloitte & Touche |
|
| 517,855 |
|
| 2.5 | % |
| 0.7 | % |
BHP Petroleum |
|
| 463,734 |
|
| 2.2 | % |
| 0.6 | % |
Mellon (Boston Co) |
|
| 457,248 |
|
| 2.2 | % |
| 0.6 | % |
Southern Company Services, Inc |
|
| 456,235 |
|
| 2.2 | % |
| 0.6 | % |
Yahoo! |
|
| 448,147 |
|
| 2.1 | % |
| 0.6 | % |
Microsoft |
|
| 361,527 |
|
| 1.7 | % |
| 0.5 | % |
Crowell & Moring |
|
| 320,539 |
|
| 1.5 | % |
| 0.4 | % |
ATMOS Energy |
|
| 293,835 |
|
| 1.4 | % |
| 0.4 | % |
Fourth & Madison |
|
| 284,630 |
|
| 1.3 | % |
| 0.4 | % |
Kirkpatrick & Lockhart Preston Gates Ellis |
|
| 248,982 |
|
| 1.2 | % |
| 0.3 | % |
TIAA Real Estate AccountProspectus|§29 Prospectus35
|
|
|
|
|
|
|
|
|
|
MAJOR INDUSTRIAL TENANTS |
| Occupied |
| Percentage of |
| Percentage of |
| ||
Meiko America |
| 1,115,000 |
| 3.7 | % |
| 1.5 | % |
|
Walmart |
| 1,099,112 |
| 3.6 | % |
| 1.5 | % |
|
General Electric |
| 1,004,000 |
| 3.3 | % |
| 1.4 | % |
|
Priority Fulfillment |
| 993,120 |
| 3.3 | % |
| 1.4 | % |
|
Regal West |
| 968,535 |
| 3.2 | % |
| 1.3 | % |
|
Covidien (FKA Tyco) |
| 800,000 |
| 2.6 | % |
| 1.1 | % |
|
Michelin (TNT) |
| 756,600 |
| 2.5 | % |
| 1.0 | % |
|
Hewlett-Packard |
| 708,532 |
| 2.3 | % |
| 1.0 | % |
|
Del Monte |
| 689,660 |
| 2.3 | % |
| 0.9 | % |
|
RR Donnelley |
| 659,157 |
| 2.2 | % |
| 0.9 | % |
|
|
|
|
|
|
|
|
|
|
|
MAJOR RETAIL TENANTS |
| Occupied |
| Percentage of |
| Percentage of |
| ||
Walmart |
| 944,437 |
| 4.4 | % |
| 1.3 | % |
|
Kohl’s |
| 609,529 |
| 2.8 | % |
| 0.8 | % |
|
Goody’s |
| 589,392 |
| 2.7 | % |
| 0.8 | % |
|
Publix Super Markets |
| 565,187 |
| 2.6 | % |
| 0.8 | % |
|
Ross |
| 564,927 |
| 2.6 | % |
| 0.8 | % |
|
Dick’s Sporting Goods |
| 522,486 |
| 2.4 | % |
| 0.7 | % |
|
PetSmart |
| 496,595 |
| 2.3 | % |
| 0.7 | % |
|
Michael’s |
| 492,636 |
| 2.3 | % |
| 0.7 | % |
|
Bed, Bath & Beyond |
| 455,510 |
| 2.1 | % |
| 0.6 | % |
|
Linens ’N Things |
| 426,523 |
| 2.0 | % |
| 0.6 | % |
|
The following table liststables list the rentable area subject to expiring leases during the next five years, and an aggregate figure for expirations in 20122013 and thereafter, in the Account’s commercial (non-residential) properties.
|
|
|
|
|
|
|
|
Year of Lease Expiration |
| Rentable Area Subject |
| Percentage of Total |
| ||
OFFICE PROPERTIES |
|
|
|
|
|
|
|
2007 |
|
| 2,229,661 |
|
| 9.9 | % |
2008 |
|
| 2,171,122 |
|
| 9.6 | % |
2009 |
|
| 1,913,318 |
|
| 8.5 | % |
2010 |
|
| 2,335,573 |
|
| 10.3 | % |
2011 |
|
| 2,945,731 |
|
| 13.0 | % |
2012 and thereafter |
|
| 9,272,527 |
|
| 41.0 | % |
Total |
|
| 20,867,932 |
|
| 92.2 | % |
|
|
|
|
|
|
|
|
Year of Lease Expiration |
| Rentable Area Subject |
| Percentage of Total |
| ||
INDUSTRIAL PROPERTIES |
|
|
|
|
|
|
|
2007 |
|
| 3,915,050 |
|
| 11.2 | % |
2008 |
|
| 5,034,465 |
|
| 14.4 | % |
2009 |
|
| 6,078,823 |
|
| 17.4 | % |
2010 |
|
| 4,464,370 |
|
| 12.8 | % |
2011 |
|
| 3,780,235 |
|
| 10.8 | % |
2012 and thereafter |
|
| 9,397,067 |
|
| 26.8 | % |
Total |
|
| 32,670,010 |
|
| 93.3 | % |
|
|
|
|
|
|
|
|
Year of Lease Expiration |
| Rentable Area Subject |
| Percentage of Total |
| ||
RETAIL PROPERTIES |
|
|
|
|
|
|
|
2007 |
|
| 324,085 |
|
| 6.6 | % |
2008 |
|
| 283,346 |
|
| 5.8 | % |
2009 |
|
| 374,582 |
|
| 7.6 | % |
2010 |
|
| 534,841 |
|
| 10.9 | % |
2011 |
|
| 462,270 |
|
| 9.4 | % |
2012 and thereafter |
|
| 2,770,806 |
|
| 56.3 | % |
Total |
|
| 4,749,930 |
|
| 96.5 | % |
|
|
|
|
|
|
|
|
|
|
OFFICE PROPERTIES |
| Rentable Area |
| Percentage of Total |
| ||
2008 |
|
| 2,025,032 |
| 9.6 | % |
|
2009 |
|
| 1,841,797 |
| 8.7 | % |
|
2010 |
|
| 2,254,954 |
| 10.7 | % |
|
2011 |
|
| 2,673,274 |
| 12.7 | % |
|
2012 |
|
| 1,731,962 |
| 8.2 | % |
|
2013 and thereafter |
|
| 8,606,526 |
| 40.9 | % |
|
Total |
|
| 19,133,545 |
| 90.8 | % |
|
30|36 Prospectus§TIAA Real Estate Account
|
|
|
|
|
|
|
|
INDUSTRIAL PROPERTIES |
| Rentable Area |
| Percentage of Total |
| ||
2008 |
|
| 4,373,313 |
| 14.4 | % |
|
2009 |
|
| 4,120,869 |
| 13.5 | % |
|
2010 |
|
| 4,570,510 |
| 15.0 | % |
|
2011 |
|
| 4,336,083 |
| 14.2 | % |
|
2012 |
|
| 1,542,068 |
| 5.1 | % |
|
2013 and thereafter |
|
| 9,800,725 |
| 32.2 | % |
|
Total |
|
| 28,743,568 |
| 94.4 | % |
|
|
|
|
|
|
|
|
|
RETAIL PROPERTIES |
| Rentable Area |
| Percentage of Total |
| ||
2008 |
|
| 1,325,407 |
| 6.2 | % |
|
2009 |
|
| 1,244,001 |
| 5.8 | % |
|
2010 |
|
| 1,789,246 |
| 8.3 | % |
|
2011 |
|
| 2,224,269 |
| 10.4 | % |
|
2012 |
|
| 2,289,812 |
| 10.7 | % |
|
2013 and thereafter |
|
| 11,315,396 |
| 52.7 | % |
|
Total |
|
| 20,188,131 |
| 94.1 | % |
|
RESIDENTIAL PROPERTIES
The Account’s residential property portfolio currently consists of 2321 property investments comprised of first class or luxury multi-family, garden, midrise, and high-rise apartment buildings. The portfolio contains approximately 11,10610,650 units located in nine states and has a 95%94% average occupancy rate.rate as of December 31, 2007. One of the residential properties in the portfolio is subject to a mortgage. The complexes generally contain one- to three-bedroom apartment units with a range of amenities, such as patios or balconies, washers and dryers, and central air conditioning. Many of these apartment communities have on-site fitness facilities, including some with swimming pools. Rents on each of the properties tend to be comparable with competitive communities and are not subject to rent regulation. The Account is responsible for the expenses of operating its residential properties.
TIAA Real Estate Account §Prospectus 37
The table below contains detailed information regarding the apartment complexes in the Account’s portfolio as of December 31, 2006.2007.
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Property |
| Location |
| Number |
| Average |
| Avg. Rent |
|
| Location |
| Number |
| Average |
| Avg. Rent |
| ||||||
The Greens at Metrowest |
| Orlando, FL |
| 200 |
|
| 920 |
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| $ | 940 |
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The Royal St. George Apts |
| West Palm Beach, FL |
| 224 |
|
| 870 |
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| $ | 1,056 |
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Westcreek Apartments |
| Westlake Village, CA |
| 126 |
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| 951 |
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| $ | 1,819 |
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Lincoln Woods Apartments |
| Lafayette Hill, PA |
| 216 |
|
| 774 |
|
| $ | 1,272 |
| ||||||||||||
Lodge at Willow Creek |
| Denver, CO |
| 316 |
|
| 996 |
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| $ | 1,008 |
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Legends at Chase Oaks |
| Plano, TX |
| 346 |
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| 972 |
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| $ | 1,082 |
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Houston Apartment Portfolio |
| Houston, TX |
| 2,295 |
|
| 1,351 |
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| $ | 1,341 |
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Palomino Park |
| Highlands Ranch, CO |
| 1,184 |
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| 1,095 |
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| $ | 1,153 |
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Kierland Apartment Portfolio |
| Scottsdale, AZ |
| 1,000 |
|
| 1,047 |
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| $ | 1,260 |
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Phoenix Apartment Portfolio |
| Greater Phoenix, AZ |
| 1,176 |
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| 1,094 |
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| $ | 1,122 |
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Legacy at Westwood |
| Los Angeles, CA |
| 187 |
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| 1,181 |
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| $ | 4,212 |
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The Colorado |
| New York, NY |
| 256 |
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| 622 |
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| $ | 2,703 |
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| New York, NY |
| 256 |
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| 617 |
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| $ | 3,173 |
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Larkspur Courts |
| Larkspur, CA |
| 248 |
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| 1,001 |
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| $ | 2,086 |
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| Larkspur, CA |
| 248 |
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| 1,001 |
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| $ | 2,382 |
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Ashford Meadows |
| Herndon, VA |
| 440 |
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| 1,050 |
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| $ | 1,435 |
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| Herndon, VA |
| 440 |
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| 1,057 |
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| $ | 1,493 |
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1050 Lenox Park |
| Atlanta, GA |
| 407 |
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| 1,023 |
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| $ | 1,386 |
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Regents Court |
| San Diego, CA |
| 251 |
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| 884 |
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| $ | 2,208 |
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South Florida Apartment Portfolio |
| Boca Raton, Plantation, FL |
| 550 |
|
| 889 |
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| $ | 1,105 |
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| Boca Raton, Plantation, FL |
| 550 |
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| 906 |
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| $ | 1,109 |
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Caruth at Lincoln Park |
| Dallas, TX |
| 338 |
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| 1,168 |
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| $ | 1,723 |
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Glenridge Walk |
| Atlanta, GA |
| 296 |
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| 1,142 |
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| $ | 1,409 |
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The Reserve at Sugarloaf |
| Duluth, GA |
| 333 |
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| 1,222 |
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| $ | 1,175 |
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The Lodge at Willow Creek |
| Denver, CO |
| 316 |
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| 996 |
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| $ | 1,082 |
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The Maroneal |
| Houston, TX |
| 309 |
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| 926 |
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| $ | 1,224 |
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Westcreek Apartments |
| Westlake Village, CA |
| 126 |
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| 951 |
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| $ | 2,019 |
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Lincoln Woods Apartments |
| Lafayette Hill, PA |
| 216 |
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| 774 |
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| $ | 1,264 |
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Fairways of Carolina |
| Margate, FL |
| 208 |
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| 1,026 |
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| $ | 1,160 |
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| Margate, FL |
| 208 |
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| 1,026 |
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| $ | 1,181 |
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The Royal St. George Apts |
| West Palm Beach, FL |
| 224 |
|
| 870 |
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| $ | 1,094 |
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Quiet Waters Apartments |
| Deerfield Beach, FL |
| 200 |
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| 1,048 |
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| $ | 1,250 |
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| Deerfield Beach, FL |
| 200 |
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| 1,048 |
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| $ | 1,241 |
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Legacy at Westwood |
| Los Angeles, CA |
| 187 |
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| 1,181 |
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| $ | 4,223 |
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Regents Court |
| San Diego, CA |
| 251 |
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| 884 |
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| $ | 1,717 |
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The Reserve at Sugarloaf |
| Duluth, GA |
| 333 |
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| 1,220 |
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| $ | 1,149 |
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The Maroneal |
| Houston, TX |
| 309 |
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| 928 |
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| $ | 1,207 |
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Glenridge Walk |
| Atlanta, GA |
| 296 |
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| 1,142 |
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| $ | 1,337 |
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1050 Lenox Park |
| Atlanta, GA |
| 407 |
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| 1,023 |
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| $ | 1,386 |
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Caruth at Lincoln Park |
| Dallas, TX |
| 338 |
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| 1,168 |
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| $ | 1,680 |
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Palomino Park |
| Highlands Ranch, CO |
| 1,184 |
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| 1,095 |
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| $ | 1,520 |
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Houston Apartment Portfolio |
| Houston, TX |
| 2,295 |
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| 1,062 |
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| $ | 1,332 |
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Phoenix Apartment Portfolio |
| Greater Phoenix, AZ |
| 1,176 |
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| 996 |
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| $ | 1,084 |
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Kierland Apartment Portfolio |
| Scottsdale, AZ |
| 1,000 |
|
| 1,049 |
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| $ | 1,166 |
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RECENT TRANSACTIONS
The following describes property transactions by the Account since February 1,October 5, 2007, the date of the last supplement to the AccountAccount’s prospectus describing property purchases. 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. The Account is responsible for operating expenses not reimbursed under the terms of a lease. All rental rates are quoted on an annual basis unless otherwise noted.
TIAA Real Estate AccountProspectus|31
PURCHASES
RetailOffice Properties
Joint Venture with Developers Diversified Realty CorporationPacific Plaza – San Diego, CA
On February 27, 2007, DDR/TC Core Retail Fund, LLC, a Delaware limited liability company (Company) and a joint venture between a wholly owned subsidiary of TIAA, for the benefit of the Account, and a wholly owned subsidiary of Developers Diversified Realty Corporation (DDR), acquired an aggregate of 66 community center properties located predominantly the southeastern United States for approximately $3.0 billion of total asset value (collectively, the “Portfolio”). Prior to this acquisition, the Properties were owned by Inland Retail Real Estate Trust, Inc. The Account contributed 85% of the equity in the Company (approximately $1.04 billion) and DDR contributed 15% of the equity in the Company (approximately $170 million). The Portfolio consists of approximately 17.0 million square feet of owned gross leasable area (over 18 million square feet including “shadow” anchors) and has an average occupancy of approximately 96.0%. The properties are located in 13 states, with 42 properties, representing approximately 60.7% of the Portfolio’s valuation, located in Georgia, North Carolina and Florida. The largest asset accounts for 6.3% of the total value and the largest state concentration is in Georgia with 18 properties which account for 34.6% of the Portfolio’s total value. The majority of the Portfolio is anchored by well-known, high-quality retailers including Wal-Mart (6%), Kohl’s (5%), Ross Dress for Less (3%), Goody’s Family Clothing (3%), and Linens ‘N Things (2%).
The Portfolio is subject to an aggregate of approximately $1.8 billion in indebtedness and consists of assumed indebtedness and three separate pools of financing, each provided by a different lender. Solely for purposes of the financing, the lenders have divided the Portfolio into 70 individual properties. The material components of the three pools of financing are as follows:
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32|ProspectusTIAA Real Estate Account
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Finally, Company assumed indebtedness on a total of 15 properties with an aggregate loan balance amount of approximately $285 million. These individual loans mature between June 2009 and June 2018, and all but one loan matures on or before August 2012.
Printemps De L’Homme - Paris, France
On March 8,November 11, 2007, the Account purchased a retail centerthree building, Class A, office development in Paris, FranceSan Diego, California for approximately $263.7$127.1 million, subject to $8.9 million in debt, for a net investment of approximately $118.2 million. The property consists$8.9 million mortgage loan bears an interest rate of a nine-story retail building with three basement levels,5.55% and matures in September 2013. The property was built in the 1930s,2000 and underwent major renovations in 1999. The retail center2002, and it contains 142,365a total of 220,405 square feet of office space, of which 82% was occupied at the time of purchase. The three largest tenants are Qualcomm Incorporated (85,329 square feet), Iomega Corporation (39,045 square feet) and is 100% leased to France Printemps SA for their Printemps De L’Homme (Men’s Store)Cisco Systems (23,292 square feet). Rental rates for the office space average 637 Euros$30.00 per square meter (at the time of underwriting, equivalent to $78.12 per square foot),foot plus utilities, which is below the current average market rent for comparable properties. The property is
38 Prospectus §TIAA Real Estate Account
located in the Paris City Centre and Shopping Centre market,Del Mar Heights/Carmel Valley submarket, which consistshad an inventory of 4.23.4 million square meters (45.21 millionfeet and an 11.6% vacancy rate at the time of purchase.
Industrial Properties
Seneca Industrial Park – Ft. Lauderdale (Pembroke Pines), FL
On December 14, 2007, the Account purchased six industrial buildings in Pembroke Pines, Florida for approximately $122.3 million. The properties contain 882,000 square feet and were 96% occupied at the time of purchase. The properties were built in 1999 through 2001. The three largest tenants are Mohawk Industries, Inc. (258,270 square feet), Royal Caribbean Cruises Ltd (154,405 square feet) and Sound Advice (111,985 square feet). Rental rates average $6.50 per square foot, net of expenses, which is below the current average market rent for comparable properties. They are located in the industrial submarket of Southeast Broward which had an inventory of 30.7 million square feet and a vacancy rate of 3%3.3% at the time of purchase.
Retail Properties
The Colorado – New York, NY
On February 12, 2008, the Account purchased a tenant’s leasehold interest in approximately 40,000 square feet of retail space for approximately $42.7 million. The Colorado is a 35-story high-rise apartment building and was acquired by the Account in 1999. There are two tenants who occupy substantially all of the retail space; Banana Republic (approximately 17,000 square feet) and Yoga & Fitness (approximately 22,000 square feet). This transaction provides the Account with control of all of the property’s rentable space.
SALES
ResidentialOffice Properties
The Greens at MetroWest - Orlando, FL 10 Waterview – Parsippany, NJ
On February 14,October 18, 2007, the Account sold an apartment complexoffice building located in Orlando, FloridaParsippany, New Jersey for net sales proceeds of approximately $21.7$36.6 million. The Account purchased the property on December 15, 1995 for an original investment of $12.5$31.1 million. At the time of sale, the property had a market value of $21.5$39.0 million and a cost to date of $15.0$36.7 million in the records of the Account.
TIAA Real Estate 9 Hutton Centre – Santa Ana, CA
On October 31, 2007, the AccountProspectus|33 sold an office building located in Santa Ana, California for net sales proceeds of approximately $36.5 million. The Account purchased the property for an original investment of $20.4 million. At the time of sale, the property had a market value of $38.5 million and a cost to date of $25.6 million in the records of the Account.
TIAA Real Estate Account§ Prospectus 39 | |
One Monument Place – Fairfax, VA
On November 29, 2007, the Account sold an office building located in Fairfax, Virginia for net sales proceeds of approximately $60.3 million. The Account purchased the property for an original investment of $34.6 million. At the time of sale, the property had a market value of $63.1 million and a cost to date of $42.6 million in the records of the Account.
The Account is party to various claims and routine litigation arising in the ordinary course of business. As of the date of this prospectus, management of the Account does not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material effect on the Account’s business, financial position or results of operations.
40Prospectus§ TIAA Real Estate Account | |
The following selected financial data should be considered in conjunction with the Account’s financial statements and notes provided in this prospectus.
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| Years Ended December 31, |
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| Year Ended |
| Year Ended |
| Year Ended |
| Year Ended |
| Year Ended |
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| 2007 |
| 2006 |
| 2005 |
| 2004 |
| 2003 |
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Investment income: |
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Real estate income, net |
| $ | 444,782,843 |
| $ | 340,089,550 |
| $ | 239,429,500 |
| $ | 224,938,080 |
| $ | 198,998,685 |
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| $ | 529,412,759 |
| $ | 444,782,843 |
| $ | 340,089,550 |
| $ | 239,429,500 |
| $ | 224,938,080 |
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Income from real estate joint ventures and limited partnerships |
| 84,671,528 |
| 71,826,443 |
| 71,390,397 |
| 31,989,569 |
| 17,077,072 |
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| 93,724,569 |
| 60,788,998 |
| 71,826,443 |
| 71,390,397 |
| 31,989,569 |
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Dividends and interest |
| 135,407,210 |
| 70,999,212 |
| 27,508,560 |
| 19,461,931 | �� |
| 26,437,901 |
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| 141,913,253 |
| 135,407,210 |
| 70,999,212 |
| 27,508,560 |
| 19,461,931 |
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Total investment income |
| 664,861,581 |
| 482,915,205 |
| 338,328,457 |
| 276,389,580 |
| 242,513,658 |
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| 765,050,581 |
| 640,979,051 |
| 482,915,205 |
| 338,328,457 |
| 276,389,580 |
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Expenses |
| 83,448,664 |
| 56,100,197 |
| 36,728,425 |
| 31,654,065 |
| 23,304,336 |
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| 140,294,447 |
| 83,448,664 |
| 56,100,197 |
| 36,728,425 |
| 31,654,065 |
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Investment income, net |
| 581,412,917 |
| 426,815,008 |
| 301,600,032 |
| 244,735,515 |
| 219,209,322 |
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| 624,756,134 |
| 557,530,387 |
| 426,815,008 |
| 301,600,032 |
| 244,735,515 |
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Net realized and unrealized gain (loss) on investments and mortgage notes payable |
| 1,032,787,765 |
| 765,970,272 |
| 414,580,303 |
| 58,837,371 |
| (102,967,284 | ) |
| 1,438,434,738 |
| 1,056,670,295 |
| 765,970,272 |
| 414,580,303 |
| 58,837,371 |
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Net increase in net assets resulting from operations |
| 1,614,200,682 |
| 1,192,785,280 |
| 716,180,335 |
| 303,572,886 |
| 116,242,038 |
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| 2,063,190,872 |
| 1,614,200,682 |
| 1,192,785,280 |
| 716,180,335 |
| 303,572,886 |
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Participant transactions |
| 1,969,780,728 |
| 2,110,375,836 |
| 1,735,947,490 |
| 813,860,715 |
| 346,079,345 |
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| 1,464,653,415 |
| 1,969,780,728 |
| 2,110,375,836 |
| 1,735,947,490 |
| 813,860,715 |
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Net increase in net assets |
| $ | 3,583,981,410 |
| $ | 3,303,161,116 |
| $ | 2,452,127,825 |
| $ | 1,117,433,601 |
| $ | 462,321,383 |
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| $ | 3,527,844,287 |
| $ | 3,583,981,410 |
| $ | 3,303,161,116 |
| $ | 2,452,127,825 |
| $ | 1,117,433,601 |
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| 2007 |
| 2006 |
| 2005 |
| 2004 |
| 2003 |
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Total assets |
| $ | 19,232,767,244 |
| $ | 15,759,961,333 |
| $ | 11,685,426,413 |
| $ | 7,843,979,924 |
| $ | 4,867,089,727 |
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Total liabilities |
| 1,572,230,445 |
| 1,627,268,821 |
| 1,136,715,311 |
| 598,429,938 |
| 73,667,566 |
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Total net assets |
| $ | 17,660,536,799 |
| $ | 14,132,692,512 |
| $ | 10,548,711,102 |
| $ | 7,245,549,986 |
| $ | 4,793,422,161 |
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Accumulation units outstanding |
| 55,105,718 |
| 50,146,354 |
| 42,623,491 |
| 33,337,597 |
| 24,724,183 |
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Accumulation unit value |
| $ | 311.41 |
| $ | 273.65 |
| $ | 239.95 |
| $ | 210.44 |
| $ | 186.94 |
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Mortgage notes payable |
| $ | 1,392,092,982 |
| $ | 1,437,149,148 |
| $ | 973,502,186 |
| $ | 499,479,256 |
| $ | — |
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| December 31, |
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| 2006 |
| 2005 |
| 2004 |
| 2003 |
| 2002 |
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Total assets |
| $ | 15,759,961,333 |
| $ | 11,685,426,413 |
| $ | 7,843,979,924 |
| $ | 4,867,089,727 |
| $ | 3,731,503,245 |
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Total liabilities |
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| 1,627,268,821 |
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| 1,136,715,311 |
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| 598,429,938 |
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| 73,667,566 |
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| 55,514,685 |
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Total net assets |
| $ | 14,132,692,512 |
| $ | 10,548,711,102 |
| $ | 7,245,549,986 |
| $ | 4,793,422,161 |
| $ | 3,675,988,560 |
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Accumulation units outstanding |
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| 50,142,688 |
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| 42,623,491 |
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| 33,337,597 |
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| 24,724,183 |
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| 20,346,696 |
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Accumulation unit value |
| $ | 273.65 |
| $ | 239.95 |
| $ | 210.44 |
| $ | 186.94 |
| $ | 173.90 |
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Mortgage notes payable |
| $ | 1,437,149,148 |
| $ | 973,502,186 |
| $ | 499,479,256 |
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| — |
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| — |
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QUARTERLY SELECTED FINANCIAL INFORMATION
The following selected unaudited financial data for each full quarter of 20062007 and 20052006 are derived from the financial statements of the Account for the years ended December 31, 20062007 and 2005.2006. Certain amounts below have been reclassified in accordance with the reclassifications discussed in Note 1 of the Notes to Financial Statements.
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| 2007 |
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| 2006 |
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| For the Three Months Ended |
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| Year Ended |
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| March 31 |
| June 30 |
| September 30 |
| December 31 |
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| March 31 |
| June 30 |
| September 30 |
| December 31 |
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Investment income, net |
| $ | 117,280,069 |
| $ | 135,154,810 |
| $ | 173,662,421 |
| $ | 155,315,617 |
|
| $ | 142,720,924 |
| $ | 158,634,655 |
| $ | 155,766,287 |
| $ | 167,634,268 |
| $ | 624,756,134 |
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Net realized and unrealized gain on investments and mortgage loans payable |
| 229,766,395 |
| 411,609,818 |
| 266,396,224 |
| 125,015,328 |
|
| 436,763,627 |
| 355,602,333 |
| 442,916,313 |
| 203,152,465 |
| 1,438,434,738 |
| |||||||||
Net increase in net assets resulting from operations |
| $ | 347,046,464 |
| $ | 546,764,628 |
| $ | 440,058,645 |
| $ | 280,330,945 |
|
| $ | 579,484,551 |
| $ | 514,236,988 |
| $ | 598,682,600 |
| $ | 370,786,733 |
| $ | 2,063,190,872 |
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Total return |
| 3.21 | % |
| 4.69 | % |
| 3.43 | % |
| 2.04 | % |
| 4.02 | % |
| 3.31 | % |
| 3.66 | % |
| 2.15 | % |
| 13.80 | % | ||
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| 2006 |
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| |||||||||||||||||||||||||
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| For the Three Months Ended |
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| March 31 |
| June 30 |
| September 30 |
| December 31 |
| Year Ended |
| ||||||||||||||||||
Investment income, net |
| $ | 118,718,422 |
| $ | 135,473,310 |
| $ | 149,429,649 |
| $ | 153,909,006 |
| $ | 557,530,387 |
| |||||||||||||
Net realized and unrealized gain on investments and mortgage loans payable |
| 228,328,042 |
| 411,291,318 |
| 290,628,996 |
| 126,421,939 |
| 1,056,670,295 |
| ||||||||||||||||||
Net increase in net assets resulting from operations |
| $ | 347,046,464 |
| $ | 546,764,628 |
| $ | 440,058,645 |
| $ | 280,330,945 |
| $ | 1,614,200,682 |
| |||||||||||||
Total return |
| 3.21 | % |
| 4.69 | % |
| 3.43 | % |
| 2.04 | % |
| 14.04 | % | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 2005 |
| ||||||||||
|
| ||||||||||||
|
| March 31 |
| June 30 |
| September 30 |
| December 31 |
| ||||
Investment income, net |
| $ | 93,301,077 |
| $ | 98,805,190 |
| $ | 114,048,282 |
| $ | 120,660,459 |
|
| |||||||||||||
Net realized and unrealized gain on investments and mortgage loans payable |
|
| 21,210,579 |
|
| 263,101,053 |
|
| 267,884,516 |
|
| 213,774,124 |
|
Net increase in net assets resulting from operations |
| $ | 114,511,656 |
| $ | 361,906,243 |
| $ | 381,932,798 |
| $ | 334,434,583 |
|
Total return |
|
| 1.52 | % |
| 4.38 | % |
| 4.13 | % |
| 3.33 | % |
42 Prospectus§TIAA Real Estate Account | |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and notes contained in this prospectus and with consideration to the sub-section entitled “Forward-Looking Statements,” which begins on page 51,below, and the section entitled “Risks,” which begins on page 11.12. The past performance of the Account is not indicative of future results.
2006 OVERVIEWFORWARD-LOOKING STATEMENTS
Some statements in this prospectus 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 underlying these forward-looking statements, and are based on current expectations, estimates and projections about the real estate industry, markets in which the Account operates, management’s beliefs, assumptions made by management and the transactions described in this prospectus. 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. Forward-looking statements involve risks and uncertainties, some of which are referenced in the section of the prospectus entitled “Risks” and in this prospectus below and also in the section entitled “Quantitative and Qualitative Disclosures About Market Risk,” that 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 of this prospectus. 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.
2007 Overview
The TIAA Real Estate Account (the “Account”) invests primarily in high quality, core commercial 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. CommericalThe Account does not directly invest in either single-family residential real estate enjoyed anotheror residential mortgage-backed securities. Performance of commercial real estate during 2007 was positive as U.S. economic growth continued to support real estate market fundamentals. Investor demand for commercial real estate remained strong yearthrough much of performancethe year. According to Real Capital Analytics, a primary source of commercial real estate transaction data, transactional volume reached a record $430 billion in 2007, a 34% increase
TIAA Real Estate Account§ Prospectus 43 | |
over the $322 billion recorded in 2006. Large transactions which contributed to 2007’s record breaking results included the privatization of Archstone Smith and Equity Office Properties. While sales were strong for the year as a whole, sales slowed dramatically in the fourth quarter as capital markets uncertainties escalated. Sales activity in the quarter declined by roughly 33% compared with the fourth quarter of 2006.
The shift in capital market conditions that materialized in the summer and fall of 2007 was the conclusion of a capital markets cycle phase characterized by plentiful capital, inexpensive and abundant debt, and increasingly aggressive risk pricing for all asset types. As deteriorating credit in sub-prime residential mortgages became evident in 2007, the value of structured securities containing those mortgages plunged and effectively closed down demand for new issues of such securities. The loss of confidence in this sector of the market ignited, in turn, a re-evaluation of risk pricing through-out the capital markets. Credit spreads on corporate debt, conventional commercial mortgages and commercial mortgage-backed securities (CMBS) have widened to levels not seen since the last recession. CMBS new issuances have all but halted as a loss of confidence spilled over from sub-prime residential mortgages. Various specialty instruments have withered as well, also largely the result of this loss of confidence. The risk re-pricing brought the long phase of commercial real estate capitalization rate compression to a halt. By year end 2007, cap rates showed slight widening across certain property types though based on very few transactions. The slowing in transactions probably reflects both heightened uncertainty as market participants wait out the capital markets volatility and the constraining effect of less available and more expensive commercial mortgage financing.
In the public sector, REITs performed poorly during most of 2007, despite healthy real estate market fundamentals. After a seven year run of above-average returns, REIT returns as indicated by the Dow Jones Wilshire Real Estate Securities Index were a negative 17.7% for the year as compared with a gain of 5.5% for the S&P 500. Several REITs were taken private during the year at what turned out to be peak prices; those that remained public saw their share prices decline. Because of their liquidity, REIT returns have historically been more volatile than commercial property returns, as stock market investors will often move money between sectors based on swings in sentiment and other factors. While the Account does invest in REITs, these holdings amount to less than 5% of the total value of the Account as of December 31, 2007.
The U.S. economy continued positiveto expand in 2007; however, growth slowed measurably over the course of the year due in large part to the slowdown in the housing market. Home prices declined across the nation, and the number of residential mortgage delinquencies increased, particularly among borrowers who bought homes with adjustable rate mortgages. Housing construction dropped sharply over the course of the year as inventories of unsold homes increased and mortgage lenders tightened lending standards.
44 Prospectus § TIAA Real Estate Account
Historically, there has not been a direct link between the performance of commercial real estate markets is a reflection of positive economic indicators and improved real estatesingle-family housing due to the different market fundamentals as discussed in the following section. While economic growth was relatively strong throughout the year, the Federal Reserve Board reported inthat drive each. In its January 20072008 “Beige Book,”Book”, which summarizesreports on economic conditions in the 12 Federal Reserve Districts, that economic activity had moderated in several Districts since its November 2006 report. However, the Federal Reserve Board also statedcharacterized commercial real estate activity at year-end 2007 as generally stable, with some markets reporting little to no change while others reported a slight easing. By comparison, according to the Beige Book, “residential real estate conditions continued to be weak in all districts”.
Nonetheless, the performance of the single-family housing market has had an indirect impact on commercial real estate markets. For example, bankruptcies of subprime mortgage lenders have negatively affected office space demand in Orange County, California, where several of the largest subprime lenders were headquartered. The Account has minimal exposure to the Orange County market, with one investment totaling $64 million, or 0.3% of total Account value. Similarly, job losses in the financial services sector can affect retail market conditions since financial services jobs are among the most highly paid. While retail sales softened nationally in 2007, the impact has been minimal in the Account’s primary retail markets to date.
During the second half of 2007, as the national economy continued to weaken and the housing market downturn deepened, the Federal Open Market Committee (“FOMC”) cut the federal funds rate three times, first by 50 basis points (0.50%) in September, and then by another 25 basis points (0.25%) in both October and December In early-2008, the Federal Reserve lowered the federal funds rate two more times by a total of 125 basis points (1.25%). Cuts in interest rates are designed to spur economic activity by increasing consumer spending and business borrowing. The effects of cuts in the federal funds rate and other Federal Reserve actions often take 6-9 months to become evident, and the Federal Reserve will be watching for signs that its cuts have stimulated economic activity. While credit markets remain constrained as of early 2008, the Federal Reserve’s efforts to stimulate economic activity through cuts in the federal funds rate give management reason to believe that the economic and capital markets environment will provide fundamental support for U.S. commercial real estate markets remained very active throughout the country: “…in contrast to the housing sector, commercial real estate markets continued to see strong activity in most Districts.”
Investor demand for commercial real estate in 2006 was fueled by the solid performance of the U.S. economy, healthy market fundamentals, a dip in interest rates in the second half of 2006, and relatively attractive returns when compared to other asset classes. Unlike the single family housing market, which experienced softening in demand and prices, commercial real estate prices and investment activity increased in 2006. According to Real Capital Analytics, one of the primary industry sources of commercial real estate transaction data, commercial real estate transactional volume in 2006 totaled approximately $307 billion, an 11% increase over 2005. A number of REIT privatization transactions and the $5 billion purchase price paid for a single property (Peter Cooper Village/Stuyvesant Town in New York City) were responsible for a sizeable share of the 2006 increase, which may make it difficult for the commercial real estate market to sustain this pace in 2007.
While management believes that economic and real estate market fundamentals should remain stable to positive in the near term, commercial real estate markets are cyclical over the longer term and, therefore, are subject to change. Geopolitical and economic risks, changes in interest rates or monetary policy, industry or sector slowdowns, the dynamics of supply and demand for commercial real estate and changing demographics are but a few of the factors which can affect commercial real estate values and, consequently, the2008.
36|ProspectusTIAA Real Estate Account
performanceInvestments as of the Account. While management cannot predict the exact nature or timing of such changes or the magnitude of their impact, our experience has demonstrated that market fluctuations can and will take place without advance notice, and any significant changes could have a direct and meaningful impact on the returns of the Account. Please refer to the section entitled “Risks,” which begins on page 11, for a more detailed description of the risks associated with an investment in the Account.
It is also important to note that, while the single family residential real estate market has slowed to varying degrees in particular markets throughout the country, the Account does not directly invest in single family residential real estate. Historically, there has not been a strong link between commercial real estate and single family housing because different market fundamentals drive the performance of each. The volatility in interest rates had an immediate negative impact on the affordability of single family housing while not affecting commercial real estate values in the short term. During this same period, the commercial real estate market has been experiencing improved market conditions (improving occupancies and increases in rental rates) and moderate levels of new construction.
INVESTMENTS AS OF DECEMBERDecember 31, 20062007
As of December 31, 2006,2007, the Account had total net assets in the amount of $14,132,692,512,$17,660,536,799, a 4%3% increase from the end of the third quarter of 20062007 and a 34%25% increase from year-end 2005.2006. The growth in net assets was due to the strongcontinued positive inflow of premiums and net transfers into the Account, combined with a healthy12% increase in net investment income and capital appreciation on the Account’s investment portfolio during the year ended December 31, 2006,2007, as compared to 2005.2006.
As of December 31, 2006,2007, the Account owned a total of 121111 real estate property investments (109(99 of which were wholly owned andwholly-owned, 12 of which were held in joint ventures) and one remaining equity interest in a joint venture, which sold its real
TIAA Real Estate Account§Prospectus45
estate investments during the third quarter of 2007, representing 80.03%77.9% of the Account’s total investment portfolio. The real estate portfolio included 4946 office properties (six(5 of which were held in joint ventures and one located in London, England), 3527 industrial properties (including one held in a joint venture), 2321 apartment complexes, 1316 retail properties (including fourfive held in joint ventures)ventures and one located in Paris, France), and a 75% joint venture interest in a portfolio of storage facilities. Of the 121111 real estate property investments, only 18 were20 are subject to debt.debt (including seven joint venture property investments). Total debt on the Account’s wholly ownedwholly-owned real estate portfolio as of December 31, 20062007 was $1,437,149,148,$1,392,092,982 representing 10.17%7.9% of Total Net Assets. The Account’s share of joint venture debt is netted out in determining the joint venture values shown in the Statement of Investments, but, when that debt is also considered, total debt on the Account’s portfolio as of December 31, 20062007 was $1,909,316,373,$3,383,875,582 representing 13.51%19.2% of Total Net Assets.
Management believes the Account’s real estate and real estate-related transactional activity in the year ended December 31, 2006 was strong. The Account currently has no fund-level debt.
During 2007, the Account purchased 237 property investments, includingone of which was a joint venture interest in a portfolio containing 65 retail properties, for
TIAA Real Estate AccountProspectus|37
a total net equity investment of $2.3$1.7 billion. These purchases were diversified by both location (12(16 states and Washington, D.C.)Paris, France) and by sector. The Account purchased an 80% joint venture interestproperties are listed in four retail centers, and purchased nine office properties, seven industrial properties, three retail properties and three apartment properties. Two of the seven industrial properties were consolidated into existing portfolios.chart below:
PROPERTY INVESTMENTS ACQUIRED IN 2007
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Property Name |
| Property |
| City |
| State |
| Net |
| Joint Venture/ |
| Third Party |
| Gross |
| ||||
Camelback Center |
| Office |
| Phoenix |
| AZ |
| $ | 75,743,245 |
|
| No |
| $ | — |
| $ | 75,743,245 |
|
DDR Retail Portfolio |
| Retail |
| various |
| various |
|
| 1,043,213,518 |
|
| Yes - 85% |
|
| 1,531,873,092 |
|
| 2,575,086,610 |
|
Printemps de l’Homme |
| Retail |
| Paris |
| France |
|
| 259,842,066 |
|
| No |
|
| — |
|
| 259,842,066 |
|
Preston Sherry Plaza |
| Office |
| Dallas |
| TX |
|
| 45,211,077 |
|
| No |
|
| — |
|
| 45,211,077 |
|
Champlin Marketplace |
| Retail |
| Champlin |
| MN |
|
| 18,352,263 |
|
| No |
|
| — |
|
| 18,352,263 |
|
Pacific Plaza |
| Office |
| San Diego |
| CA |
|
| 118,221,017 |
|
| No |
|
| 8,922,033 |
|
| 127,143,050 |
|
Seneca Industrial Park |
| Industrial |
| Pembroke Park |
| FL |
|
| 122,334,422 |
|
| No |
|
| — |
|
| 122,334,422 |
|
Total |
|
|
|
|
|
|
| $ | 1,682,917,608 |
|
|
|
| $ | 1,540,795,125 |
| $ | 3,223,712,733 |
|
The Account also sold nine15 property investments (four apartment and five office properties),5 properties from larger portfolios for approximately $381.9$801.8 million. TheseWe believe that these properties had either maximized in value, under-performed, or represented properties needing significant capital infusions in the future, which could have had a negative impact
46 Prospectus § TIAA Real Estate Account
on the Account’s overall performance. The properties sold had a total netcumulative realized gain of $76.1approximately $199.1 million. The properties are listed below:
PROPERTY INVESTMENTS SOLD IN 2007
|
|
|
|
|
|
|
|
|
|
|
Property Name |
| Property |
| City |
| State |
| Net Sales Price |
| |
Greens at Metrowest |
| Apartment |
| Orlando |
| FL |
| $ | 21,656,260 |
|
Eastgate Distribution Center |
| Industrial |
| San Diego |
| CA |
|
| 31,800,127 |
|
Woodcreek III-Chicago Industrial(1) |
| Industrial |
| Bollingbrook |
| IL |
|
| 6,717,149 |
|
IDI Kentucky |
| Industrial |
| Hebron |
| KY |
|
| 66,981,460 |
|
Corporate Lakes-Atlanta Industrial(1) |
| Industrial |
| Atlanta |
| GA |
|
| 30,653,575 |
|
Landmark at Salt Lake City |
| Industrial |
| Salt Lake City |
| UT |
|
| 16,176,540 |
|
2101 Design Road-Dallas Industrial Portfolio(1) |
| Industrial |
| Arlington |
| TX |
|
| 9,279,890 |
|
1155 Harvester-Chicago CalEast Portfolio(1) |
| Industrial |
| West Chicago |
| IL |
|
| 8,727,620 |
|
Memphis Portfolio |
| Industrial |
| Memphis |
| TN |
|
| 61,485,333 |
|
Mideast RA Industrial Portfolio |
| Industrial |
| New Castle |
| DE |
|
| 15,207,210 |
|
Mountain RA Industrial Portfolio |
| Industrial |
| Phoenix |
| AZ |
|
| 9,014,952 |
|
Sabre Street-Northern CA RA Industrial(1) |
| Industrial |
| Hayward |
| CA |
|
| 6,547,463 |
|
Batterymarch Park II |
| Office |
| Quincy |
| MA |
|
| 17,291,200 |
|
161 N. Clark Street (75% Account Interest) |
| Office |
| Chicago |
| IL |
|
| 239,493,750 |
|
Butterfield Industrial Park |
| Industrial |
| El Paso |
| TX |
|
| 5,035,162 |
|
Legends at Chase Oaks |
| Apartment |
| Plano |
| TX |
|
| 36,631,000 |
|
Sawgrass Office Portfolio |
| Office |
| Sunrise |
| FL |
|
| 85,656,950 |
|
10 Waterview |
| Office |
| Parsippany |
| NJ |
|
| 36,633,763 |
|
9 Hutton Centre |
| Office |
| Santa Ana |
| CA |
|
| 36,535,781 |
|
One Monument Place |
| Office |
| Fairfax |
| VA |
|
| 60,263,855 |
|
Total |
|
|
|
|
|
|
| $ | 801,789,040 |
|
(1) | Partial sale of a single building which was part of an existing portfolio |
In addition to the acquisition and sales activity, the Account madeentered into a $75commitment to purchase a limited partnership interest in the amount of $50 million mortgagein a real estate fund providing mezzanine financing on commercial real estate, and refinanced the debt on West Town Mall, reducing the interest rate from 6.90% to 6.34%, and increasing the amount of its share in the loan receivable investment secured by an apartment complex in Washington, D.C.from $38 million to $105 million.
Management believes that the Account’s real estate portfolio is diversified by location and property typetype. The largest investment, DDR Joint Venture, consists of 65 properties in 13 states, represents 5.41% of Total Investments and at December 31, 2006, no6.94% of its total real estate investments. No single property investment represented more than 3.56%3.37% of its total investmentsTotal Investments or more than 4.45%4.32% of its total real estate investments, based on the values of such assets. The following charts reflect the diversification of the Account’s real estate assets by region and property type, list its ten largest holdings, and list its top five overall market exposures by
TIAA Real Estate Account§Prospectus47
metropolitan statistical area. All information is based on the values of the properties as stated in the financial statements as ofat December 31, 2006.2007.
REAL ESTATE PROPERTY INVESTMENT DIVERSIFICATION BY MARKET VALUE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| East |
| West |
| South |
| Midwest |
| Other* |
| Foreign** |
| TOTAL | |||||||
|
|
| (32) |
| (40) |
| (39) |
| (7) |
| (2) |
| (1) |
| (121) | |||||||
Office (49) |
|
| 22.6 | % |
| 18.4 | % |
| 11.5 | % |
| 2.9 | % |
| 0.0 | % |
| 3.5 | % |
| 58.9 | % |
Apartment (23) |
|
| 1.9 | % |
| 7.4 | % |
| 6.2 | % |
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 15.5 | % |
Industrial (35) |
|
| 2.6 | % |
| 6.6 | % |
| 3.8 | % |
| 1.6 | % |
| 0.6 | % |
| 0.0 | % |
| 15.2 | % |
Retail (13) |
|
| 1.9 | % |
| 1.0 | % |
| 6.9 | % |
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 9.8 | % |
Other (1) |
|
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 0.6 | % |
| 0.0 | % |
| 0.6 | % |
TOTAL (121) |
|
| 29.0 | % |
| 33.4 | % |
| 28.4 | % |
| 4.5 | % |
| 1.2 | % |
| 3.5 | % |
| 100.0 | % |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| East |
| West |
| South |
| Midwest |
| Various* |
| Foreign** |
| Total |
| |||||||
Office (46) |
| 20.9 | % |
| 20.1 | % |
| 11.1 | % |
| 1.2 | % |
| 0.0 | % |
| 2.9 | % |
| 56.2 | % |
|
Apartment (21) |
| 1.7 | % |
| 6.1 | % |
| 5.0 | % |
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 12.8 | % |
|
Industrial (27) |
| 1.7 | % |
| 6.0 | % |
| 3.4 | % |
| 1.4 | % |
| 0.5 | % |
| 0.0 | % |
| 13.0 | % |
|
Retail (16) |
| 1.6 | % |
| 0.9 | % |
| 6.0 | % |
| 0.1 | % |
| 6.9 | % |
| 1.9 | % |
| 17.4 | % |
|
Other (1)*** |
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 0.0 | % |
| 0.6 | % |
| 0.0 | % |
| 0.6 | % |
|
Total (111) |
| 25.9 | % |
| 33.1 | % |
| 25.5 | % |
| 2.7 | % |
| 8.0 | % |
| 4.8 | % |
| 100.0 | % |
|
|
| |
( ) | Number of property investments in parentheses. | |
|
| |
* | Represents a portfolio of storage facilities, a portfolio of industrial properties, and a portfolio of | |
|
| |
** | Represents real estate investments in the United Kingdom and France. | |
| ||
*** | Represents a | |
Properties in the “East” region are located in: ME, NH, VT, MA, RI, CT, NY, NJ, PA, DE, MD, DC, WV, VA, NC, SC, KY | ||
Properties in the “Midwest” region are located in: WI, MI, OH, IN, IL, MN, IA, MO, KS, NE, ND, SD | ||
Properties in the “South” region are located in: TN, MS, AL, GA, FL, OK, AR, LA, TX | ||
Properties in the “West” region are located in: MT, ID, WY, CO, NM, AZ, UT, NV, WA, OR, CA, AK, HI | ||
38|Prospectus TIAA Real Estate Account
TOP TEN LARGEST REAL ESTATE PROPERTY INVESTMENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||||
Property Name |
| City |
| State/ |
| Property |
| Market |
| % of Total |
| % of Total |
|
| City |
| State/ |
| Property |
| Market |
| % of Total |
| % of Total |
| |||||||||||||||
1001 Pennsylvania Ave |
| Washington |
| DC |
| Office |
| $ | 552.5 | (b) |
| 4.45 | % |
| 3.56 | % |
| ||||||||||||||||||||||||
| |||||||||||||||||||||||||||||||||||||||||
DDR Joint Venture |
| Various |
| USA |
| Retail |
| $ | 1,028.3 | (c) |
| 6.94 | % |
| 5.41 | % |
| ||||||||||||||||||||||||
1001 Pennsylvania Avenue |
| Washington |
| DC |
| Office |
| $ | 640.1 | (d) |
| 4.32 | % |
| 3.37 | % |
| ||||||||||||||||||||||||
Fourth and Madison |
| Seattle |
| WA |
| Office |
| $ | 487.0 | (e) |
| 3.29 | % |
| 2.56 | % |
| ||||||||||||||||||||||||
50 Fremont |
| San Francisco |
| CA |
| Office |
| $ | 478.0 | (f) |
| 3.23 | % |
| 2.51 | % |
| ||||||||||||||||||||||||
1 & 7 Westferry Circus |
| London |
| UK |
| Office |
| $ | 428.6 | (c) |
| 3.45 | % |
| 2.76 | % |
|
| London |
| UK |
| Office |
| $ | 436.1 | (g) |
| 2.94 | % |
| 2.29 | % |
| |||||||
50 Fremont Street |
| San Francisco |
| CA |
| Office |
| $ | 421.0 | (d) |
| 3.39 | % |
| 2.71 | % |
| ||||||||||||||||||||||||
IDX Tower |
| Seattle |
| WA |
| Office |
| $ | 399.0 | (e) |
| 3.21 | % |
| 2.57 | % |
| ||||||||||||||||||||||||
Four Oaks Place |
| Houston |
| TX |
| Office |
| $ | 419.3 |
| 2.83 | % |
| 2.21 | % |
| |||||||||||||||||||||||||
The Newbry |
| Boston |
| MA |
| Office |
| $ | 370.7 |
| 2.99 | % |
| 2.39 | % |
|
| Boston |
| MA |
| Office |
| $ | 389.9 |
| 2.63 | % |
| 2.05 | % |
| |||||||||
Four Oaks Place |
| Houston |
| TX |
| Office |
| $ | 306.2 |
| 2.47 | % |
| 1.97 | % |
| |||||||||||||||||||||||||
Houston Apartment Portfolio |
| Houston |
| TX |
| Apartment |
| $ | 306.0 |
| 2.47 | % |
| 1.97 | % |
| |||||||||||||||||||||||||
780 Third Avenue |
| New York City |
| NY |
| Office |
| $ | 298.0 |
| 2.40 | % |
| 1.92 | % |
|
| New York City |
| NY |
| Office |
| $ | 375.0 |
| 2.53 | % |
| 1.97 | % |
| |||||||||
99 High Street |
| Boston |
| MA |
| Office |
| $ | 291.8 | (f) |
| 2.35 | % |
| 1.88 | % |
| ||||||||||||||||||||||||
Yahoo! Center |
| Santa Monica |
| CA |
| Office |
| $ | 369.4 |
| 2.49 | % |
| 1.94 | % |
| |||||||||||||||||||||||||
Ontario Industrial Portfolio |
| Ontario |
| CA |
| Industrial |
| $ | 270.0 | (g) |
| 2.18 | % |
| 1.74 | % |
|
| Ontario |
| CA |
| Industrial |
| $ | 355.4 | (h) |
| 2.40 | % |
| 1.87 | % |
| |||||||
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|
(a) | Value as reported in the |
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|
(b) | Total Real Estate Portfolio excludes the mortgage loan receivable. |
(c) | This property is held in a 85%/15% joint venture with Developers Diversified Realty Corporation (DDR), and consists of 65 retail properties located in 13 states. |
48Prospectus§TIAA Real Estate Account
(d) | This property is shown gross of debt. The value of the Account’s interest less leverage is |
|
|
| This property is shown gross of debt. The value of the Account’s interest less leverage is |
|
|
| This property is shown gross of debt. The value of the Account’s interest less leverage is |
|
|
| This property is shown gross of debt. The value of the Account’s interest less leverage is |
|
|
| This property is held in a 50%/50% joint venture with Equity Office Properties Trust. |
(i) | This property is shown gross of debt. The value of the Account’s interest less leverage is |
|
|
TOP FIVE OVERALL MARKET EXPOSURE
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Metropolitan Statistical Area |
| % |
| # of |
| % Total |
| |||||||||
Washington-Arlington-Alexandria |
|
|
| 96.8 | % |
|
|
| 10 |
|
|
|
| 9.61 | % |
|
Boston-Quincy |
|
|
| 85.3 | % |
|
|
| 6 |
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|
|
| 5.85 | % |
|
San Francisco-San Mateo-Redwood City |
|
|
| 93.3 | % |
|
|
| 4 |
|
|
|
| 5.39 | % |
|
Los Angeles-Long Beach-Glendale |
|
|
| 98.4 | % |
|
|
| 8 |
|
|
|
| 5.37 | % |
|
Seattle-Bellevue-Everett |
|
|
| 95.8 | % |
|
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| 5 |
|
|
|
| 4.29 | % |
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|
Metropolitan Statistical Area (MSA) |
| % |
| # of |
| % Total |
| |||
Washington-Arlington-Alexandria DC-VA-MD-WV |
| 99.2 | % |
| 9 |
|
| 8.42 | % |
|
Los Angeles-Long Beach-Glendale CA |
| 92.5 | % |
| 8 |
|
| 5.72 | % |
|
Boston-Quincy MA |
| 96.7 | % |
| 5 |
|
| 5.51 | % |
|
San Francisco-San Mateo-Redwood City CA |
| 94.4 | % |
| 4 |
|
| 5.11 | % |
|
Seattle-Bellevue-Everett WA |
| 97.9 | % |
| 5 |
|
| 4.11 | % |
|
As of December 31, 2006,2007, the Account also held investments in real estate limited partnerships, representing 1.80%1.74% of Total Investments, real estate equity securities, representing 3.99% of Total Investments, commercial mortgage-backed securities (CMBSs), representing 0.55%2.24% of Total Investments, a mortgage loan receivable representing 0.48%0.38% of Total Investments, certificates of deposit representing 2.22% of Total Investments, commercial paper representing 10.79%9.23% of Total Investments, government bonds, representing 5.82% of Total Investments, variable notes representing 0.26% of Total Investments, and government bonds,bankers acceptance representing 2.36%0.20% of Total Investments.
TIAA Real Estate AccountProspectus|39
Real Estate Market Outlook—In GeneralUpdate By Property Type
(Commercial real estate market statistics discussed in this section are obtained by the Account from sources that managementManagement considers reliable, but some of the data isare preliminary for the year ended December 31, 20062007 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.)
TheIn 2007 the United States economy grew steadily for the first seven months and then at a pace which slowed measurably from August to the end of 2007. Employment growth, which is a crucially important influence on the demand side of commercial real estateproperty markets, slowed with the economy. An estimated 1.7 million jobs were added during 2007, down significantly from 2.5 million in 2006. While the service sector expanded, job losses were concentrated in the construction (primarily residential building) and the national economy continuedmanufacturing sectors. The unemployment rate began to experience improvements throughout 2006. Commercial real estate market fundamentals improved while the national economy moved ahead, albeit more slowly inincrease during the second half of the year, ending at 5.0%, as compared to 4.4% at the end of 2006. Despite the slowerweaker economic growth, capital inflow from investors toactivity, commercial real estate assetsfundamentals remained strong in 2006, continuinghealthy, although varied from market to support commercial real estate values, while moderating investment returns. Management believes it is important to remember that real estate values can be affectedmarket and by prospective changes in economicproperty sectors during the year. In general, vacancy rates across most property types remained at or below equilibrium levels and capital market conditions, as well as by changes in supply and demand at the local level.
Economic activity expanded throughout the nation in 2006. The United States economy added a total of 2.24 million new jobs over the course of 2006 and 2.54 million new jobs in 2005. The unemployment rate dropped to 4.5% as of December 2006, from 4.9% in December 2005. Economic gains were broadly based, both geographically and across industries. While the economy did grow throughout 2006, the Federal Reserve Board reported in its January 2007 “Beige Book” that economic activity had moderated in several Districts during December. The Federal Reserve also noted, however, that “...in contrast to the housing sector, commercial real estate markets continued to see strong activityrents grew in most Districts.”markets.
TIAA Real Estate Account§ Prospectus49
Payroll employment growthgrew in all of the Account’s primary metropolitan areas remained positive in 2006. Of the2007. The Account’s top five top markets (Washington, D.C., Boston, San Francisco, Los Angeles and Seattle), based on the net equity value of the Account’s property investments employmentwere Washington, D.C., Los Angeles, Boston, San Francisco, and Seattle. Employment growth was strongest in Seattle, where the Seattle metropolitan area, where payroll employment grew 3.9%number of jobs increased by 2.8% in 2006.Employment2007. Payroll growth was also strongpositive in San Francisco (2.2%), Boston (1.7%), and Washington, D.C (1.5%). Employment growth in Los Angeles registered a more modest 1.0% gain during the year. In comparison, payroll employment in the Washington, D.C. metropolitan area, where payroll employmentU.S. grew 2.5%by 1.3%.
Office market conditions, particularly in the primary markets, were stable over the course of 2006. Employment growth was more modest in the Boston (+0.9%), San Francisco (+1.5%) and Los Angeles (+1.2%) metropolitan areas. By comparison, payroll employment grew 1.4% in the United States as a whole in 2006.
Growth in payroll employment is highly correlated with tenant demand for commercial real estate; however, growth in employment may not immediately result in demand for space. Space demand can lag growth in employment due to the nature of the leasing cycle. Alternatively, absorption can be a leading indicator as companies lease space to accommodate anticipated hiring. The “financial activities” and “professional and business services” sectors are the primary office users, and growth in these sectors is correlated with office space demand over the long term. These two sectors added 179,000 and 442,000 jobs, respectively, over the course of 2006, and office space demand responded in kind. According to2007. Torto Wheaton
40|Prospectus TIAA Real Estate Account
Research, an independent subsidiary of CB Richard Ellis and a widely-used source of real estate market data, office absorption in the United States, which is the net change in occupied space and a fundamental indicator of demand, totaled a healthy 75 million square feet in 2006. Gains in net absorption during 2006 lowered office vacancy rates throughout much of the country. Torto Wheaton Research reported that U.S. office market vacancies averaged 12.5% as of year-end 2007 as compared to 12.6% at year-end 2006, as compared with 13.6% at the end of 2005.2006. In comparison, at year-end 2006,2007, the vacancy rate of the Account’s office portfolio was 8%5.2%, which was well below the national average. The office market remained stable despite job losses in financial activities, a key office using sector. The downturn of the housing market and collapse of several of the largest subprime mortgage lenders contributed to the loss of around 21,000 jobs in the financial activities sector in the latter half of 2007. “Credit intermediation”, a category which includes subprime lenders, lost 75,000 jobs, most of which occurred during the third and fourth quarters. However, job losses in financial services were more than offset by larger gains in the professional and business services sector, which generated 314,000 jobs over the course of the year.
Real estate conditionsOffice market fundamentals remained positive in the Account’s top office markets were solid in 2006. For example, induring 2007. All of the Account’s top office markets enjoyed vacancy rates below the national average. In Washington, D.C. metropolitan area,, where the largest concentrationproportion of the Account’s real estateoffice investments are located, office vacancies were wellconcentrated, the year-end 2007 vacancy rate was 10.0%, which is below the national average but marginally above the market’s vacancy rate of 9.1% at 9.1%year-end 2006. By comparison, the average vacancy rate for the Account’s Washington, D.C. properties was 0.6% at year-end 2007. Similarly, the table below shows that the average vacancy rate of the Account’s property investments is well below that of their respective markets in Boston, San Francisco, Los Angeles, and Seattle.
50Prospectus§ TIAA Real Estate Account
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|
|
Metropolitan |
|
| Total |
| % of |
| Account |
| MSA |
| National |
| ||||||||
Office |
|
|
|
|
|
|
| 5.7 | % |
|
|
|
| 12.5 | % |
| ||||
1 | Washington-Arlington-Alexandria DC-VA-MD-WV |
|
| $ | 1,409 |
|
| 7.4 | % |
| 0.6 | % |
| 10.0 | % |
|
|
|
| |
2 | Boston-Quincy MA |
|
| $ | 1,014 |
|
| 5.3 | % |
| 3.0 | % |
| 10.8 | % |
|
|
|
| |
3 | San Francisco-San Mateo-Redwood City CA |
|
| $ | 874 |
|
| 4.6 | % |
| 5.6 | % |
| 9.1 | % |
|
|
|
| |
4 | Los Angeles-Long Beach-Glendale CA |
|
| $ | 719 |
|
| 3.8 | % |
| 5.4 | % |
| 10.0 | % |
|
|
|
| |
5 | Seattle-Bellevue-Everett WA |
|
| $ | 687 |
|
| 3.6 | % |
| 3.6 | % |
| 9.5 | % |
|
|
|
| |
* Source: Torto Wheaton Research | |
Industrial space demand is influenced by a number of factors including the national business cycle, industrial production, international trade, as well as employment growth in the manufacturing, wholesale trade and transportation and warehousing industries. Gross Domestic Product (GDP), a basic indicator of the national economic activity, grew an estimated 2.2% in 2007, as compared with 2.9% in 2006 and 3.1% in 2005. GDP growth was especially weak in the fourth quarter of 2007 at 0.6% (a preliminary estimate), which many economists believe will remain similarly weak in the first half of 2008. Nonetheless, industrial market conditions were stable in 2007. According to Torto Wheaton Research, industrial market vacancies in the U.S. averaged 9.4% as of year-end 2006, down2007, unchanged from 9.3% at year-end 2005.2006. In comparison, the average vacancy rate of the Account’s office portfolio inof industrial properties was 4.3% as of year-end 2007, below the Washington, D.C. metropolitan area was significantly better and stood at 3.0% at the end of 2006. Officenational average. The average vacancy rates in the Boston, Los Angeles, San Francisco, and Seattle metropolitan areas, which were the Account’s other top office markets, experienced steady declines over the past year, and the average office vacancy rates in those three markets at year-end 2006 were 11.9%, 10.0%, 10.8% and 9.4%, respectively. In comparison, the Account’s office portfolios in Los Angeles, San Francisco, Seattle and Boston had an average vacancy rate at year-end 2006 of 1%, 7%, 7% and 18%, respectively. It is important to note that three of the five property investments owned by the Account in the Boston metropolitan area are located within the city of Boston and had an average vacancy rate of 5%. The remaining two property investments are located in suburban areas and had an average vacancy rate of 36% due to a slower leasing pace.
Industrial space demand is related to a number of factors, including the national business cycle, national industrial production, international trade volumes, changes in corporate logistics and distribution systems, and employment growth in the manufacturing, wholesale trade and transportation & warehousing industries. Most of these factors have experienced sustained growth over the last several years. For example, U.S. gross domestic product (GDP), a basic indicator of the national business cycle, grew an estimated 3.3% in 2006, after growing 3.2% in 2005 and 3.9% in 2004. Similarly, national industrial production grew at a 4.4% rate in 2006, following growth of 3.2% in 2005 and 2.5% in 2004. While GDP growth and growth in industrial production slowed during the second half of the year due primarily to a slowdown in domestic auto production and weakness in the single-family housing market, those factors continued to grow at relatively healthy rates. According to Torto Wheaton Research, industrial space absorption in major U.S. metropolitan areas totaled 188 million square feet in 2006, which is a reflection of U.S. economic growth, and, as a result of the healthy absorption, industrial vacancies dipped lower in 2006. According to Torto Wheaton Research, industrial vacancies averaged 9.4% at year-end 2006 compared with 9.9% at the end of 2005. In comparison, at year-end 2006, the vacancy rate of the Account’s properties in its top industrial portfolio was 4%, well below the national average.markets are as follows:
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Metropolitan |
|
| Total |
| % of |
| Account |
| MSA |
| National |
| ||||||||
Industrial |
|
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|
|
|
|
| 4.3 | % |
|
|
|
| 9.4 | % |
| ||||
1 | Riverside-San Bernardino-Ontario CA |
|
| $ | 488 |
|
| 2.6 | % |
| 0.0 | % |
| 9.1 | % |
|
|
|
| |
2 | Chicago-Naperville-Joliet IL |
|
| $ | 202 |
|
| 1.1 | % |
| 0.4 | % |
| 10.4 | % |
|
|
|
| |
3 | Dallas-Plano-Irving TX |
|
| $ | 201 |
|
| 1.1 | % |
| 3.7 | % |
| 10.6 | % |
|
|
|
| |
4 | Los Angeles-Long Beach-Glendale CA |
|
| $ | 145 |
|
| 0.8 | % |
| 11.4 | % |
| 4.6 | % |
|
|
|
| |
5 | Atlanta-Sandy Springs-Marietta GA |
|
| $ | 135 |
|
| 0.7 | % |
| 2.2 | % |
| 12.9 | % |
|
|
|
| |
* Source: Torto Wheaton Research | |
TIAA Real Estate AccountProspectus|41
Industrial market vacancies in the Riverside, California, metropolitan area, where the largest concentration of the Account’s industrial properties areassets is located, averaged 7.9% athad a year-end 2006, which was2007 vacancy rate of 9.1%, slightly below the 9.4% national average, but up from 6.1% at year-end 2005. Still,average. Riverside is the Riversidenation’s top industrial market remaineddue to its proximity to the most active industrial market in the country with over 21 million square feetPorts of absorption in 2006, which was 30% greater than that in the next most active market. In Los Angeles anotherand Long Beach where approximately 40% of the nation’s imports enter the U.S. The Account’s top industrial markets, vacancies were also well below the national average at 4.5% at year-end 2006. The industrial marketproperties in Riverside are fully leased and occupied. Although vacancy rates in the Chicago (11.4%),and Dallas (11.7%), and Atlanta (13.0%) metropolitan areas were above the national average, butboth markets saw vacancies in these markets declined
TIAA Real Estate Account§ Prospectus 51
decline over the course of 2007. The Account’s industrial properties in Chicago and Dallas had a vacancy rate of 0.4% and 3.7%, respectively, as of year-end 2007, which are well below their respective market averages. Vacancy rates in Atlanta averaged 12.9% as of year-end 2007, virtually unchanged from year-end 2006. In comparison, at December 31, 2006, the Account’s industrial portfolioproperties in Riverside was 100% occupied, and,Atlanta had a vacancy rate of 2.2% at year-end 2007. The only market in which the Account’s properties have a higher vacancy rate than the market average is Los Angeles, and Dallas,where vacancies in the Account’s industrial properties averaged 11.4% as of year-end 2007 versus the 4.6% market average. The higher vacancy rates were 2% and 5%, respectively. Inrate in the Account’s remaining topproperties is due to two industrial markets, Chicago and Atlanta, average vacancy rates at year-end 2006 were 7% and 2%, respectively.tenants moving to other buildings following expiration of their leases.
The rental apartment market remained relatively healthy throughout 2006, within 2007, despite the slow-downdownturn in the single-family housing market, producing mostly positive effectswhich resulted in increasing competition from unsold condominiums and single-family rentals being offered for the apartment market. While the growth of single-family housing prices slowed in 2006, past price increases had pushed housing affordability to its lowest level since 2001. The supply of rental units was significantly reduced in a number of markets by developers who removed unitsrent. Preliminary data from the rental stock as they pursued condominium conversion plans. The pace of condo conversions and conversion-driven acquisitions slowed significantly in the second half of 2006, but the reduction in rental supply during 2005 and the first half of 2006 was sufficient to keep apartment vacancies relatively low. According to Torto Wheaton Research indicates that vacancy rates in U.S. apartment vacancies increased to 5.1% atmarkets averaged 4.7% as of year-end 2006, as compared with 5.0%4.8% at the endyear-end 2006. While national vacancies were largely unchanged, markets that experienced a boom of 2005. In addition, apartment rents increasedsingle family and condominium construction in a number2005-2006 generally experienced an increase in vacancies. These markets include Phoenix and much of markets for the first time in several years,Florida (e.g., Orlando, Ft. Lauderdale and rental concessions such as free rent were reduced or eliminated in many markets.Miami). The average vacancy rate for the Account’s apartment portfolioholdings was 5%6.5% at the end of 2006.
Market2007. The average vacancy rates of properties in the Phoenix metropolitan area, the Account’s top apartment market, averaged 5.3% at year-end 2006. Inmarkets are shown below:
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|
Metropolitan |
|
| Total |
| % of |
| Account |
| MSA |
| National |
| ||||||||
Apartment |
|
|
|
|
|
|
| 6.5 | % |
|
|
|
| 4.7 | % |
| ||||
1 | Houston-Bay Town-Sugar Land TX |
|
| $ | 336 |
|
| 1.8 | % |
| 6.5 | % |
| 6.9 | % |
|
|
|
| |
2 | Phoenix-Mesa-Scottsdale AZ |
|
| $ | 326 |
|
| 1.7 | % |
| 3.5 | % |
| 6.7 | % |
|
|
|
| |
3 | Denver-Aurora CO |
|
| $ | 238 |
|
| 1.2 | % |
| 7.1 | % |
| 4.6 | % |
|
|
|
| |
4 | Atlanta-Sandy Springs-Marietta GA |
|
| $ | 190 |
|
| 1.0 | % |
| 5.2 | % |
| 6.0 | % |
|
|
|
| |
5 | Los Angeles-Long Beach-Glendale CA |
|
| $ | 127 |
|
| 0.7 | % |
| 21.0 | % |
| 2.6 | % |
|
|
|
| |
* Source: Torto Wheaton Research | |
As shown above, with the exception of the Account’s other top apartment markets, market vacancy rates were higher: Houston (7.6%),properties in Denver (5.8%), Atlanta (5.9%), and Los Angeles, (2.8%). In comparison, at December 31, 2006, the Account’s apartments located in Atlanta had an average vacancy rate of 2%, Phoenix had a vacancy rate of 5%, and in Denver, Houston and Los Angeles, average vacancy rates of its apartment properties were 6%.generally similar to or modestly lower than their respective market averages. In Los Angeles, the Account’s single property has experienced direct competition from new rental projects. In Denver, one property has a 3% vacancy while the second property has a vacancy of 8% due to direct competition from lower priced properties.
Retail markets remainedweakened modestly during 2007 despite healthy in 2006.consumer spending during much of the year. Preliminary data from the U.S. Department of Commerce indicated that retail and food service sales (excluding autos and auto parts) increased 7.3%5.7% in 2006,the fourth quarter of 2007 as compared to the fourth
52Prospectus§ TIAA Real Estate Account
quarter of 2006. (Year-over-year comparisons are necessary to account for seasonal sales patterns.) However, a significant gain given thenumber of major retailers reported that sales were very soft during December, leading many economists to speculate that slower job growth, elevated energy prices of oil and gasoline during much of the year.declining home prices has caused consumers to cut back on discretionary spending. According to Torto Wheaton Research, vacancies in neighborhood and community centers increased toaveraged 9.8% at year-end 2007, up from 8.7% at the end of 2006, versus 7.7% at year-end 2005.2006. In comparison, the average vacancy rate at the endas of 2006December 31, 2007 for the Account’s entire retail portfolio as well as for its neighborhood and community centers was 3%much lower at 2.5%, and lower than this same time in 2006 at 3.0%.
42|Prospectus TIAA Real Estate Account
Overall, Management believes real estate markets are at or close to equilibrium. The consistent declines in vacancy rates that occurred on a quarterly basis in recent years appear to have ended. Similarly, rent growth has slowed or leveled off in a number of markets. Management believes that this reaction of the real estate market activity is consistent with the slowing of the overall U.S. economic activity and job growth. Fortunately, markets remained balanced, and the level of construction of new commercial real estate has been moderate, and generally in-line with anticipated demand. Torto Wheaton Research believesprojects approximately 73 million square feet of multi-tenant office space to be built in 2008, a total which is below the average of 93 million square feet that commercial real estatewere built during the 1999-2001 construction remains at appropriate levels to maintainpeak. Similarly, in the favorable real estate supply/demand conditions that existed in 2006 over the near term. Space demand is expected to track closely with construction for most property types over the next several years. According toindustrial market, Torto Wheaton Research office construction nationally should total 87expects around 170 million square feet over the 2007-2008 period and absorption should total 91 million square feet. Constructionto be built in 2008, as compared with an average of industrial space is projected to total 340nearly 250 million square feet over the 2007-2008 period, as compared with absorption of 304 million square feet. While industrial vacancies are expected to increase modestly to 9.8% at year-end 2008, rents are projected to grow 4.3% per year.in 1999-2001. Apartment construction is expected to total almost 425,000215,000 units overin 2008, which is essentially similar to the 2007-2008 period, and absorption is projected to total approximately 350,000 units. While1999-2001 average, but below the 225,000 unit average built in 2006-2007. However, Torto Wheaton’s forecast of apartment vacancies are expected to increase modestlyconstruction may ultimately prove too high given the 9% decline in 2007-2008, they will remain low by historical standards. Further, apartment rents are projected to grow 3.2%permits issued for new multi-family buildings (an indicator of future construction) in 2007 and 3.0% in 2008. Torto Wheaton Research expects construction2007. Construction of new neighborhood and community centers is expected to total 41.6just over 20 million square feet over the 2007-2008 period and absorption to total 40.8in 2008, down from 36 million square feet. With construction and absorption closely aligned, retail rents are projected to grow 4.4%feet in 2007, and 3.3%which is consistent with announcements by several major retailers that plan to reduce their new store openings in 2008.
Economic Outlook for 20072008
On balance, management believes that prospects for U.S.While commercial real estate fundamentals have remained positive to date despite the capital markets remain promising given current economic and property market conditions. Several years into recovery,turmoil of recent months, Management expects these fundamentals to weaken to some degree in the national economy shows signsmonths ahead as a result of a modest slowdownweak economic growth environment. There is little disagreement among economic forecasters with regard to the first half of 2008; expectations of sub-par growth are unanimous. Some forecasters are expecting mildly negative GDP growth during the first half while others are expecting weakly positive growth. While the difference might well determine whether this period is actually deemed to be a “recession”, the impact on commercial real estate will probably not differ much one way or the other. The larger question is whether economic growth will
TIAA Real Estate Account§ Prospectus 53
rebound materially in the second half of the year. Here, Management shares the view among more optimistic forecasters which calls for a return to near-trend growth in the third and fourth quarters largely as a result of the Federal Reserve’s interest rate cuts that began in September. This view is shared by the Federal Open Market Committee which is the policy setting arm of the Federal Reserve. As reported by Chairman Bernanke in his February 2008 Semiannual Monetary Policy Report to Congress, the FOMC members believe that GDP growth in 2008 will amount to 1.3% to 2.0% with a rebound “close to or a little above its longer-term trend” in 2009 and 2010. They also expect inflation will be “moderate” from its 2007 pace.
With slow growth or mild recession in the first half of 2008, growth in tenant demand for office, industrial and retail space will likely slip, rent growth will likely slow or flatten out, and vacancy rates may inch up. The degree of commercial real estate market weakening will be mitigated by the generally balanced conditions that currently prevail in many if not most metro area markets. In addition, the credit market constraints now in play will likely constrain new commercial real estate construction activity in 2009. Constrained additions to supply along with the expected rebound in economic activity primarily due to high energy pricesgrowth will set the stage for a rapid repair of fundamentals in 2009.
Commercial real estate pricing in the near term will be largely determined by a combination of factors including the level and a weakened single-family housing market; however, many economists believeuncertainty associated with Treasury rates and inflation, and the general pricing of risk across all asset types. Assuming that the economyperiod of economic weakness is short-lived, Treasury rates should achieve a cycle low in the midstfirst half of a “soft landing”the year and that economic activity should remain healthy throughout 2007. Nationally, employment is growing at a solid pace,then slowly rebound as is employment in key office-using industries. In addition to promising fundamentals, domestic and foreign investor demandthe economy recovers. Low Treasury rates would cushion the impact of wider cap rate spreads which, for commercial real estate, shows little signare approaching their long-term norms. Finally, pricing pressures have so far been concentrated on properties that are in less attractive locations or have less attractive investment characteristics; Management believes that such distinctions will continue in light of abating. Strong inflows should provide supportthe ongoing strong investor demand for the most attractive properties. Nonetheless, in light of less available and more expensive commercial mortgage debt, it is possible that the number of investors pursuing commercial real estate will be smaller in 2008 than in prior years, contributing to current values butsome easing of pricing across the quality spectrum.
Management believes that its property investments are also likelydiversified by both sector and geographic location, which will allow it to continue to exertweather a continued pressure on property pricesslowdown of economic and future returns.real estate market conditions. The Account will seekcontinue to balance the promising marketthese fundamentals against pricing pressures when executing its core investment strategy.However, market conditions affecting real estate investments at any given time cannot be predicted, and an unexpected, sudden economicany downturn in one or a number of the markets in which the Account invests could significantly and adversely impact the Account’s returns.
RESULTS OF OPERATIONS
54Prospectus§ TIAA Real Estate Account
Results of Operations
Year Ended December 31, 20062007 Compared to Year Ended December 31, 20052006
Performance
The Account’s total return was 14.04%13.80% for the year ended December 31, 2006, two2007, 24 basis points higherlower than the 20052006 annual return of 14.02%14.04%. The Account’s
TIAA Real Estate AccountProspectus|43
overall performance on a year-to-year basis reflects the continued strong performance of the Account’s real estate property investments, and an increaseincluding investments owned in interest rates onjoint ventures. This strong performance was offset by the substantial decrease in performance of its marketable securities.securities (described in Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable).
Commercial real estate has been experiencingcontinued to experience historically high pricing for the past several yearsin 2007 as capital has continued to flow into the asset class. While this increase in property pricing has positively impacted the Account’s net realized and unrealized gains on its real estate assets and joint venture holdings, the underlying property values are subject to decline prospectively, if capital or real estate market conditions experience adverse changes. Real estate as an investment should be considered from a long-term perspective. The Account’s total return (after expenses) over the past three, five and 10 years ended December 31, 2007 was 13.96%, 12.35% and 9.79%. The respective returns for the year ended December 31, 2006 were 13.53%, 10.22% and 9.43%.
The Account’s total net assets grew 25.0% from December 31, 2006 to December 31, 2007. The primary drivers of this growth were a significant increase in the Account’s net realized and unrealized gains on its real estate investments including joint ventures and funds, net positive participant transactions, and an increase in the Account’s net investment income from its investment portfolio over the last twelve months. Management believes that the continued significant realized and unrealized gains on the real estate investments, including joint ventures, is due to the positive real estate market fundamentals, and the core property investment strategy upon which the Account is based. Management also believes that the continued positive net participant transfers into the Account are due to its strong long-term historic performance and its historically low return volatility relative to other available investment options.
Income and Expenses
The Account’s net investment income, after deduction of all expenses, was 12% higher for the year ended December 31, 2007, as compared to 2006. This increase was due to a 23% increase in net income from the Account’s real estate properties, including joint venture holdings and limited partnerships, augmented by a 5% increase in income from marketable securities, all of which was partially offset by a 68% increase in Account level expenses for the year ended 2007 as compared to 2006.
TIAA Real Estate Account§Prospectus55
The Account’s real estate holdings, including real estate joint ventures and limited partnerships, generated approximately 81% and 79% of the Account’s total investment income (before deducting Account level expenses) during 2007 and 2006, respectively. The 23% increase in the Account’s total investment income was derived from its investment in real estate, joint ventures and limited partnerships. The remaining portion of the Account’s total investment income was generated by investments in marketable securities, including real estate equity securities, commercial paper, government bonds, and an investment in a commercial mortgage loan receivable.
Gross real estate rental income increased approximately 18% during the year ended December 31, 2007, as compared to the same period in 2006. This increase was primarily due to income derived from properties acquired in 2006 and 2007, which included properties with larger income streams due to their relative size. Income from real estate joint ventures and limited partnerships was $93,724,569 for the year ended December 31, 2007, as compared with $60,788,998 for the year ended December 31, 2006. This 54% increase was primarily due to an increase in gross rental income from the properties owned in joint ventures, which increased substantially with the acquisition of a joint venture interest in 65 retail properties in the first quarter of 2007. Total investment income on the Account’s investments in all marketable securities increased by 5%, from $135,407,210 for the year ended December 31, 2006 to $141,913,253 for the comparable period in 2007. This change was due to an increase in the Account’s investment income from other marketable securities, which was partially offset by a decrease in the Account’s investment income from REIT securities due to their poor performance in 2007.
Total real estate property level expenses and taxes for wholly-owned property investments for the years ended December 31, 2007 and 2006 were $458,021,539 and $389,672,945, respectively. In 2007, operating expenses and real estate taxes represented 54% and 28% of the total real estate property level expenses and taxes, respectively, with the remaining 18% representing interest payments on mortgages. In comparison, operating expenses, real estate taxes, and interest expenses similarly represented 53%, 28% and 19% of total property level expenses, respectively, in 2006. Overall, property level expenses increased by only 18% from 2006 to 2007. The majority of this increase (83%) was due to increases in operating expenses and real estate taxes associated with the Account’s larger portfolio of wholly-owned property investments. The increase in the interest expense paid on properties subject to a mortgage accounted for 17% of the overall increase. As of year-end 2007, there were 13 wholly-owned properties subject to debt, as compared to 12 properties at year-end 2006. Three of the thirteen properties with debt as of December 31, 2007 were added to the Account’s real estate portfolio in the second half of 2006; and one was added in fourth quarter 2007.
The Account incurred overall Account level expenses for the year ended December 31, 2007 of $140,294,447, which was a 68% increase from expenses of $83,448,664 for the year ended December 31, 2006. The overall change in expenses was primarily due to the growth of the Account’s total net assets (which increased
56 Prospectus§ TIAA Real Estate Account
by approximately 25% from December 31, 2006 to December 31, 2007), increased actual expenses associated with managing the Account, due in part to adjustments made to the allocation methodology, and increases in certain of the Account’s expense deduction rates effective May 1, 2007. Investment advisory charges grew to $49,239,366 for the year ended December 31, 2007 as compared to $26,899,307 for the year ended December 31, 2006. This increase was primarily the result of higher operational costs (including personnel and other infrastructure costs) due to the Account’s increasing diversity of assets and associated costs due to increased property asset management activities. Further, a component of this increase (approximately $5.2 million) was the result of reconciliation, during the twelve month period ended December 31, 2007 and in accordance with the Account’s procedures, of the difference between actual and estimated expenses of the Account. In addition, the direct investment advisory charges associated with the Account increased with the continued growth of the Account’s total net assets. Total administrative and distribution expenses increased to $63,593,008 for the year ended December 31, 2007 as compared to $45,712,473 for the year ended December 31, 2006. Administrative and distribution expenses increased due to adjustments made to the Account’s expense base, in accordance with the Account’s procedures, for any difference between actual and estimated expenses. This increase in expenses primarily resulted from larger allocated operational expenses including costs associated with new technology investments. In addition, the direct administrative and distribution charges associated with the Account increased with the continued growth of the Account’s total net assets. Finally, liquidity guarantee expenses increased to $19,409,759 for the year ended December 31, 2007 as compared to $3,905,051 for the year ended December 31, 2006, due to an increase in the liquidity guarantee expense deduction rate, which increased from 0.035% of annual net assets to 0.160% of annual net assets as of May 1, 2007.
Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable
The Account had net realized and unrealized gains on investments and mortgage loans payable of $1,438,434,738 for the year ended December 31, 2007, as compared with net realized and unrealized gains on investments and mortgage loans payable of $1,056,670,295 for the year ended December 31, 2006, a 36% year over year increase. The overall increase was primarily driven by the increase in net realized and unrealized gains on the Account’s real estate joint ventures and limited partnerships to $462,098,173 for 2007 from $217,360,271 for the year ended December 31, 2006. In addition, the Account had a strong increase in net realized and unrealized gains on the real estate properties to $1,026,007,574 for the year ended December 31, 2007 from $735,507,509 for 2006. The increase in net realized and unrealized gains on the Account’s property investments, including those held in joint ventures, was due to the solid real estate market fundamentals and continued liquidity in the commercial real estate markets. The effect of these
TIAA Real Estate Account§Prospectus57
positive conditions was to increase the value of the Account’s existing real estate assets, as reflected in the unrealized gains on the real estate properties of $898,172,653 and the realized gains on the sales of real estate properties of $127,834,921. During the year ended December 31, 2007, the Account sold nineteen wholly-owned properties, which included two apartments, five office buildings and a portfolio of several industrial properties for total net proceeds of $562.3 million, and recognized a cumulative net gain of $127.8 million. The Account also sold one joint venture, a 75% equity interest in the 161 N. Clark Street joint venture for total net proceeds of $239.5 million, and recognized a net gain of $69.9 million. The Account posted a net realized and unrealized loss on its marketable securities of $101,479,347 for the year ended December 31, 2007, as compared to a net realized and unrealized gain of $130,710,746 in the same period of 2006. The losses on the Account’s marketable securities in the year ended December 31, 2007 were primarily due to the Account’s investments in real estate equity securities (REITs). The U.S. REIT market struggled through a volatile 2007 and ended the year down by more than 17%, as compared to the strong 2006 performance where the market increased by 35%. We believe that the volatility in the REIT market was a reaction to a perceived fear of an overall slowdown in the real estate markets due to the continued problems of the subprime market, and the subsequent credit crunch.
Year Ended December 31, 2006 Compared to Year Ended December 31, 2005
Performance
The Account’s total return was 14.04% for the year ended December 31, 2006, two basis points higher than the 2005 annual return of 14.02%. The Account’s overall performance on a year-to-year basis reflected the continued strong performance of the Account’s real estate property investments and an increase in interest rates on its marketable securities.
As of December 31, 2006 the Account’s total return (after expenses) over the prior three, five and 10 years ended December 31, 2006 was 13.53%, 10.22% and 9.43%, respectively.
The Account’s total net assets grew 34.0%34% from December 31, 2005 to December 31, 2006. The primary drivers of this growth were significant net participant transactions, the Account’s net investment income from its investment portfolio and the Account’s realized and unrealized gains on its investments over the last twelve months.prior year. Management believes that the net participant transfers into the Account arewere due to its positive historical performance and its low return volatility relative to other available investment options.
Income and Expenses
The Account’s net investment income, after deduction of all expenses, was 36.2%30.6% higher for the year ended December 31, 2006, as compared to 2005. This
58Prospectus§ TIAA Real Estate Account
increase was related to the increase in total net assets, which included a 35.1% increase in the Account’s real estate properties, joint venture holdings and limited partnerships.
The Account’s real estate holdings, including real estate joint ventures and limited partnerships, generated approximately 79.6%79% and 85.3%85% of the Account’s total investment income (before deducting Account level expenses) during 2006 and 2005, respectively. The remaining portion of the Account’s total investment income was generated by investments in marketable securities, including real estate equity securities, commercial paper, government bonds, and an investment in a commercial mortgage loan receivable. The decline in the percentage of the Account’s total investment income derived from its real estate holdings was primarily due to an increase in the Account’s interest income from its marketable securities and mortgage loan receivable.
Gross real estate rental income increased approximately 34.9%35% in the year ended December 31, 2006, as compared to 2005. This increase was primarily due to the increased number and size of the Account’s wholly-owned property investments (98 at December 31, 2005 compared to 109 at December 31, 2006). Income from real estate joint ventures and limited partnerships was $84,671,528$60,788,998 for the year ended December 31, 2006, as compared with $71,826,443 for the year ended December 31, 2005. This 17.9% increase15% decrease was due to an increase in gross rental incomethe timing of distributions from the properties owned in joint ventures, as well as increased
44|Prospectus TIAA Real Estate Account
income from limited partnerships.venture partners. Investment income on the Account’s investments in marketable securities increased by 90.7%91%, from $70,999,212 in 2005 to $135,407,210 in 2006. This increase was due to an increase in the relatednumber of marketable securities investments and higher interest rates in 2006.
Total property level expenses for wholly-owned property investments for the years ended December 31, 2006 and 2005 were $389,672,945 and $278,544,030, respectively. In 2006, operating expenses and real estate taxes represented 53% and 28% of the total property level expenses, respectively, with the remaining 19% representing interest payments on mortgages. In comparison, operating expenses, real estate taxes, and interest expense represented 54%, 32% and 14% of total property level expenses, respectively, in 2005. Overall, property level expenses increased by 40% from 2005 to 2006. The majority of this increase (71%) was due to increases in operating expenses and real estate taxes associated with the Account’s larger portfolio of wholly-owned property investments. The increase in the interest expense paid on properties subject to a mortgage accounted for 29% of the overall increase. As of year-end 2006, there were 12 wholly-owned properties subject to debt, as compared to seven leveraged properties at year-end 2005.
The Account also incurred expenses for the years ended December 31, 2006 and 2005 for investment advisory services ($26,899,307 and $19,603,225, respectively), administrative and distribution services ($45,712,473 and $27,130,406, respectively), and mortality, expense risk and liquidity guarantee charges ($10,836,884 and $9,366,566 respectively). The total 49% increase in these expenses was a result of the larger net asset base in the Account, on which the
TIAA Real Estate Account§Prospectus59
fees are calculated, and the increased costs associated with managing and administering the Account.
Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable
The Account had net realized and unrealized gains on investments and mortgage loans payable of $1,032,787,765$1,056,670,295 for the year ended December 31, 2006, as compared with net realized and unrealized gains on investments and mortgage loans payable of $765,970,272 for the year ended December 31, 2005. The overall increase was partially driven by the increase in net realized and unrealized gains on the Account’s real estate properties to $735,507,509 for the year ended December 31, 2006 from $619,333,773$610,734,011 for 2005. The Account also posted substantial net realized and unrealized gains on its marketable securities of $130,710,746 for the year ended 2006, as compared to $8,770,726 in 2005. In addition, the Account had unrealized gains on its real estate joint ventures and limited partnership holdings of $193,477,741$217,360,271 for the year ended December 31, 2006, as compared to unrealized gains of $167,019,921$175,619,683 for 2005. The increase in net realized and unrealized gains on the Account’s property investments, including those held in joint ventures, was due to the positive effect of the strong inflow of capital into the real estate market from investors, combined with improved real estate market fundamentals, which had the effect of increasing the value of the
TIAA Real Estate AccountProspectus|45
Account’s existing real estate assets. This trend which has continued for several years, was also evidenced by the net realized gains on the properties sold in 2006. During the year ended December 31, 2006, the Account sold nine properties for total net proceeds, after selling expenses, of $381.9 million, for a cumulative net gain of $76.1 million, based on the properties’ capitalized costs. The unrealized gains on the Account’s marketable securities in 2006 were primarily associated with the Account’s investments in real estate equity securities.
Year Ended December 31, 2005 Compared to Year Ended December 31, 2004
Performance
The Account’s total return was 14.02% for the year ended December 31, 2005, 145 basis points higher than the 2004 total return of 12.57%. The substantial increase in the Account’s overall performance on a year-to-year basis reflected the strong performance of the Account’s real estate properties. The market value of the Account’s real estate portfolio increased substantially in 2005 due to capital appreciation of these assets as a result of the sustained growth in capital investment in the real estate market from institutional investors as well as foreign investors.
IncomeLiquidity and Expenses
The Account’s net investment income, after deduction of all expenses, was 41.5% higher for the year ended December 31, 2005, as compared to 2004. This increase is related to a 45.6% growth in Total Net Assets from year-end 2004 to year-end 2005. The growth in Total Net Assets was driven by a year-to-year 84.8% increase in net realized and unrealized gains on its investments and a 24.8% increase in net transfers and premiums into the Account.
The Account’s real estate holdings, including real estate joint ventures and limited partnerships, generated approximately 85.3% and 91.9% of the Account’s total investment income (before deducting Account level expenses) during 2005 and 2004, respectively. The remaining portion of the Account’s total investment income was generated by investments in marketable securities. The decline in the real estate component was due to the growth in the non-real estate assets owned by the Account as a percentage of Total Net Assets. As of year-end 2005, the Account held 89.1% of its Total Net Assets in real estate, joint ventures and limited partnership holdings, as compared to 92.2% in 2004.
Gross real estate rental income increased approximately 55.7% in the year ended December 31, 2005 as compared to 2004. This increase was primarily due to the increased number and size of properties owned by the Account. Income from the real estate joint ventures and limited partnerships was $71,826,443 for the year ended December 31, 2005 as compared with $71,390,397 for the year ended December 31, 2004. Interest and dividend income on the Account’s marketable securities increased from $27,508,560 in 2004 to $70,999,212 in 2005 due to the increase in the amount of non-real estate assets held by the Account, as well as an increase in short term rates from 2004 to 2005.
46|Prospectus TIAA Real Estate Account
Total property level expenses for the years ended December 31, 2005 and 2004 were $278,544,030 and $157,768,776, respectively. In 2005, operating expenses and real estate taxes represented 54.0% and 31.6% of the total property level expenses, respectively, with the remaining 14.4% due to interest payments on mortgages. In comparison, operating expenses, real estate taxes, and interest expense represented 64.0%, 35.5% and 0.5% of the total property level expenses, respectively in 2004. Overall, property level expenses increased by 76.6% from 2004 to 2005, with approximately one-third of this increase attributable to interest expense in 2005. The interest expense incurred by the Account was $830,361 and $40,028,630, respectively, in 2004 and 2005. The factors influencing these year-to-year increases were an increase in the number of wholly-owned properties subject to debt, which increased from four in 2004 (all acquired in the fourth quarter of 2004) to seven in 2005, and the purchase of additional properties in 2005.
The Account also incurred expenses for the years ended December 31, 2005 and 2004 for investment advisory services ($19,603,225 and $14,393,388, respectively), administrative and distribution services ($27,130,406 and $16,372,446, respectively) and mortality, expense risk and liquidity guarantee charges ($9,366,566 and $5,962,591, respectively). The overall 52.7% increase in expenses was a result of the larger net asset base in the Account and the increased costs associated with managing and administering the Account.
Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable
The Account had net realized and unrealized gains on investments and mortgage loans payable of $765,970,272 for the year ended December 31, 2005, as compared to $414,580,303 for the year ended December 31, 2004. This positive variance was primarily due to a substantial increase in net realized and unrealized gain on the Account’s real estate properties to $619,333,773 for the year ended December 31, 2005, as compared to $186,313,976 for the year ended December 31, 2004. The increase was due to the capital appreciation of real estate assets attributable to the continued inflow of capital into the real estate market from institutional and other investors, which had the effect of increasing the value of real estate. This trend, which began in 2004 and increased in 2005, is further evidenced by the net realized gain of $84.8 million on the properties sold in 2005. The net proceeds of these sales were $511.5 million. The Account also had unrealized gains on its real estate joint ventures and limited partnership holdings of $167,019,921 for the year ended December 31, 2005, as compared to $162,245,601 in 2004. The Account’s marketable securities had net realized and unrealized gains totaling $8,770,726 for the year ended December 31, 2005, as compared to $67,803,292 for the year ended December 31, 2004. The primary factor in the decline was the net effect on the Account’s real estate equity securities of the relatively weak performance of the REIT market in 2005, as compared to the strong performance of this market in 2004.
TIAA Real Estate AccountProspectus|47
LIQUIDITY AND CAPITAL RESOURCESCapital Resources
At year-end 20062007 and 2005,2006, the Account’s liquid assets (i.e., cash and marketable securities) had a value of $2,747,445,678$3,804,639,841 and $2,090,768,483,$2,747,445,678, respectively. The increase in the Account’s liquid assets was primarily due to an increase in its net investment income and the continued net positive inflow from participant transfers and premiums into the Account, which management believes was in response to the continued strong relative performance of the Account.
In 2006,2007, the Account received $1,085,057,614$1,186,870,080 in premiums and $1,354,697,847$934,307,324 in net participant transfers from TIAA, CREF Accounts and affiliated mutual funds, while, for 2005,2006, the Account received $968,189,436$1,085,057,614 in premiums and $1,435,432,984$1,354,697,847 in net participant transfers. The Account’s net investment income increased from $426,815,008$557,530,387 for the year ended December 31, 20052006 to $581,412,917$624,756,134 for the year ended December 31, 2006.2007.
The Account’s liquid assets continue to be available to purchase additional suitable real estate properties and to meet the Account’s expense needs and participant redemption requests (i.e., cash withdrawals, benefits, or transfers). In
60Prospectus§TIAA Real Estate Account
the unlikely event that the Account’s liquid assets and its cash flow from operating activities and participant transactions are not sufficient to meet participant transfer or cash withdrawal requests, TIAA’s general account will purchase liquidityaccumulation units (liquidity units) in accordance with TIAA’s liquidity guarantee to the Account.
The Account, under certain conditions more fully described in the Account’s prospectus (as supplemented from time to time)under “General Investment and Operating Policies”, may borrow money and assume or obtain a mortgage on a property (i.e., to make leveraged real estate investments). Also, to meet any short-term cash needs, the Account may obtain a line of credit whose terms may require that the Account secure the loan with one or more of its properties. The Account’s total borrowings may not exceed 30% of the Account’s Total Net Assets. In calculating this limit, only the Account’s actual percentage interest in any borrowings is included, and not that of any joint venture partner.partner Further, the Account may only borrow up to 70% of the then-current value of a property, although construction loans may be for 100% of the costs incurred in developing a property.
EFFECTS OF INFLATION AND INCREASING OPERATING EXPENSESContractual Obligations
The following table sets forth a summary regarding our known contractual obligations, including required interest payments for those items that are interest bearing, at December 31, 2007:
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| Amounts Due During Years Ending December 31, |
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| 2008 |
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| Thereafter |
| Total |
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Mortgage Loans Payable: |
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Principal Payments |
| $ | 736,371 |
| $ | 788,911 |
| $ | 2,161,722 |
| $ | 10,241,993 |
| $ | 269,313,872 |
| $ | 1,144,614,574 |
| $ | 1,427,857,443 |
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Interest Payments(1) |
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| 83,561,479 |
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| 83,440,048 |
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| 83,353,568 |
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| 82,863,631 |
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| 80,543,446 |
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| 124,780,243 |
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| 538,542,415 |
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Total Mortgage Loans Payable |
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| 84,297,850 |
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| 84,228,959 |
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| 85,515,290 |
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| 93,105,624 |
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| 349,857,318 |
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| 1,269,394,817 |
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| 1,966,399,858 |
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Commitment to Purchase |
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| 42,728,299 |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 42,728,299 |
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Leasehold Interest(2) |
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Other Commitments(3) |
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| 87,562,894 |
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| — |
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| — |
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| — |
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| — |
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| — |
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| 87,562,894 |
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Total Contractual Obligations |
| $ | 214,589,043 |
| $ | 84,228,959 |
| $ | 85,515,290 |
| $ | 93,105,624 |
| $ | 349,857,318 |
| $ | 1,269,394,817 |
| $ | 2,096,691,051 |
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(1) | These amounts represent interest payments due on mortgage loans payable based on the stated rates and, where applicable, the foreign currency exchange rates at December 31, 2007. |
(2) | The Account purchased this leasehold interest on February 12, 2008. |
(3) | This includes the Account’s commitment to purchase interest in six limited partnerships and to purchase shares in a private real estate equity investment trust. |
Effects of Inflation and Increasing Operating Expenses
Inflation, along with increased insurance, taxes, utilities and security costs, may increase property operating expenses in the future. These increases in operating expenses are generally billed to tenants either through contractual lease provisions in office, industrial, and retail properties or through rent increases in apartment complexes. The Account remains responsible for the expenses for unleased space in a property as well as expenses which may not be reimbursed under the terms of an existing lease.
CRITICAL ACCOUNTING POLICIESTIAA Real Estate Account§Prospectus61
Critical Accounting Policies
The financial statements of the Account are prepared in conformity with accounting principles generally accepted in the United States of America.
48|Prospectus TIAA Real Estate Account
In preparing the Account’s financial statements, management is required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.
Management believes that the following policies related to the valuation of the Account’s assets reflected in the Account’s historical financial statements affect the significant judgments, estimates and assumptions used in preparing its historical financial statements:
Valuation of Real Estate Properties:Properties
Investments in real estate properties are stated at fair value, as determined in accordance with procedures approved by the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole; accordingly, the Account does not record depreciation. Fair value for real estate properties is defined as the most probable price for which a property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value involves subjective judgment because the actual market value of real estate can be determined only by negotiation between the parties in a sales transaction. Real estate properties owned by the Account are initially valued at their respective purchase prices (including acquisition costs). Subsequently, the properties are valued on a quarterly cycle andwith an independent appraisersappraisal value completed for each real estate property at least once a year. An independent fiduciary, Real Estate Research Corporation, has been appointed by a special subcommittee of TIAA’s Board of Trustees. The independent fiduciary must approve all independent appraisers used by the Account. TIAA’s appraisal staff performs the other quarterly valuations offor each real estate property and updates the property value if it believes that the value of a property has changed since the previous valuation or appraisal.as appropriate. The appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices (USPAP), the real estate appraisal industry standards created by The Appraisal Foundation. Real estate appraisals are estimates of property values based on a professional’s opinion. RealThe independent fiduciary can also require additional appraisals if a property’s value has changed materially and such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued appropriately. The independent fiduciary must also approve any valuation change where a property’s value changed by more than 6% from the most recent independent annual appraisal, or if the value of the Account would change by more than 4% within any calendar quarter or more than 2% since the prior month. When a real estate propertiesproperty is subject to a mortgage, are generally valued as described; the mortgage is valued independently of the property and its fair value is reported separately. The
62 Prospectus§TIAA Real Estate Account
independent fiduciary reviews and approves mortgage valuation adjustments which exceed certain prescribed limits before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value until the next valuation review or appraisal.
Valuation of Real Estate Joint Ventures and Limited Partnerships:Partnerships
Real estate joint ventures and limited partnerships are stated at the Account’s equity in the net assets of the underlying entities adjusted,and, for the joint ventures, are adjusted to value their real estate holdings and mortgage notes payable at fair value. Upon the disposition of all real estate investments by an investee entity, the Account will continue to state its equity in the remaining net assets of the investee entity during the wind down period, if any, that occurs prior to the dissolution of the investee entity.
Valuation of Marketable Securities:Securities
Equity securities listed or traded on any national market or exchange are valued at the last sale price as of the close of the principal securities exchange on which such securities are traded or, if there is no sale, at the mean of the last bid and asked prices on such exchange.
Debt securities, other than money market instruments, are valued at the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). Money market instruments, with maturities of one year or less, are valued in the same manner as debt securities or derived from a
TIAA Real Estate AccountProspectus|49
pricing matrix that has various types of money market instruments along one axis and various maturities along the other. Portfolio securities and limited partnership interests for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole.
Mortgage Loans Receivable:Receivable
Mortgage loans receivable are stated at fair value and are initially valued at the face amount of the mortgage loan funding.funding as representative of fair value. Subsequently, mortgage loans receivable are valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, and the performance of the underlying collateral.
Mortgage Loans Payable:Payable
Mortgage loans payable are stated at fair value. Estimated market values of mortgage loans payable are based on the amount at which the liability could be settled (either transferred or paid back) in a current transaction exclusive of direct transaction costs. Different assumptions or changes in future market conditions could significantly affect estimated market value. At times, the Account may assume debt in connection with the purchase of real estate. For debt assumed, the Account allocates a portion of the purchase price to the below- or
TIAA Real Estate Account§Prospectus63
above-market debt and amortizes the premium or discount over the remaining life of the debt.
Foreign currency transactions and translation:translation
Portfolio investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of securities, income receipts and expense payments made in foreign currencies are translated into U.S. dollars at the exchange rates prevailing on the respective dates of the transactions. The effects of any changes in foreign currency exchange rates on portfolio investments and mortgage loans payable are included in the net realized and unrealized gains and losses on investments and mortgage loans payable. Net realized gains and losses on foreign currency transactions include maturities of forward foreign currency contracts, disposition of foreign currencies, and currency gains and losses between the accrual and receipt dates of portfolio investment income and between the trade and settlement dates of portfolio investment transactions.
Accumulation and Annuity Fund:Fund
The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment. The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments. The net increase or decrease in net assets from investment operations is apportioned between the accounts based upon their relative daily net asset values. Once an Account participant begins receiving lifetime annuity income benefits, monthly payment levels cannot be reduced as a result of the Account’s adverse mortality experience. In addition, the contracts are required to stipulate the maximum expense charge that can be assessed, which is equal to 2.50% of average net assets per year. Accordingly,The Account pays a small risk charge is paid by the Accountfee to TIAA to assume thesethe mortality and expense risks.
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Accounting for Investments:Investments
Real estate transactions are accounted for as of the date on which the purchase or sale transactions for the real estate properties close (settlement date). The Account recognizes a gain on the sale of a real estate property to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A loss occurs when the cost-to-date exceeds the sales price. As the Account is fair valued and all properties are appraised quarterly, anyAny accumulated unrealized gains and losses are reversed in the calculation of realized gains and losses.
Rent from real estate properties consists of all amounts earned under tenant operating leases, including base rent, recoveries of real estate taxes and other expenses and charges for miscellaneous services provided to tenants. Rental income is recognized in accordance with the billing terms of the lease agreements. The Account bears the direct expenses of the real estate properties owned. These expenses include, but are not limited to, fees to local property management companies, property taxes, utilities, maintenance, repairs, insurance and other operating and administrative costs. An estimate of the net operating income earned from each real estate property is accrued by the Account on a daily basis
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and such estimates are adjusted as soon as actual operating results are determined.
The Account has limited ownership interests in various real estate funds (limited partnerships and one limited liability corporation) and a private REIT (collectively, the “limited partnerships”). The Account records its contributions as increases to the investments, and distributions from the investments are treated as either income or return of capital, as determined by the management of the limited partnerships. Unrealized gains and losses are calculated and recorded quarterly when the Account’s accounting records are compared to the financial statements of the limited partnerships.
Income from joint ventures is recorded based on the Account’s proportional interest inof the income distributed by the joint venture. Income earned by the joint venture.venture, but not yet distributed to the Account by the joint venture investment, is recorded as unrealized gains and losses on real estate joint ventures.
Securities transactionsTransactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned and includes accrual of discount and amortization of premium.premium as applicable. Dividend income is recorded on the ex-dividend date or as soon as the Account is informed of the dividend. Realized gains and losses on securities transactions are accounted for on the specific identification method.
FORWARD-LOOKING STATEMENTS New Accounting Pronouncements
SomeIn June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) 48, an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and is effective for fiscal years beginning after December 31, 2006. The adoption of FIN 48 did not have a significant impact on the Account’s financial position and results of operations.
In September 2006, FASB issued Statement No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and requires additional disclosures about fair value measurements. This Statement does not require any new fair value measurements, but the application of this prospectus which are not historical facts may be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our expectations, beliefs, intentions or strategiesStatement could change current practices in determining fair value. This statement is effective January 1, 2008 for the Account. The Account has assessed the impact of Statement No. 157 and determined that it will not significantly change the Account’s financial position and results of operations at the effective date.
In February 2007, FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This Statement permits entities to choose to measure financial instruments and certain other items at fair value and is expected to expand the use of fair value measurement when warranted. The Account effectively adopted Statement 159 on January 1, 2008 and plans to report all existing and future and includeMortgage Loans Payable at fair value using this Statement. Historically, the assumptions underlying these forward-looking statements. Forward-looking statements appear in this prospectus, among other places, in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations.” Forward-looking statements involve risks and uncertainties, some of which are referenced in the sections ofAccount recorded Mortgage Loans Payable at fair value. The
TIAA Real Estate AccountProspectus|§51Prospectus65
this prospectus entitled “Risk Factors”Account has assessed the impact of Statement 159 in comparison to historical reporting and below in “Quantitativedetermined that it will not significantly change the Account’s financial position and Qualitative Disclosures About Market Risk,” that could cause actual results to differ materially from historical experience or management’s present expectations.of operations.
Caution should be taken not to place undue reliance on management’s forward-looking statements, which represent management’s views only asIn June 2007, the Accounting Standards Executive Committee (“ACSEC”) of the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies. The SOP clarifies which entities are required to apply the provisions of the Investment Companies Audit and Accounting Guide (“Guide”) and provides guidance on accounting by parent companies and equity method investors for investments in investment companies. The SOP is effective for fiscal years beginning on or after December 15, 2007. In February 2008, FASB issued Staff Position (“FSP”) SOP 07-1-1 indefinitely delaying the effective date of this prospectus. Neither management norSOP 07-1 to allow FASB time to consider significant issues related to the implementation of SOP 07-1. Management of the Account undertakewill continue to monitor FASB developments and will evaluate the financial reporting implications to the Account, as necessary.
In December 2007, FASB issued Statement No. 141(R), “Business Combinations,” which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements the identifiable assets acquired, liabilities assumed, any obligation to update publiclynoncontrolling interest in the acquiree and goodwill acquired in a business combination or revise any forward-looking statement, whethera gain from a bargain purchase. This Statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Account is currently assessing the impact that Statement No. 141(R) will have on its financial position and results of operations.
In December 2007, FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an Amendment of ARB No. 51,” which establishes and expands accounting and reporting standards for minority interests, which will be recharacterized as noncontrolling interests, in a resultsubsidiary and the deconsolidation of new information, changed assumptions, future eventsa subsidiary. This Statement is effective for fiscal years beginning on or otherwise.after December 15, 2008. The Account is currently assessing the potential impact that Statement No. 160 will have on its financial position and results of operations.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Account’s real estate holdings, including real estate joint ventures and limited partnerships, which, as of December 31, 20062007 represented 81.8%79.7% of the Account’s total investments, expose the Account to a variety of risks. These risks include, but are not limited to:
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| • | General Real Estate Risk — The risk that the Account’s property values or rental and occupancy rates could go down due to general economic conditions, a weak market for real estate generally, or changing supply and demand for certain types of properties; |
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| • | Appraisal Risk — The risk that the sale price of an Account property (i.e., the value that would be determined by negotiations between independent parties) might differ substantially from its estimated or appraised value, leading to losses or reduced profits to the Account upon sale; |
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| • | Risk Relating to Property Sales — The risk that the Account might not be able to sell a property at a particular time for its full value, particularly in a poor market. This might make it difficult to raise cash quickly and also could lead to Account losses; |
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| • | Risks of Borrowing — The risk that interest rate changes may impact Account returns if the Account takes out a mortgage on a property or buys a property subject to a mortgage; and |
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| • | Foreign Currency Risk — The risk that the value of the Account’s foreign investments, related debt or rental income could increase or decrease due to changes in foreign currency exchange rates or foreign currency exchange control regulations, and hedging against such changes, if undertaken by the Account, may entail additional costs and be unsuccessful. |
As of December 31, 2006, 18.2%2007, 20.3% of the Account’s total investments were in market risk sensitive instruments, comprised of marketable securities and an adjustable rate mortgage loan receivable. Marketable securities include real estate equity securities, commercial mortgage-backed securities (CMBS), and high-quality short-term debt instruments (i.e., commercial paper and government agency bonds). The Statement of Investments for the Account sets forth the general financial terms of these instruments, along with their fair values, as
52|ProspectusTIAA Real Estate Account
determined in accordance with procedures described in Note 1 to the Account’s financial statements. Note that the Account does not currently invest in derivative financial instruments.
The Account’s investments in marketable securities and mortgage loans receivable are subject to the following general risks:
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| • | Financial Risk — The risk, for debt securities, that the issuer will not be able to pay principal and interest when due and, for common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value. |
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| • | Market Risk — The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets and, particularly for debt securities, changes in overall interest rates. |
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| • | Interest Rate Volatility — The risk that interest rate volatility may affect the Account’s current income from an investment. |
In addition, mortgage-backed securities are subject to prepayment risk or extension risk (i.e., the risk that borrowers will repay the loans earlier or later than anticipated). If the underlying mortgage assets experience faster than anticipated repayments of principal, the Account could fail to recoup some or all of its initial investment in these securities, since the original price paid by the
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Account was based in part on assumptions regarding the receipt of interest payments. If the underlying mortgage assets are repaid later than anticipated, the Account could lose the opportunity to reinvest the anticipated cash flows at a time when interest rates might be rising. The rate of prepayment depends on a variety of geographic, social and other functions, including prevailing market interest rates and general economic factors. The market value of these securities is also highly sensitive to changes in interest rates. Note that the potential for appreciation, which could otherwise be expected to result from a decline in interest rates, may be limited by any increased prepayments. These securities may be harder to sell than other securities.
In addition to these risks, real estate equity securities and mortgage-backed securities are subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. For more information on the risks associated with all of the Account’s investments, see the Account’s most recent prospectus.
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We value the Account’s assets as of the close of each valuation day by taking the sum of:
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| • | the value of the Account’s cash, cash equivalents, and short-term and other debt instruments, |
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| • | the value of the Account’s other securities investments and other assets, |
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| • | the value of the individual real properties and other real estate-related investments owned by the Account, and |
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| • | an estimate of the net operating income accrued by the Account from its properties and other real estate-related investments, |
and then reducing the sum by the Account’s liabilities, including the daily investment management fee and certain other expenses attributable to operating the Account. See “Expense Deductions” on page 73.
Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon vendor-provided, evaluated prices or internally-developed models that primarily use market-based or independently-sourced market data, including interest rate yield curves, market spreads, and currency rates. Valuation adjustments may be made to reflect credit quality, the Account’s creditworthiness, liquidity, and other observable and unobservable data that are applied consistently over time.
The methods described above are considered to produce a fair value calculation that represents a good faith estimate as to what a buyer in the market place would pay to purchase the asset or assume the liability. Since fair value calculations involve significant professional judgment in the application of both observable and unobservable attributes, actual realizable values or future fair values may differ from amounts reported. Furthermore, while the Account
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believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments, while reasonable, could result in different estimates of fair value at the reporting date.
VALUING REAL ESTATE INVESTMENTS
Valuing Real Property:IndividualInvestments in real estate properties will be valued initiallyare stated at their purchase prices. Prices include all expenses related to purchase, suchfair value, as acquisition fees, legal fees and expenses, and other closing costs. We could use a different valuedetermined in appropriate circumstances.
After this initial valuation, an independent appraiser,accordance with procedures approved by the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole; accordingly, the Account does not record depreciation. Fair value for real estate properties is defined as the most probable price for which a property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value involves judgment because the actual market value of real estate can be determined only by negotiation between the parties in a sales transaction. Real estate properties owned by the Account are initially valued based on an independent fiduciary, willappraisal at the time of the closing of the purchase, which may result in a potential unrealized gain or loss reflecting the difference between an investment’s fair value (i.e., exit price) and its cost basis (which is inclusive of transaction costs).
Subsequently, the properties are valued on a quarterly cycle with an independent third party appraisal completed for each real estate property at least once a year.year The Account’s independent fiduciary, Real Estate Research Corporation, must approve all independent appraisers used by the Account. TIAA’s appraisal staff performs the other quarterly valuations for each real estate property and updates the property value as appropriate. The appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices (USPAP), the real estate appraisal industry standards created by The Appraisal Foundation. Real estate appraisals are estimates of property values based on a professional’s opinion. The independent fiduciary can also require additional appraisals if it believes that a propertyproperty’s value has changed materially and such change is not reflected in the quarterly valuation review, or otherwise to assureensure that the Account is valued correctly.
Quarterly, we will conduct an internal review of each ofappropriately. The independent fiduciary must also approve any valuation change where a property’s value changed by more than 6% from the Account’s properties. We’ll adjust a valuationmost recent independent annual appraisal, or if we believe that the value of the property has changedAccount would change by more than 4% within any calendar quarter or more than 2% since the previous valuation. We’ll continue to use the revised value to calculate the Account’s net asset value until the next review or appraisal. However, we can adjust the value of a property in the interim to reflect what we believe are actual changes in property value.prior month.
The Account’s net asset value will include the current value of any note receivable (an amount that someone else owes the Account) from selling a real estate-related investment. We’ll estimate the value of the note by applying a discount rate appropriate to then-current market conditions.
Development properties initially will be valuedcarried at fair value, which is anticipated initially to equal the Account’s cost, and the value will be adjusted as additional development costs are incurred. Once a property receives a certificate of occupancy, within one year from the initial funding by the Account, or the property is substantially leased,
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whichever is earlier, the property will be appraised by an independent appraiser, approved by the independent fiduciary. We may also have the properties independently appraised earlier if circumstances warrant.
The Account may, at times, value properties purchased together as a portfolio as a single asset, to the extent we believe that the property will likely be sold as
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one portfolio. The value assigned to the portfolio as a whole may be more or less than the valuation of each property individually.
We retain independent appraisers, each of whom have been approved by the independent fiduciary, to prepare the initial and subsequent annual third-party appraisals. These independent appraisers retained are always expected to be MAI-designated members of the Appraisal Institute and state certified appraisers from national or regional firms with relevant property type experience and market knowledge.
We intend that the overarching principle when valuing our real estate investments will be to produce a valuation that represents a fair and accurate estimate of the fair value of our investments. Implicit in our definition of fair value is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:
• | Buyer and seller are typically motivated; | |
• | Both parties are well informed or well advised, and acting in what they consider their best interests; | |
• | A reasonable time is allowed for exposure in the open market; | |
• | Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and | |
• | The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale. |
Because of the nature of real estate assets and because the fair value of our investments is not reduced by transaction costs that will be incurred to sell the investments, the Account’s net asset value won’t necessarily reflect the true ornet realizable value of its real estate assets (i.e., what the Account would receive if it sold them).
Valuing Real Property Encumbered by Debt:In general, when we value an AccountWhen a real estate property is subject to a mortgage, the mortgage is valued independently of the property and its fair value is reported separately. The independent fiduciary reviews and approves mortgage valuation adjustments which exceed certain prescribed limits before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value will includeuntil the next valuation review or appraisal.
Valuing Mortgage Loans Receivable:Mortgage loans receivable are stated at fair value and are initially valued at the face amount of the mortgage loan funding. Subsequently, mortgage loans receivable are valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, and the performance of the underlying collateral.
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Valuing Mortgage Loans Payable:Mortgage loans payable are stated at fair value. The estimated fair value of mortgage loans payable is based on the amount at which the liability could be settled (either transferred or paid back) in a current transaction, exclusive of direct transaction costs. Fair values are estimated basedon market factors, such as market interest rates and spreads on comparable loans. Different assumptions or changes in future market conditions could significantly affect estimated fair values. At times, the Account may assume debt in connection with the purchase of real estate.
Valuation of Real Estate Joint Ventures and Limited Partnerships:Real estate joint ventures and limited partnerships are stated at the fair value of the Account’s interestownership interests in the property (withunderlying entities. The Account’s ownership interests are valued based on the property valued as described above). Thefair value of the mortgage will be recordedunderlying real estate, any related mortgages payable, and other factors, such as a liability based on a valuation performed independentlyownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. Upon the disposition of the property.
Valuing Conventional Mortgages:Individual mortgage loans madeall real estate investments by an investee entity, the Account will be valued initially at their face amount. Thereafter, quarterly, we’ll valuecontinue to state its equity in the Account’s fixed interest mortgage loans by discounting payments of principal and interest to their present value (using a rate at which commercial lenders would make similar mortgage loans). We’ll also use this method for foreign mortgages with conventional terms. We can adjust the mortgage value more frequently if circumstances require it. Floating variable rate mortgages will generally be valued at their face amount, although we may adjust these values as market conditions dictate.
Valuing Participating Mortgages:Individual mortgages will initially be valued at their face amount. Thereafter, quarterly, we’ll estimate the valuesremaining net assets of the participating mortgages by making various assumptions about occupancy rates, rental rates, expense levels, and other things. We’ll use these assumptionsinvestee entity during the wind down period, if any that occurs prior to project the cash flow and anticipated sale proceeds from each investment over the termdissolution of the loan, or sometimes over a shorter period. To calculate sale proceeds, we’ll assume that the real property underlying each investment will be sold at the end of the period used in the valuation at a price based on market assumptions for the time of the projected sale. We’ll then discount the estimated cash flows and sale proceeds to their present value (using rates appropriate to then-current market conditions).investee entity.
Net Operating Income:The Account usually receives operating income from its investments intermittently, not daily. In fairness to participants, we estimate the Account’s net operating income rather than applying it when we actually receive it, and assume that the Account has earned (accrued) a proportionate amount of that estimated amount daily. You bear the risk that, until we adjust the estimates when we receive actual income reports, the Account could be under- or over-valued.
Every year, we prepare a month-by-month estimate of the revenues and expenses (estimated net operating income) for each of the Account’s properties. Each day, we add the appropriate fraction of the estimated net operating income for the month to the Account’s net asset value.
Every month, the Account receives a report of the actual operating results for the prior month for each property (actual net operating income). We then recognize the actual net operating income on the accounting records of the
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Account and adjust the outstanding daily accrued receivable accordingly. As the Account actually receives cash from a property, we’ll adjust the daily accrued receivable and other accounts appropriately.
Adjustments:We can adjust the value of an investment if we believe events or market conditions (such as a borrower’s or tenant’s default) have affected how much the Account could receive if it sold the investment. We may not always be aware of each event that might require a valuation adjustment, and because our evaluation is based on subjective factors, we may not in all cases make adjustments where changing conditions could affect the value of an investment.
The independent fiduciary will need to approve adjustments to any valuation of one or more properties that
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| • | is made within three months of the annual independent appraisal, or | |
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| • | results in an increase or decrease of: | |
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| • | more than 6 percent of the value of any of the Account’s properties since the last independent annual appraisal, | |
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| • | more than 2 percent in the value of the Account since the prior month, and/or | |
| • | more than 4 percent in the value of the Account within any quarter. | |
Right to Change Valuation Methods:If we decide that a different valuation method would reflect the value of a real estate-related investment more accurately, we may use that method if the independent fiduciary consents. Changes in TIAA’s valuation methods could change the Account’s net asset value and change the values at which participants purchase or redeem Account interests.
VALUING OTHER INVESTMENTS (INCLUDING CERTAIN REAL ESTATE-RELATED INVESTMENTS)
Debt Securities and Money Market Instruments:We value debt securities (excluding money market instruments) for which market quotations are readily available based on the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). We derive these values utilizing an independent pricing service, except when we believe the prices do not accurately reflect the security’s fair value. We value money market instruments with maturities of one year or less in the same manner as debt securities, or derive them fromby using a pricing matrix that has various types of money market instruments along one axis and various maturities along the other. All debt securities, including those for which market quotations are not readily available, may also be valued at fair value as determined in good faith by the Investment Committee of the TIAA Board of Trustees.Trustees and in accordance with the responsibilities of the Board as a whole.
Equity Securities:We value equity securities (including REITs) listed or traded on the New York Stock Exchange or the American Stock Exchange at their last sale price on the valuation day. If no sale is reported that day, we use the mean of the closinglast bid and asked prices. Equity securities listed or traded on any other exchange are valued in a comparable manner on the principal exchange where traded.
We value equity securities traded on the NASDAQ Stock MarketsMarket at the Nasdaq Official Closing Price on the valuation day. If no sale is reported that day,
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we use the mean of the closinglast bid and asked prices. Other U.S. over-the-counter equity securities are valued at the mean of the closinglast bid and asked prices.
Mortgage-Backed Securities:We value mortgage-backed securities in the same manner in which we value debt securities, as described above.
Foreign Securities:To value investments traded on a foreign exchange or in foreign markets, we use their closing values under the generally accepted valuation method in the country where traded, as of the valuation date. We convert this to U.S. dollars at the exchange rate in effect on the valuation day.
Investments Lacking Current Market Quotations:We value securities or other assets for which current market quotations are not readily available at fair
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value as determined in good faith under the direction of the Investment Committee of TIAA’s Board of Trustees and in accordance with the responsibilities of TIAA’s Board as a whole. In evaluating fair value for the Account’s interest in certain commingled investment vehicles, the Account will generally look to the value periodically assigned to interests by the issuer. When possible, the Account will seek to have input in formulating the issuer’s valuation methodology.
Deductions are made each valuation dayValuation Day from the net assets of the Account for various services required to manage investments, administer the Account and the contracts, and to cover certain risks borne by TIAA. Services are performed at cost by TIAA and TIAA-CREF Individual & InstitutionalServices. In particular, TIAA performs investment management services and administration services for the Account, and Services LLC (“Services”), a wholly owned subsidiary of TIAA.provides distribution services for the Account. Because services are provided at cost, we expect that expense deductions will be relatively low. TIAA guarantees that in the aggregate, the expense charges will never be more than 2.50% of average net assets per year.
The currentestimated annual estimated expense deductions are:deduction rate that appears in the expense table below reflects an estimate of the amount we expect to deduct to approximate the costs that the Account will incur from May 1, 2008 through April 30, 2009:
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Total Annual Expense Deduction1,2 |
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1 | TIAA guarantees that the total annual expense deduction will not exceed an annual rate of 2.50% of average net assets. | ||||
2 | TIAA currently does not impose a fee on transfers from the Account, but reserves the right to impose a fee on transfers from the Account in the future. |
TIAA Real Estate AccountProspectus|57Please also see “Summary of Account’s Expense Deductions” on page 5 for more detail regarding TIAA’s and Services’ provision of these at cost services to the Account.
After the end of every quarter, we reconcile how much wethe amount deducted as discussed above with the expenses the Account actually incurred. If there is a difference, we add it to or deduct it from the Account in equal daily installments over the
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remaining days in the following quarter. Since ourOur at-cost deductions are based on projections of Account assets and overall expenses, and the size of any adjusting payments will be directly affected by how different our projections are from the Account’s actual assets or expenses. While our projections of Account asset size (and resulting expense fees) are based on our best estimates, the
The size of the Account’s assets can be affected by many factors, including premium growth, participant transfers into or out of the Account, and any changes in the value of portfolio holdings. In addition, our operating expenses can fluctuate based on a number of factors including participant transaction volume, operational efficiency, and technological, personnel and other infrastructure costs. Historically, the adjusting payments have resulted in both upward and downward adjustments to the Account’s expense deductions for the following quarter.
TIAA’s Board of Trustees can revise the deduction rates for the Account from time to time, usually on an annual basis, to keep deductions as close as possible to actual expenses.
Currently there are no deductions from premiums or withdrawals, but we might change this in the future. Property expenses, brokers’ commissions, transfer taxes, and other portfolio expenses are charged directly to the Account.
Your employer may, in accordance with the terms of your plan, and with TIAA’s approval, withdraw amounts from your Real Estate Account accumulation under your Retirement Choice or Retirement Choice Plus contract, and, on a limited basis, under your GA, GSRA, GA or Keogh contract, to pay fees associated with the administration of the plan. These fees are separate from the expense deductions of the Account, and are not included for purposes of TIAA’s guarantee that the total annual expense deduction of the Account will not exceed the rate 2.50% of average net assets per year.
The amount and the effective date of an employer plan fee withdrawal will be in accordance with the terms of your plan. TIAA will determine all values as of the end of the effective date. An employer plan fee withdrawal cannot be revoked after its effective date. Each employer plan fee withdrawal will be made on a pro-rata basis from all your available TIAA and CREF accounts. An employer plan fee withdrawal reduces the accumulation from which it is paid by the amount withdrawn.
If allowed by your contract, your employer may also charge a fee on your account to pay fees associated with administering the plan.
CERTAIN RELATIONSHIPS WITH TIAA
As noted elsewhere in this prospectus, TIAA’s general account plays a significant role in operating the Real Estate Account, including providing a liquidity guarantee, and investment advisory, administration and other services. In addition,
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Services, a wholly-owned subsidiary of TIAA, provides administration and distribution services for the Account.
Liquidity Guarantee.As noted above under “Establishing and Managing the Account — The Role of TIAA — Liquidity Guarantee,” if the Account’s liquid
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assets and its cash flow from operating activities and participant transactions are insufficient to fund redemption requests, TIAA’s general account has agreed to purchase liquidity units. TIAA thereby guarantees that a participant can redeem accumulation units at their then-current daily net asset value.value next determined. For the years ended December 31, 2007, December 31, 2006 and December 31, 2005, and December 31, 2004, the Account expensed $19,409,759, $3,905,051 $3,170,017 and $1,868,733,$3,170,017, respectively, for this liquidity guarantee from TIAA through a daily deduction from the net assets of the Account.
Investment Advisory and Administrative Services/Certain Risks Borne by TIAA.As noted above under “Expense Deductions,” deductions are made each valuation day from the net assets of the Account for various services required to manage investments, administer the Account and distribute the contracts. These services are performed at cost by TIAA and Services. Deductions are also made each valuation day to cover mortality and expense risks borne by TIAA.
For the years ended December 31, 2007, December 31, 2006 and December 31, 2005, and December 31, 2004, the Account expensed $49,239,366, $26,899,307 $19,603,225 and $14,393,388,$19,603,225, respectively, for investment management services and $8,052,314, $6,931,833 $6,196,549 and $4,093,858,$6,196,549, respectively, for mortality and expense risks provided/borne by TIAA. For the same period, the Account expensed $63,593,008, $45,712,473 $27,130,406 and $16,372,446,$27,130,406, respectively, for administrative and distribution services provided by Services.
TIAA offers the Real Estate Account as a variable option for the annuity contracts described below. Some employer plans may not offer the Real Estate Account as an option for RA, GRA, GSRA, Retirement Choice, Retirement Choice Plus, or Keogh contracts. The College Retirement Equities Fund (CREF)CREF is a companion organization to TIAA. A companion CREF contract may have been issued to you when you received the TIAA contract offering the Account. For more information about the CREF annuity contracts, the TIAA traditional annuity, the TIAA Access variable annuity accounts, other TIAA separate accounts offered from time to time and particular mutual funds and investment options offered under the terms of your plan, please see the applicable contracts and respective prospectuses for those investment options.
Importantly, neither TIAA nor CREF guarantee the investment performance of the Account nor do they guarantee the value of your units at any time.
RA (RETIREMENT ANNUITY) AND GRA (GROUP RETIREMENT ANNUITY)
RA and GRA contracts are used mainly for employee retirement plans. RA contracts are issued directly to you. GRA contracts, which are group contracts, are issued through an agreement between your employer and TIAA.
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Depending on the terms of your employer’s plan, RA and GRA premiums can be paid by your employer, you, or both. GRA premiums can only be paid by your employer. If
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you’re paying some or all of or the entire periodic premium, your contributions can be in either pre-tax dollars by salary reduction or after-tax dollars by payroll deduction. Your employer may offer you the option of making contributions in the form of after-tax Roth-styleRoth IRA-style contributions, though you won’t be able to take tax deductions for these contributions. You can also transfer fundsaccumulations from another investment choice under your employer’s plan to your contract. Ask your employer for more information about these contracts.
SRA (SUPPLEMENTAL RETIREMENT ANNUITY) AND GSRA (GROUP SUPPLEMENTAL RETIREMENT ANNUITY)
These are forgenerally limited to supplemental voluntary tax-deferred annuity (TDA) plans and supplemental 401(k) plans. SRA contracts are issued directly to you. GSRA contracts, which are group contracts, are issued through an agreement between your employer and TIAA. Generally, your employer pays premiums in pre-tax dollars through salary reduction. Your employer may offer you the option of making contributions in the form of after-tax Roth-styleRoth IRA-style contributions, though you won’t be able to take tax deductions for these contributions. Although you can’t pay premiums directly, you can transfer amounts from other TDA plans.
RETIREMENT CHOICE/RETIREMENT CHOICE PLUS ANNUITIES
These are very similar in operation to the GRAs and GSRAs, respectively, except that, unlike GRAs, they are issued directly to your employer or your plan’s trustee. Among other rights, the employer retains the right to transfer accumulations under these contracts to alternate funding vehicles.
CLASSIC IRA AND ROTH IRA
Classic IRAs are individual contracts issued directly to you. Joint accounts are not permissible. You and your spouse can each open a Classic IRA with an annual contribution of up to $4,000$5,000 or by rolling over funds from another IRA or eligible retirement plan, if you meet ourthe Account’s eligibility requirements. If you are age 50 or older, you may contribute up to $5,000.$6,000. The combined limit for your contributions to a Classic IRA and a Roth IRA for a single year is $4,000,$5,000, or $5,000$6,000 if you are age 50 or older, excluding rollovers. (The dollar limits listed are for 2007;2008; different dollar limits may apply in future years.) We can’t issue you a joint contract.
Roth IRAs are also individual contracts issued directly to you. You or your spouse can each open a Roth IRA with an annual contribution up to $4,000$5,000 or with a rollover from another IRA or a Classic IRA issued by TIAA if you meet ourthe Account’s eligibility requirements.requirements, subject to rules applicable to Roth IRA conversions. If you are age 50 or older you may contribute up to $5,000.$6,000. The combined limit for your contributions to a Classic IRA and a Roth IRA for a single year is $4,000,$5,000, or $5,000$6,000 if you are age 50 or older, excluding rollovers. (The dollar
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limits listed are for 2007;2008; different dollar limits may apply in future years.) We can’t issue you a joint contract.
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Your employer may offer SEP IRAs (Simplified Employee Retirement Plans), which are subject to different rules.
Classic and Roth IRAs may together be referred to as “IRAs” in this prospectus.
GA (GROUP ANNUITY) AND INSTITUTIONALLY OWNED GSRA
These are used exclusively for employeeemployer retirement plans and are issued directly to your employer or your plan’s trustee. Your employer pays premiums directly to TIAA (you can’t pay the premiums directly to TIAA) and your employer or the plan’s trustee may control the allocation of contributions and transfers to and from these contracts including withdrawing completely from the Account. If a GA or Institutionally Owned GSRA contract is issued pursuant to your plan, the rules relating to transferring and withdrawing your money, receiving any annuity income or death benefits, and the timing of payments may be different, and are determined by your plan. Ask your employer or plan administrator for more information.
KEOGHSKEOGH CONTRACTS
TIAA also offers contracts forunder Keogh plans. If you are a self-employed individual who owns an unincorporated business, you can use ourthe Account’s Keogh contracts for a Keogh plan, and cover common law employees, subject to ourthe Account’s eligibility requirements.
ATRA (AFTER-TAX RETIREMENT ANNUITY)
The after-tax retirement annuities (ATRA) are individual non-qualified deferred annuity contracts, issued to participants who are eligible and would like to remit personal premiums under the contractual provisions of their RA contract. To be eligible, you must have an active and premium-paying or paid up RA contract.
Note that the tax rules governing these non-qualified contracts differ significantly from the treatment of qualified contracts. See “Taxes,” on page 7493 for more information.
ELIGIBILITY FOR IRA AND KEOGH ELIGIBILITYCONTRACTS
You orEach of you and your spouse can set upopen a TIAA Classic or Roth IRA or a Keogh if you’re a current or retired employee or trustee of an eligible institution,Eligible Institution, or if you own a TIAA or CREF annuity contract or a TIAA individual insurance contract. To be considered a retired employee for this purpose, an individual must be at least 55 years old and have completed at least three years of service at an eligible institution.Eligible Institution. In the case of partnerships, at least half the partners must be eligible individuals and the partnership itself must be primarily engaged in education or research. Eligibility may be restricted by certain income limits on opening Roth IRA contracts.
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STATE REGULATORY APPROVAL
State regulatory approval may be pending for certain of these contracts and they may not currently be available in your state.
STARTING OUT
Generally, we’ll issue you a TIAA contract whenas of the end of the business day we receive youra completed application or enrollment form.form in good order. Your premiums will be credited to the Real Estate Account as of the end of the business day we receive them.them in good order.
If we receive premiums from your employer before we receive your application or enrollment form, we’ll generally invest the money in the CREF Money Market Account until we receive your form. (Someform (some employer plans may require that we send such premiums back to the employer or have a different default.) We’llFor some employer plans, when the completed application or form arrives transfer the appropriate amount (premiums plus earnings) from the CREF Money Market Account and credit it to the Real Estate Account as of end of the business day we receive yourthe completed form.form in good order.
If the allocation instructions onGenerally, if your application or enrollment form areis incomplete, or if your allocations violate employer plan restrictions that have been provided to TIAA, or total more than 100 percent, we’ll invest premiums remitted by your premiumsemployer in the CREF Money Market Account (Some(some employer plans may have a different default). After we receive a complete and correct application in good order with proper allocation instructions, we’ll follow your allocation instructions for future premiums. However, in this situation, you must request that we transfer any amounts that we credited to the CREF Money Market Account before we received correct instructions will be transferred to the Real Estate Account only on request, andAccount. They will be credited as of the business day we receive that request.request in good order.
TIAA generally doesn’t currently restrict the amount or frequency of payment of premiums to your contract, although we may in the future. Your employer’s retirement plan may limit your premium amounts, whileamounts. There also may be restrictions on remitting premiums on an IRA. In addition, the Internal Revenue Code limits the total annual premiums you may invest in plans qualified for favorable tax treatment.
If you want to directly contribute personal premiums under the contractual provisions of your RA contract, you will be issued an ATRA contract. Premiums and any earnings on the ATRA contract will not be subject to your employer’s retirement plan. The only restrictions relating to these premiums are in the contract itself.
In most cases (subject to any restriction we may impose, as described in this prospectus), TIAA will acceptaccepts premiums to a contract at any time during your accumulation period. Once your first premium has been paid, your TIAA contract can’t lapse or be forfeited for nonpayment of premiums. TIAA can stop accepting premiums to contracts at any time.
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Note that we cannot accept money orders or travelers checks. In addition, we will not accept a third-party check where the relationship of the payor to the account owner cannot be identified from the face of the check.
We will not be deemed to have received any premiums sent to the addresses designated for remitting premiums until the third-party service that administers
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the receipt of mail through those addresses has processed the payment on our behalf.
You will receive a confirmation statement each time you remit premiums, or make a transfer to or a cash withdrawal from the Account. The statement will show the date and amount of each transaction. However, if you’re using an automatic investment plan, you’ll receive a statement confirming those transactions following the end of each calendar quarter.
If you have any accumulations in the Account, you will be sent a statement in each quarter which sets forth the following information:
(1) Premiums paid during the quarter;
(2) The number and dollar value of accumulation units in the Account credited to the participant during the quarter and in total;
(3) Cash withdrawals, if any, from the Account during the quarter; and
(4) Any transfers between the Account and TIAA’s Traditional Annuity, CREF accounts, another TIAA annuity or separate account or mutual funds that may be offered under the terms of your plan during the quarter.
You also will receive reports containing the financial statements of the Account and certain information about the Account’s investments.
Important Information About Procedures for Opening a New Account
To help the U.S. government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions including us, to obtain, verify and record information that identifies each person who opens an account.
What this means for you:When you open an account, we will ask for your name, address, date of birth, social security number and other information that will allow us to identify you, such as your home telephone number.number and driver’s license or certain other identifying documents. Until you provide us with the information we need,needed, we may not be able to open an account or effect any transactions for you. Furthermore, if we are unable to verify your identity, or that of another person authorized to act on your behalf, or if it is believed that potentially criminal activity has been identified, we reserve the right to take such action as deemed appropriate, which may include closing your account.
CHOOSING AMONG INVESTMENT ACCOUNTS
YouAfter you receive your contract, you can allocate all or part of your premiums to the Real Estate Account, unless your employer’s plan precludes that choice. You can also allocate premiums to TIAA’s traditional annuity, the CREF variable investment accounts, the TIAA Access variable annuity accounts, other TIAA separate accounts offered from time to time (if available under the terms of your
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employer’s plan) and, in some cases, certain mutual funds if the account or fund is available under your employer’s plan.
You can change your allocation choices for future premiums by:
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| • writing to our home office at 730 Third Avenue, New York, New York 10017-3206, • using the TIAA-CREF Web Center’s account access feature at www.tiaa-cref.org, or • calling our Automated Telephone Service (24 hours a day) at 800 842-2252 |
THE RIGHT TO CANCEL YOUR CONTRACT
You can generallymay cancel any RA, SRA, Classic IRA, ATRA or GSRAKeogh contract upin accordance with the contract’s Right to 30 days after you first receive it, unlessExamine provision (unless we have begun making annuity payments from it. If you already hadit) subject to the time period regulated by the state in which the contract is issued. To cancel a TIAA contract, prior to investing in the Real Estate Account, you have no 30-day right to cancel the contract. To cancel, mail or deliver the contract with a signed Notice of Cancellation (available by contacting TIAA) to our home office. We’ll cancel the contract, then send some or all of the entire current accumulation or premiums, depending on the state in which your contract was issued, to whomever sentwhoever originally submitted the premiums. You bear the investment risk during this period (although some states require us to send back your entire premium without accounting for investment results).
DETERMINING THE VALUE OF YOUR INTEREST IN THE ACCOUNT — ACCUMULATION UNITS
When you pay premiums or make transfersEach payment to the Real Estate Account you buybuys a number of accumulation units. When you take a cashSimilarly, any withdrawal transfer from the Account or apply funds to begin annuity income,results in the redemption of a number of your
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accumulation units. The price you pay for accumulation units, decrease. We calculate how manyand the price you receive for accumulation units to credit your account with by dividingwhen you redeem accumulation units, is the amount you applied tovalue of the Account by its accumulation unit value at the end ofunits calculated for the business day when we received your premium or transfer. To determine how many accumulation units to subtract for cash withdrawals and transfers, we use the accumulation unit value for the end of the business day whenon which we receive your transactionpurchase, redemption or transfer request and all required information and documentsin good order (unless you ask for a later date)date for a redemption or transfer). AThis date is called the “effective date.” Therefore, if we receive your purchase, redemption or transfer request in good order before the NYSE closes, that business day ends at 4:00 p.m. Eastern timewill be considered the effective date of your order. If we receive your request in good order after the NYSE closes, the next business day will be considered the effective date of your order.
Payments and orders to redeem accumulation units may be processed after the effective date. “Processed” means credited to the Account in the case of a purchase, or when trading closesdebited to the Account in the case of a redemption. In the event there are market fluctuations between the effective date and the processing date and the price of accumulation units on the NYSE, if earlier.processing date is higher or lower than your price on the effective date, that difference will be paid or retained by Services, the Account’s distributor. This amount, which may be positive or negative, together with similar amounts paid or retained by Services in connection with transactions involving other investment products offered under pension plans administered by TIAA or its affiliates, is apportioned to the Account pursuant to an agreement
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with Services, under which the Account reimburses Services for the services it has provided to the Account.
“Good order” means actual receipt of an order along with all the information and supporting legal documentation necessary to effect the transaction. This information and documentation generally includes the contract number, the transaction amount (in dollars or accumulation units), signatures of all contract owners exactly as registered on the contract, and any other information or supporting documentation as may be required. With respect to purchase requests, “good order” also generally includes receipt of sufficient funds by us to effect the purchase. We may, in our sole discretion, determine whether any particular transaction request is in good order and reserve the right to change or waive any good order requirement at any time.
The accumulation unit value reflects the Account’s investment experience (i.e., the real estate net operating income accrued, as well as dividends, interest and other income accrued), realized and unrealized capital gains and losses, as well as Account expense charges.
Calculating Accumulation Unit Values:We calculate the Account’s accumulation unit value at the end of each valuation day. To do that, we multiply the previous day’s value by the net investment factor for the Account. The net investment factor is calculated asAdivided byB, whereAandBare defined as:
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A. The value of the Account’s net assets at the end of the current valuation period, less premiums received during the current valuation period.
B. The value of the Account’s net assets at the end of the previous valuation period, plus the net effect of transactions made at the start of the current valuation period.
HOW TO TRANSFER AND WITHDRAW YOUR MONEY
Generally, TIAA allows you to move your money to or from the Real Estate Account in the following ways:
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• | from the Real Estate Account to a CREF investment account, a TIAA Access variable account (if available) or TIAA’s traditional annuity | |
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• | to the Real Estate Account from a CREF investment account, a TIAA Access variable account (if available) or TIAA’s traditional annuity (transfers from TIAA’s traditional annuity under RA, GRA or Retirement Choice contracts are subject to restrictions) | |
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• | from the Real Estate Account to other companies | |
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• | to the Real Estate Account from other companies/plans | |
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• | by withdrawing cash | |
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• | by setting up a program of automatic withdrawals or transfers |
For more information regarding the transfer policies of CREF, TIAA Access or another investment option listed above, please see the respective contract, prospectus or other governing instrument.
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These transactions generally must be for at least $1,000 at a time (or your entire Account accumulation, if less). These options may be limited by the terms of your
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employer’s plan, by current tax law, or by the terms of your contract, as set forth below. Transfers and cash withdrawals are currently free. TIAA can place restrictions on transfers or charge fees for transfers and/or withdrawals in the future.
TransfersAs indicated, transfers and cash withdrawals are effective at the end of the business day we receive your request and all required documentation.documentation in good order. You can also choose to have transfers and withdrawals take effect at the close of any future business day. For any transfers to TIAA’s traditional annuity, the crediting rate will be the rate in effect at the close of business of the first day that you participate in TIAA’s traditional annuity, which is the next business day after the effective date of the transfer.
To request a transfer or to withdraw cash:
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| • | write to TIAA’s home office at 730 Third Avenue, New York, NY 10017-3206 |
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| • | call us at 800 842-2252 or |
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| • | for internal transfers, using the TIAA-CREF Web Center’s account access feature at www.tiaa-cref.org |
You may be required to complete and return certain forms to effect these transactions. We can suspend or terminate your ability to transact by telephone, over the Internet, or by fax at any time, for any reason.
Before you transfer or withdraw cash, make sure you understand the possible federal and other income tax consequences. See “Taxes” on page 74.
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TRANSFERS TO AND FROM OTHER TIAA-CREF ACCOUNTS
Once every calendar quarter you can transfer some or all of your accumulation in the Real Estate Account to TIAA’s traditional annuity, to another TIAA annuity offered by your employer’s plan, to one of the CREF accounts, to a TIAA Access variable annuity account or to mutual funds offered under the terms of your employer’s plan. Transfers to CREF accounts or to certain other options may be restricted by your employer’s plan.plan, current tax law or by the terms of your contract.
You can also transfer some or all of your accumulation in TIAA’s traditional annuity, in your CREF accounts, TIAA Access variable annuity accounts or in the mutual funds or TIAA annuities offered under the terms of your plan to the Real Estate Account, if your employer’s plan offers the Account. Transfers from TIAA’s traditional annuity to the Real Estate Account under RA, GRA or Retirement Choice contracts can only be effected over a period of time (up to tennine (9) years) and may be subject to other limitations, as specified in your contract. Amounts held under an ATRA contract cannot be transferred to or from any retirement plan contract.
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Because excessive transfer activity can hurt Account performance and other participants, we may further limit how often you transfer or otherwise modify the transfer privilege.
TRANSFERS TO OTHER COMPANIES
Generally you may transfer funds from the Real Estate Account to a company other than TIAA or CREF, subject to certain tax restrictions. This right may be limited by your employer’s plan. If your employer participates in our special
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transfer services program, we can make automatic monthly transfers from your RA or GRA contract to another company, and the $1,000 minimum will not apply to these transfers. Roth amounts in a 403(b) or 401(a) plan can only be rolled over to another Roth account under such plan or to a Roth IRA, as permitted by applicable law and the terms of the plans.
Under the Retirement Choice and Retirement Choice Plus contracts, your employer could transfer monies from anthe Account and apply it to another Accountaccount or investment option, subject to the terms of your plan, and without your consent.
TRANSFERS FROM OTHER COMPANIES/PLANS
Subject to your employer’s plan and federal tax law, you can usually transfer or rolloverroll over money from another 403(b), 401(a)/403(a) or governmental 457(b) retirement plan to your qualified TIAA contract. You may also rolloverroll over before-tax amounts in a Classic IRA to 403(b) plans, 401(a)/403(a) plans or eligible governmental 457(b) plans, provided such employer plans agree to accept the rollover. Similarly, subject to your employer’s plan, you may be able to rolloverroll over funds from 401(a), 403(a), 403(b) and governmental 457(b) plans to a TIAA Classic IRA.IRA or, subject to applicable income limits, from an IRA containing funds originally contributed to such plans, to either a TIAA Classic or Roth IRA, subject to rules applicable to Roth IRA conversion. Roth amounts in a 403(b) or 401(a) plan can only be rolled over to another Roth account under such plan or to a Roth IRA, as permitted by applicable law and the terms of the plans. Funds in a private 457(b) plan can be transferred to another private 457(b) plan only. Accumulations in private 457(b) plans may not be rolled over to a qualified plan (e.g., a 401(a) plan), a 403(b) plan, a governmental 457(b) plan or an IRA.
WITHDRAWING CASH
You may withdraw cash from your SRA, GSRA, IRA, or Keogh Real Estate Account accumulation at any time during the accumulation period, provided federal tax law permits it (see below). Real Estate Account cash withdrawals from your RA, GRA, Retirement Choice or Retirement Choice Plus accumulation may be limited by the terms of your employer’s plan and federal tax law. Normally, you can’t withdraw money from a contract if you’ve already applied that money to begin receiving lifetime annuity income. Current federal tax law restricts your ability to make cash withdrawals from your accumulation under most voluntary
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salary reduction agreements. Withdrawals are generally available only if you reach age 59½, leave your job, become disabled, die, or die,satisfy requirements related to qualified distributions or if your employer terminates its retirement plan. If your employer’s plan permits, you may also be able to withdraw money if you encounter hardship, as defined by the IRS, but hardship withdrawals can be from contributions only, and not investment earnings. You may be subject to a 10 percent penalty tax if you make a withdrawal before you reach age 59½, unless an exception applies to your situation.
Under current federal tax law, you are not permitted to withdraw from 457(b) plans earlier than the calendar year in which you reach age 70½ or, leave your job or are faced with an unforeseeable emergency (as defined by law). There are generally no early withdrawal tax penalties if you withdraw under any of these circumstances (i.e., no 10% tax on distributions prior to age 59½). If you’re married, you may be required by law or your employer’s plan to show us advance written consent from your spouse before TIAA makes certain transactions on your behalf.
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Special rules and restrictions apply to Classic and Roth IRAs.
SYSTEMATIC WITHDRAWALS AND TRANSFERS
If your employer’s plan allows, you can set up a program to make cash withdrawals or transfers automatically by specifying that we withdraw or transfer from your Real Estate Account accumulation any fixed number of accumulation units, dollar amount, or percentage of accumulation until you tell us to stop or until your accumulation is exhausted. Currently, the program must be set up so that at least $100 is automatically withdrawn or transferred at a time.
WITHDRAWALS TO PAY ADVISORY FEES
You can set up a program to have monies withdrawn directly from your retirement plan (if your employer’s plan allows) or IRA accumulations to pay your financial advisor, if your employer’s plan allows.advisor. You will be required to complete and return certain forms to effect these withdrawals, including how and from which accounts you want these monies to be withdrawn. Before you set up this program, make sure you understand the possible tax consequences of these withdrawals. See the discussion under “Taxes” below.
POSSIBLE RESTRICTIONS ON PREMIUMS AND TRANSFERS TO THE ACCOUNT
From time to time we may stop accepting premiums for and/or transfers into the Account. We might do so if, for example, we can’t find enough appropriate real estate-related investment opportunities at a particular time. Whenever reasonably possible, we will notify you before we decide to restrict premiums and/or transfers. However, because we may need to respond quickly to changing market conditions, we reserve the right to stop accepting premiums and/or transfers at any time without prior notice.
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If we decide to stop accepting premiums into the Account, amounts that would otherwise be allocated to the Account will be allocated to the CREF Money Market Account (or to a different default account under the terms of your employer’s plan) instead, unless you give us other allocation instructions. We will not transfer these amounts out of the CREF Money Market Account (or such different default account) when the restriction period is over, unless you request that we do so. However, we will resume allocating premiums to the Account on the date we remove the restrictions.
ADDITIONAL LIMITATIONS
Federal law requires us to obtain, verify and record information that identifies each person who opens an account. Until we receive the information we need, we may not be able to effect transactions for you. Furthermore, if we are unable to verify your identity, or that of another person authorized to act on your behalf, or if we believe that we have identified potentially criminal activity, we reserve the right to take such action as we deem appropriate, which may include closing your account.
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MARKET TIMING / EXCESSIVE TRADING POLICY
There are participants who may try to profit from transferring moneymaking transactions back and forth among the CREF accounts, the Real Estate Account, the TIAA Access variable accounts and the mutual funds or other investment options available under the terms of your plan in an effort to “time” the market. As money is shifted in and out of these accounts, the accounts or funds may incur transaction costs, including, among other things, expenses for buying and selling securities. These costs are borne by all participants, including long-term investors who do not generate thethese costs. In addition, market timing can interfere with efficient portfolio management and cause dilution if timers are able to take advantage of pricing inefficiencies. Consequently, the Account is not appropriate for such market timing and you should not invest in the Account if you want to engage in market timing activity.
To discourage market-timing activity, transfers from the Account to a CREF or TIAA account, or another nonaffiliated investment option, are limited to once every calendar quarter. In addition,
TIAA reserves the right to reject any purchase or exchange request with respect to the Account, including when it is believed that a request would be disruptive to the Account’s efficient portfolio management. TIAA also may suspend or terminate your ability to transact in the Account by telephone, fax or over the Internet for any reason, including the prevention of excessive trading. A purchase or exchange request could be rejected or electronic trading privileges could be suspended because of the timing or amount of the investment or because of a history of excessive trading by the participant. Because TIAA has discretion in applying this policy, it is possible that similar transaction activity could be handled differently because of the surrounding circumstances.
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TIAA seeks to apply its specifically defined excessive trading policies and procedures uniformly to all Account participants, and not to make exceptions with respect to those policies and procedures. These efforts may include requesting transaction data from intermediaries from time to time to verify whether the Account’s policies are being followed and/or to instruct intermediaries to take action against participants who make more than three transfers out of any TIAA or CREF account or any ofhave violated the TIAA-CREF mutual funds available under your plan (other than the CREF Money Market Account) in a calendar month will be advised that if this transfer frequency continues, we will suspend their ability to make telephone, fax and Internet transfers. Systematic withdrawals and transfers which are established and effected in accordance with an employer’s plan will not be deemed to be multiple transfers for purposes of theseAccount’s market timing restrictions.
We havepolicies. TIAA has the right to modify our policythese market timing policies and procedures at any time without advance notice.
The Account is not appropriate for market timing. You should not invest in the Account if you want to engage in market timing activity.
Participants seeking to engage in market timing may deploy a variety of strategies to avoid detection, and, despite TIAA’s efforts to discourage market timing, there is no guarantee that TIAA or its agents will be able to identify all such participants or curtail their trading practices.
If you invest in the Account through an intermediary, including through a retirement or employee benefit plan, you may be subject to additional market timing or excessive trading policies implemented by the intermediary or plan. Please contact your intermediary or plan sponsor for more details.
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THE ANNUITY PERIOD IN GENERAL
You can receive an income stream from all or part of your Real Estate Account accumulation. Unless you opt for a lifetime annuity, generally you must be at least age 59½ to begin receiving annuity income payments from your annuity contract free of a 10 percent early distribution penalty tax. Your employer’s plan may also restrict when you can begin income payments. Under the minimum distribution rules of the Internal Revenue Code, you generally must begin receiving some payments from your contract shortly after you reach the later of age 70½ or you retire. For more information, see “Minimum Distribution Requirements,” on page 76.94. Also, you can’t begin a one-life annuity after you reach age 90, nor may you begin a two-life annuity after either you or your annuity partner reach age 90.
Your income payments may be paid out from the Real Estate Account through a variety of income options. You can pick a different income option for different portions of your accumulation, but once you’ve started payments you usually can’t change your income option or annuity partner for that payment stream.
Usually income payments are monthly. You can choose quarterly, semi-annual, and annual payments as well. (TIAA has the right to not make payments at any interval that would cause the initial payment to be less than $100.) We’ll send your payments by mail to your home address or, on your request, by mail or electronic funds transfer to your bank.
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Your initial income payments are based on the value of your accumulation on the last valuation day before the annuity starting date. Your payments change after the initial payment based on the Account’s investment experience and the income change method you choose.
There are two income change methods for annuity payments: annual and monthly. Under the annual income change method, payments from the Account change each May 1, based on the net investment results during the prior year (April 1 through March 31). Under the monthly income change method, payments from the Account change every month, based on the net investment results during the previous month. For the formulas used to calculate the amount of annuity payments, see page 71.90. The total value of your annuity payments may be more or less than your total premiums.
ANNUITY STARTING DATE
Ordinarily, annuity payments begin on the date you designate as your annuity starting date, provided we have received all documentation necessary for the income option you’ve picked. If something’s missing, we’ll defer your annuity starting date until we receive it.the missing information. Your first annuity check may be delayed while we process your choice of income options and calculate the amount of your initial payment. Any premiums received within 70 days after payments begin may be used to provide additional annuity income. Premiums received after 70 days will remain in your accumulating annuity contract until you give
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have given us further instructions. Ordinarily, your first annuity payment can be made on any business day between the first and twentieth of any month.
INCOME OPTIONS
Both the number of annuity units you purchase and the amount of your income payments will depend on which income option you pick. Your employer’s plan, tax law and ERISA may limit which income options you can use to receive income from an RA or GRA, GSRA, Retirement Choice, Retirement Choice Plus or Keogh contract. Ordinarily you’ll choose your income options shortly before you want payments to begin, but you can make or change your choice any time before your annuity starting date.
All Real Estate Account income options provide variable payments, and the amount of income you receive depends in part on the investment experience of the Account. The current options are:
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| • | One-Life Annuity with or without Guaranteed |
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| • | Annuity for a Fixed |
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| • | Two-Life |
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| • | Minimum Distribution Option (MDO) |
You must apply your entire accumulation under a contract if you want to use the MDO annuity. It is possible that income under the MDO annuity will cease during your lifetime. Prior to age 90, and subject to applicable plan and legal restrictions, you can apply any remaining part of an accumulation applied to the MDO annuity to any other income option for which you’re eligible. Using an MDO won’t affect your right to take a cash withdrawal of any accumulation not yet
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distributed. This pay-out annuity is not available under the Retirement Choice or Retirement Choice Plus contracts. Instead, required minimum distributions will be paid directly from these contracts pursuant to the terms of your employer’s plan.
For any of the income options described above, current federal tax law saysprovides that your guaranteed period can’t exceed the joint life expectancy of you and your beneficiary or annuity partner. If you are married at your annuity start date, you may be required by law to choose an income option that provides survivor annuity income to your spouse, unless your spouse reserves the right. Other income options may become available in the future, subject to the terms of your retirement plan and relevant federal and state laws. For more information about any annuity option, please contact us.
Receiving Lump Sum Payments (Retirement Transition Benefit):If your employer’s plan allows, you may be able to receive a single sum payment of up to 10 percent of the value of any part of an accumulation being converted to annuity income on the annuity starting date. (This does not apply to IRAs.) Of course, if your employer’s plan allows cash withdrawals, you can take a larger amount (up to 100 percent) of your Real Estate Account accumulation as a cash payment. The retirement transition benefit will be subject to current federal income tax requirements and possible early distribution penalties. See “Taxes” on page 74.93.
If you haven’t picked an income option when the annuity starting date arrives for your contract, TIAA usually will assume you want theone-life annuity with 10-year guaranteed periodif you’re unmarried, subject to the terms of your plan, paid from TIAA’s traditional annuity. If you’re married, we may assume for youa survivor annuity with half-benefit to annuity partner with a 10-Year guaranteed period,with your
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spouse as your annuity partner, paid from TIAA’s traditional annuity. If you haven’t picked an income option when the annuity starting date arrives for your IRA, we may assume you want the minimum distribution option annuity.
TRANSFERS DURING THE ANNUITY PERIOD
After you begin receiving annuity income, you can transfer all or part of the future annuity income payable once each calendar quarter (i) from the Real Estate Account into a “comparable annuity” payable from a CREF or TIAA account or TIAA’s traditional annuity, or (ii) from a CREF account into a comparable annuity payable from the Real Estate Account. Comparable annuities are those which are payable under the same income option, and have the same first and second annuitant, and remaining guaranteed period.
We’ll process your transfer on the business day we receive your request.request in good order. You can also choose to have a transfer take effect at the close of any future business day. Transfers under the annual income payment method will affect your annuity payments beginning on the May 1 following the March 31 which is on or after the effective date of the transfer. Transfers under the monthly income payment method and all transfers into TIAA’s traditional annuity will affect your annuity payments beginning with the first payment due after the monthly
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payment valuation day that is on or after the transfer date. You can switch between the annual and monthly income change methods, and the switch will go into effect on the following March 31.
ANNUITY PAYMENTS
The amount of annuity payments we pay you or your beneficiary (annuitant) will depend upon the number and value of the annuity units payable. The number of annuity units is first determined on the day before the annuity starting date. The amount of the annuity payments will change according to the income change method chosen.
Under the annual income change method, the value of an annuity unit for payments is redetermined on March 31 of each year — the payment valuation day. Annuity payments change beginning May 1. The change reflects the net investment experience of the Real Estate Account. The net investment experience for the twelve months following each March 31 revaluation will be reflected in the following year’s value.
Under the monthly income change method, the value of an annuity unit for payments is determined on the payment valuation day, which is the 20th day of the month preceding the payment due date or, if the 20th is not a business day, the preceding business day. The monthly changes in the value of an annuity unit reflect the net investment experience of the Real Estate Account. The formulas for calculating the number and value of annuity units payable are described below.
Calculating the Number of Annuity Units Payable:When a participant or a beneficiary converts the value of all or a portion of his or her accumulation into an income-paying contract, the number of annuity units payable from the Real Estate
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Account under an income change method is determined by dividing the value of the Account accumulation to be applied to provide the annuity payments by the product of the annuity unit value for that income change method and an annuity factor. The annuity factor as of the annuity starting date is the value of an annuity in the amount of $1.00 per month beginning on the first day such annuity units are payable, and continuing for as long as such annuity units are payable.
The annuity factor will reflect interest assumed at the effective annual rate of 4 percent, and the mortality assumptions for the person(s) on whose life (lives) the annuity payments will be based. Mortality assumptions will be based on the then-current settlement mortality schedules for this Account. Annuitants bear no mortality risk under their contracts — actual mortality experience will not reduce annuity payments after they have started. TIAA may change the mortality assumptions used to determine the number of annuity units payable for any future accumulations converted to provide annuity payments.
The number of annuity units payable under an income change method under your contract will be reduced by the number of annuity units you transfer out of that income change method under your contract. The number of annuity units payable will be increased by any internal transfers you make to that income change method under your contract.
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Value of Annuity Units:The Real Estate Account’s annuity unit value is calculated separately for each income change method for each business day and for the last calendar day of each month. The annuity unit value for each income change method is determined by updating the annuity unit value from the previous valuation day to reflect the net investment performance of the Account for the current valuation period relative to the 4 percent assumed investment return. In general, your payments will increase if the performance of the Account is greater than 4 percent and decrease if the value is less than 4 percent. The value is further adjusted to take into account any changes expected to occur in the future at revaluation either once a year or once a month, assuming the Account will earn the 4 percent assumed investment return in the future.
The initial value of the annuity unit for a new annuitant is the value determined as of the day before annuity payments start.
For participants under the annual income change method, the value of the annuity unit for payment remains level until the following May 1. For those who have already begun receiving annuity income as of March 31, the value of the annuity unit for payments due on and after the next succeeding May 1 is equal to the annuity unit value determined as of such March 31.
For participants under the monthly income change method, the value of the annuity unit for payments changes on the payment valuation day of each month for the payment due on the first of the following month.
Further, certain variable annuity payouts might not be available if issuing the payout annuity would violate state law.
TIAA reserves the right, subject to approval by the Board of Trustees, to modify the manner in which the number and/or value of annuity units is calculated in the future.
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AVAILABILITY; CHOOSING BENEFICIARIES
Subject to the terms of your employer’s plan, TIAA may pay death benefits if you or your annuity partner dies, which may be subject to the terms of your employer’s plan.dies. When you purchase your annuity contract, you name one or more beneficiaries to receive the death benefit if you die. You can change your beneficiaries anytime before you die, and, unless you instruct otherwise, your annuity partner can do the same after your death.
YOUR SPOUSE’S RIGHTS
Your choice of beneficiary for death benefits may, in some cases, be subject to the consent of your spouse. Similarly, if you are married at the time of your death, federal law may require a portion of the death benefit be paid to your spouse even if you have named someone else as beneficiary. If you die without having named any beneficiary, any portion of your death benefit not payable to your spouse will go to your estate.
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AMOUNT OF DEATH BENEFIT
If you die during the accumulation period, the death benefit is the amount of your accumulation. If you and your annuity partner die during the annuity period while payments are still due under a fixed-period annuity or for the remainder of a guaranteed period, the death benefit is the value of the remaining guaranteed payments.
PAYMENT OF DEATH BENEFIT
To authorize payment and pay a death benefit, we must have received all necessary forms and documentation, including proof of death and the selection of the method of payment.
METHODS OF PAYMENT OF DEATH BENEFITS
Generally, you can choose for your beneficiary the method we’ll use to pay the death benefit, but few participants do this. If you choose a payment method, you can also blockprevent your beneficiaries from changing it. Most people leave the choice to their beneficiaries. We can blockprevent any choice if its initial payment is less than $25. If death occurs while your contract is in the accumulation stage, in most cases we can pay the death benefit using the TIAA-CREF Savings & Investment Plan. We won’t do this if you preselected another option or if the beneficiary elects another option. Some beneficiaries aren’t eligible for the TIAA-CREF Savings & Investment Plan. If your beneficiary isn’t eligible and doesn’t specifically tell us to start paying death benefits within a year of your death, we can start making payments to them over five years using the fixed-period annuity method of payment.
Payments During the Accumulation Period:Currently, the available methods of payment for death benefits from funds in the accumulation period are:
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| • | Single-Sum Payment,in which the entire death benefit is paid to your beneficiary at once; |
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| • | One-Life Annuity with or without Guaranteed Period,in which the death benefit is paid monthly for the life of the beneficiary or through the guaranteed period; |
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| • | Annuity for a Fixed Period of 5 to 30 years (not available under Retirement Choice or Retirement Choice Plus),in which the death benefit is paid for a fixed period; |
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| • | Accumulation-Unit Deposit Option,which pays a lump sum at the end of a fixed period, ordinarily two to five years, during which period the accumulation units deposited participate in the Account’s investment experience (generally the death benefit value must be at least $5,000); (This option is not available under all contracts) and |
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| • | Minimum Distribution Option (also called the TIAA-CREF Savings & Investment Plan),which automatically pays income according to the Internal Revenue Code’s minimum distribution requirements (not available |
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under Retirement Choice or Retirement Choice Plus). It operates in much the same way as the MDO annuity income option. It’s possible, under this method, that your beneficiary won’t receive income for life. |
Death benefits are usually paid monthly (unless you chose a single-sum method of payment), but your beneficiary can switch them to quarterly, semi-annual, or annual payments.
Payments During the Annuity Period:If you and your annuity partner die during the annuity period, your beneficiary can choose to receive any remaining guaranteed periodic payments due under your contract. Alternatively, your beneficiary can choose to receive the commuted value of those payments in a single sum unless you have indicated otherwise. The amount of the commuted value will be different than the total of the periodic payments that would otherwise be paid.
Ordinarily, death benefits are subject to federal estate tax. Generally, if taken as a lump sum, death benefits would be taxed like complete withdrawals. If taken as annuity benefits, death benefits would be taxed like annuity payments. For more information on death benefits, see the discussion under “Taxes” below, or for further detail, contact TIAA.
This section offers general information concerning federal taxes. It doesn’t cover every situation. Tax treatment varies depending on the circumstances, and state and local taxes may also be involved. For complete information on your personal tax situation, check with a qualified tax advisor.
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HOW THE REAL ESTATE ACCOUNT IS TREATED FOR TAX PURPOSES
The Account is not a separate taxpayer for purposes of the Internal Revenue Code — its earnings are taxed as part of TIAA’s operations. Although TIAA is not expected to owe any federal income taxes on the Account’s earnings, if TIAA does incur taxes attributable to the Account, it may make a corresponding charge against the Account.
TAXES IN GENERAL
During the accumulation period, Real Estate Account premiums paid in before-tax dollars, employer contributions and earnings attributable to these amounts are not taxed until they’re withdrawn. Annuity payments, single-sum withdrawals, systematic withdrawals, and death benefits are usually taxed as ordinary income. Premiums paid in after-tax dollars aren’t taxable when withdrawn, but earnings attributable to these amounts are taxable unless those amounts are contributed as Roth contributions to a 401(a) or 403(b) plan and certain criteria are met before the amounts (and the income on the amounts) are withdrawn. Death benefits are usually also subject to federal estate and state estate or inheritance taxation. Generally, transfers between qualified retirement plans are not taxed. Generally,
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contributions you can make under an employer’s plan are limited by federal tax law.law Employee voluntary salary reduction contributions and Roth after-tax contributions to 403(b) and 401(k) plans are limited in the aggregate to $15,500 per year ($20,500 per year if you are age 50 or older). Certain long-term employees may be able to defer up to $18,500 per year in a 403(b) plan ($23,500 per year if you are age 50 or older). Contributions to Classic and Roth IRAs, other than rollover contributions, cannot generally exceed $4,000$5,000 per year ($5,0006,000 per year for taxpayers age 50 or older).
The maximum contribution limit to a 457(b) non-qualified deferred compensation plan for employees of state and local governments is $15,500 ($20,500 if you are age 50 or older). Special catch-up rules may permit a higher contribution in one or more of the last three years prior to an individual’s normal retirement age under the plan.
Note that the dollar limits listed above are for 2007;2008; different dollar limits may apply in future years.
EARLY DISTRIBUTIONS
If you want to withdraw funds or begin receiving income from any 401(a), 403(a), or 403(b) retirement plan or an IRA before you reach age 59½, you may have to pay a 10 percent early distribution tax on the taxable amount. Distributions from a Roth IRA generally are not taxed, except that, once aggregate distributions exceed contributions to the Roth IRA, income tax and a 10% penalty tax may apply to distributions made (1) before age 59½ (subject to certain exceptions) or (2) during the five taxable years starting with the year in which the first contribution is made to any Roth IRA. A 10 percent penalty tax may apply to amounts attributable to a conversion from an IRA if they are
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distributed during the five taxable years beginning with the year in which the conversion was made. You won’t have to pay this tax in certain circumstances. Early distributions from 457(b) plans are not subject to a 10% penalty tax unless, in the case of a governmental 457(b) plan, the distribution includes amounts rolled over to the plan from an IRA, 401(a)/403(a), or 403(b) plan. Consult your tax advisor for more information.
MINIMUM DISTRIBUTION REQUIREMENTS
In most cases, payments from qualified contracts must begin by April 1 of the year after the year you reach age 70½, or if later, by retirement. For Classic IRAs, and with respect to 5 percent or more owners of the business covered by a Keogh plan, payments must begin by April 1 of the year after you reach age 70½. Under the terms of certain retirement plans, the plan administrator may direct us to make the minimum distributions required by law even if you do not elect to receive them. In addition, if you don’t begin distributions on time, you may be subject to a 50 percent excise tax on the amount you should have received but did not. Roth IRAs are generally not subject to these rules requiring minimum distributions during your lifetime. You are responsible for requesting distributions that comply with the minimum distribution rules.
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WITHHOLDING ON DISTRIBUTIONS
If we pay an “eligible rollover” distribution directly to you, federal law requires us to withhold 20 percent from the taxable portion. On the other hand, if we roll over such a distribution directly to an IRA or employer plan, we do not withhold any federal income tax. The 20 percent withholding also does not apply to certain types of distributions that are not considered eligible rollovers such as payments from IRAs, hardship withdrawals, lifetime annuity payments, substantially equal periodic payments over your life expectancy or over 10 or more years, or minimum distribution payments.
For the taxable portion of non-eligible rollover distributions, we will usually withhold federal income taxes unless you tell us not to and you are eligible to avoid withholding. However, if you tell us not to withhold but we don’t have your taxpayer identification number on file, we still are required to deduct taxes. These rules also apply to distributions from governmental 457(b) plans. In general, all amounts received under a private 457(b) plan are taxable and are subject to federal income tax withholding as wages. Nonresident aliens who pay U.S. taxes are subject to different withholding rules.
SPECIAL RULES FOR AFTER-TAX RETIREMENT ANNUITIES
If you paid premiums directly to an RA and the premiums are not subject to your employer’s retirement plan, or if you have been issued an ATRA contract, the following general discussion describes our understanding of current federal income tax law that applies to these accumulations. This discussion does not apply to premiums paid on your
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behalf under the terms of your employer’s retirement plan. It also does not cover every situation and does not address all possible circumstances.
In General.These annuities are generally not taxed until distributions occur. When distributions occur, they are taxed as follows:
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| • | Withdrawals, including withdrawals of the entire accumulation under the contract, are generally taxed as ordinary income to the extent that the contract’s value is more than your investment in the contract (i.e.,what you have paid into it). |
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| • | Annuity payments are generally treated in part as taxable ordinary income and in part as non-taxable recovery of your investment in the contract until you recover all of your investment in the contract. After that, annuity payments are taxable in full as ordinary income. |
Required Distributions.In general, if you die after you start your annuity payments but before the entire interest in the annuity contract has been distributed, the remaining portion must be distributed at least as quickly as under the method in effect on the date of your death. If you die before your annuity payments begin, the entire interest in your annuity contract generally must be distributed within five years after your death, or be used to provide payments that begin within one year of your death and that will be made for the life of your designated beneficiary or for a period not extending beyond the life expectancy of
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your designated beneficiary. The “designated beneficiary” refers to a natural person you designate and to whom ownership of the contract passes because of your death. However, if the designated beneficiary is your surviving spouse, your surviving spouse can continue the annuity contract as the new owner.
Death Benefit Proceeds.Death benefit proceeds are taxed like withdrawals of the entire accumulation in the contract if distributed in a single sum and are taxed like annuity payments if distributed as annuity payments. Your beneficiary may be required to take death benefit proceeds within a certain time period.
Penalty Tax on Certain Distributions.You may have to pay a penalty tax (10 percent of the amount treated as taxable income) on distributions you take prior to age 591/259½. There are some exceptions to this rule, however. You should consult a tax advisor for information about those exceptions.
Withholding.Annuity distributions are generally subject to federal income tax withholding but most recipients can usually choose not to have the tax withheld.
Certain Designations or Exchanges.Designating an annuitant, payee or other beneficiary, or exchanging a contract may have tax consequences that should be discussed with a tax advisor before you engage in any of these transactions.
Multiple Contracts.All non-qualified deferred annuity contracts issued by us and certain of our affiliates to the same owner during a calendar year must generally be treated as a single contract in determining when and how much income is taxable and how much income is subject to the 10 percent penalty tax (see above).
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Diversification Requirements.The investments of the Real Estate Account must be “adequately diversified” in order for the ATRA Contracts to be treated as annuity contracts for Federal income tax purposes. It is intended that Real Estate Account will satisfy these diversification requirements.
Owner Control.In certain circumstances, owners of non-qualified variable annuity contracts have been considered for Federal income tax purposes to be the owners of the assets of the separate account supporting their contracts due to their ability to exercise investment control over those assets. When this is the case, the contract owners have been currently taxed on income and gains attributable to the variable account assets. While we believe that the ATRA Contracts do not give you investment control over assets in the Real Estate Account or any other separate account underlying your ATRA Contract, we reserve the right to modify the ATRA Contracts as necessary to prevent you from being treated as an owner of the assets in the Real Estate Account.
FEDERAL ESTATE TAXES
While no attempt is being made to discuss the Federal estate tax implications of the Contract, you should keep in mind that the value of an annuity contract owned by a decedent and payable to a beneficiary by virtue of surviving the decedent is included in the decedent’s gross estate. Depending on the terms of the annuity contract, the value of the annuity included in the gross estate may be the
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value of the lump sum payment payable to the designated beneficiary or the actuarial value of the payments to be received by the beneficiary. Consult an estate planning advisor for more information.
GENERATION-SKIPPING TRANSFER TAX
Under certain circumstances, the Code may impose a “generation skipping transfer tax” when all or part of an annuity contract is transferred to, or a death benefit is paid to, an individual two or more generations younger than the Owner. Regulations issued under the Code may require us to deduct the tax from your Contract, or from any applicable payment, and pay it directly to the IRS.
RESIDENTS OF PUERTO RICO
The IRS has announced that income from an annuity received by residents of Puerto Rico is U.S.-source income that is generally subject to United States Federalfederal income tax.
ANNUITY PURCHASES BY NONRESIDENT ALIENS
The discussion above provides general information regarding U.S. federal income tax consequences to annuity purchasers that are U.S. citizens or residents. Purchasers that are not U.S. citizens or residents will generally be subject to U.S. federal withholding tax on taxable distributions from annuity contracts at a 30% rate, unless a lower treaty rate applies. In addition, purchasers may be subject to state and/or municipal taxes and taxes that may be imposed by the purchaser’s
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country of citizenship or residence. Prospective purchasers who are nonresident aliens are advised to consult with a qualified tax adviser regarding U.S., state, and foreign taxation with respect to an annuity contract purchase.
SPECIAL RULES FOR WITHDRAWALS TO PAY ADVISORY FEES
If you have arranged for us to pay advisory fees to your financial advisor from your accumulations, those partial withdrawals generally will not be treated as taxable distributions as long as:
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| • | the payment is for expenses that are ordinary and necessary; |
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• | your financial advisor’s payment is only made from the accumulations in your retirement plan or IRA, as applicable, and not directly by you or anyone else, under the agreement with your financial advisor; and | |
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| • | once advisory fees begin to be paid from your retirement plan or IRA, as applicable, you continue to pay those fees solely from your plan or IRA, as applicable, and not from any other source. |
However, withdrawals to pay advisory fees to your financial advisor from your accumulations under an ATRA contract will be treated as taxable distributions.
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FOREIGN TAX CREDIT
The Account may be subject to foreign taxes on investments in other countries, including capital gains tax on any appreciation in value when a real estate investment in a foreign jurisdiction is eventually sold. Any potential tax impact will not be reflected in the valuation of the foreign investment and may not be fully reflected in a tax accrual by the Account. Upon payment of any foreign tax by the Account, TIAA will receive a foreign tax credit, which may be available to reduce its U.S. tax burden. The Account is a segregated asset account of TIAA and incurs no material federal income tax attributable to the investment performance of the Account under the Internal Revenue Code. As a result, the Account will not realize any tax benefit from any foreign tax credit that may be available to TIAA; however, to the extent that TIAA can utilize the foreign tax credit in its consolidated tax return, TIAA will reimburse the Account for that benefit at that time. The extent to which TIAA is able to utilize the credits when the Account incurs a foreign tax will determine the amount and timing of reimbursement from TIAA to the Account for the resulting foreign tax credit. The Account’s unit values may be adversely impacted in the future if a foreign tax is paid, and TIAA is not able to utilize (and therefore does not reimburse the Account for), either immediately or in the future, the foreign tax credit earned as a result of the foreign tax paid by the Account.
POSSIBLE TAX LAW CHANGES
Although the likelihood of legislative changes is uncertain, there is always the possibility that the tax treatment of your contract could change by legislation or
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otherwise. Consult a tax advisor with respect to legislative developments and their effect on your contract.
We have the right to modify the contract in response to legislative changes that could otherwise diminish the favorable tax treatment that annuity contract owners currently receive. We make no guarantee regarding the tax status of any contract and do not intend the above discussion as tax advice.
MAKING CHOICES AND CHANGES
You may have to make certain choices or changes (e.g., changing your income option, making a cash withdrawal) by written notice satisfactory to us and received at our home office or at some other location that we have specifically designated for that purpose. When we receive a notice of a change in beneficiary or other person named to receive payments, we’ll execute the change as of the date it was signed, even if the signer has died in the meantime. We execute all other changes as of the date received.
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TELEPHONE AND INTERNET TRANSACTIONS
You can use our Automated Telephone Service (ATS) or the TIAA-CREF Web Center’s account access feature to check your account balances, transfer to TIAA’s traditional annuity, TIAA Access variable annuity accounts or CREF, and/or allocate future premiums among the accounts and funds available to you through TIAA-CREF.TIAA-CREF You will be asked to enter your Personal Identification Number (PIN) and social security number for both systems. (You can establish a PIN by calling us.) Both will lead you through the transaction process and will use reasonable procedures to confirm that instructions given are genuine. If we use such procedures, we are not responsible for incorrect or fraudulent transactions. All transactions made over the ATS and Internet are electronically recorded.
To use the ATS, you need a touch-tone phone. The toll free number for the ATS is 800 842-2252. To use the Internet, go to the account access feature of the TIAA-CREF Web Center at http://www.tiaa-cref.org. We can suspend or terminate your ability to transact by telephone, over the Internet, or by fax at any time, for any reason.
VOTING RIGHTS
You don’t have the right to vote on the management and operation of the Account directly; however, you may send ballots to advise the TIAA Board of Overseers about voting for nominees for the TIAA Board of Trustees.
ELECTRONIC PROSPECTUS
If you received this prospectus electronically and would like a paper copy, please call 877 518-9161 and we will send it to you. Under certain circumstances
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where we are legally required to deliver a prospectus to you, we cannot send you a prospectus electronically unless you’ve consented.
HOUSEHOLDING
To lower costs and eliminate duplicate documents sent to your home, we may begin mailing only one copy of the Account’s prospectus, prospectus supplements or any other required documents to your household, even if more than one participant lives there. If you would prefer to continue receiving your own copy of any of these documents, you may call us toll-free at 877 518-9161, or write us.
MISCELLANEOUS POLICIES
Amending the Contracts:The contract may be amended by agreement of TIAA and the contractholder without the consent of any other person, provided that such change does not reduce any benefit purchased under the contract up to that time. Any endorsement or amendment of thisthe contract, waiver of any of its provisions, or change in rate schedule will be valid only if in writing and signed by an executive officer of TIAA.
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If You’re Married:If you’re married, you may be required by law or your employer’s plan to get advance written consent from your spouse before we make certain transactions for you. If you’re married at your annuity starting date, you may also be required by law or your employer’s plan to choose an income option that provides survivor annuity income to your spouse, unless he or she waives that right in writing. There are limited exceptions to the waiver requirement.
Texas Optional Retirement Program Restrictions:If you’re in the Texas Optional Retirement Program, you or your beneficiary can redeem some or all of your accumulation only if you retire, die, or leave your job in the state’s public institutions of higher education.
Assigning Your Contract:Generally, neither you nor your beneficiaries can assign your ownership of a TIAA retirement contract to anyone else.
Overpayment of Premiums:If your employer mistakenly sends more premiums on your behalf than you’re entitled to under your employer’s retirement plan or the Internal Revenue Code, we’ll refund them to your employer as long as we’re requested to do so (in writing) before you start receiving annuity income.
Any time there’s a question about premium refunds, TIAA will rely on information from your employer. If you’ve withdrawn or transferred the amounts involved from your accumulation, we won’t refund them.
Errors or Omissions:We reserve the right to correct any errors or omissions on any form, report, or statement that we send you.
Payment to an Estate, Guardian, Trustee, etc.:We reserve the right to pay in one sum the commuted value of any benefits due an estate, corporation, partnership, trustee, or other entity not a natural person. Neither TIAA nor the Account will be responsible for the conduct of any executor, trustee, guardian, or other third party to whom payment is made.
TIAA Real Estate AccountProspectus|81
Benefits Based on Incorrect Information:If the amounts of benefits provided under a contract were based on information that is incorrect, benefits will be recalculated on the basis of the correct data. If the Account has overpaid or underpaid, appropriate adjustments will be made.
Proof of Survival:We reserve the right to require satisfactory proof that anyone named to receive benefits under a contract is living on the date payment is due. If we have not received this proof after we request it in writing, the Account will have the right to make reduced payments or to withhold payments entirely until such proof is received.
The annuity contracts are offered continuously by TIAA-CREF Individual & Institutional Services, LLC (Services), which is registered with the SEC as a broker-dealer and a registered investment adviser and is a member of the National Association of Securities Dealers, Inc. (NASD)Financial Industry Regulatory Authority (“FINRA”). Teachers Personal Investors Services, Inc. (TPIS), which is also registered with the SEC and is a member of the NASD,FINRA, may participate in the distribution of the contracts on
100Prospectus§ TIAA Real Estate Account
a limited basis. Services and TPIS are direct or indirect wholly owned subsidiaries of TIAA. Their addresses are at 730 Third Avenue, New York, NY 10017-3206. No commissions are paid for distributing the contracts.
TIAA, the Real Estate Account, and the contracts are subject to regulation by the New York Insurance Department (NYID)NYID as well as by the insurance regulatory authorities of certain other states and jurisdictions.
TIAA and the Real Estate Account must file with the NYID both quarterly and annual statements. The Account’s books and assets are subject to review and examination by the NYID at all times, and a full examination into the affairs of the Account is made at least every five years. In addition, a full examination of the Real Estate Account operations is usually conducted periodically by some other states.
All matters involving state law and relating to the contracts, including TIAA’s right to issue the contracts, have been passed upon by George W. Madison, Executive Vice President and General Counsel of TIAA. Sutherland Asbill & BrennanDechert LLP Washington, D.C., have passed uponhas provided legal advice to the Account related to certain matters relating tounder the federal securities laws.
82|ProspectusTIAA Real Estate Account
The financial statements as of December 31, 20062007 and December 31, 20052006 and for each of the twothree years in the period ended December 31, 20062007 included in this Prospectusprospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP (“PWC”), an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.
Ernst & Young LLP (“E&Y”), independent registered public accounting firm, has audited the Account’s financial statements at December 31, 2004, and for the year then ended, as set forth in their report.
With respect to TIAA, PWC has audited TIAA’s statutory-basis financial statements as of December 31, 2006 and December 31, 2005, and for each of the two years in the period ended December 31, 2006, as set forth in their report, given on the authority of said firm as experts in auditing and accounting.
E&Y has audited TIAA’s statutory-basis financial statements as of December 31, 2004 and December 31, 2003, and for each of the three years in the period ended December 31, 2004, as set forth in their report (which contains an explanatory paragraph describing that TIAA presents its financial statements in conformity with accounting practices prescribed or permitted by the New York State Insurance Department, which practices differ from U.S. generally accepted accounting principles and that the effects of the variances between such bases of accounting on TIAA’s financial statements are not reasonably determinable but are presumed to be material, as described in Note 2 to the TIAA statutory-basis financial statements).
Friedman LLP, an independent registered public accounting firm, has audited the statement of revenues and certain expenses of the following properties:
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TIAA Real Estate AccountProspectus|83
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| The properties comprising the Account’s joint venture with Developers Diversified Realty Corporation (“DDR”), in which the Account has an 85% equity | ||
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| Printemps de l’Homme (Paris, France) for the year ended December 31, 2005; | |
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(iii) | 8600 114th Avenue North, Champlin, Minnesota for the year ended December 31, 2006; | ||
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TIAA Real Estate Account§ Prospectus101
(v) | Preston Sherry, Dallas, Texas, for the year ended December 31, 2006. |
Aarons Grant & Habif, LLC, an independent registered public accounting firm, has audited the statement of revenues and certain expenses of the following properties:
(i) | Camelback Center, Phoenix, Arizona, for the year ended December 31, 2005; and | ||
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Berdon LLP, independent registered public accounting firm, has audited the statement of revenues and certain expenses of the following properties: (i) 501 Boylston Street (The Newbry) for the year ended December 31, 2005 and (ii) 9345 Santa Anita Avenue (Weber Distribution) for the year ended December 31, 2005.
Aarons Grant & Habif, LLC, independent registered public accounting firm, has audited the statement of revenues and certain expenses for the Camelback Center property for the year ended December 31, 2005.
After reasonable inquiry, the Account is not aware of any material factors relating to the specific properties audited by anyeither of Friedman LLP, Berdon LLP or Aarons Grant & Habif, LLC, other than as specifically set forth elsewhere in this prospectus that would cause the reported financial information indicated in such financial statements not to be necessarily indicative of future operating results.
We have included these financial statements in the prospectus and elsewhere in the registration statement in reliance on the auditing firms’ respective reports, given on the authority of such firms as experts in accounting and auditing.
INFORMATION AVAILABLE AT THE SEC
The Account has filed with the SEC a registration statement under the Securities Act of 1933, which contains this prospectus and additional information related to the offering described in this prospectus. The Account also files annual, quarterly, and current reports, along with other information, with the SEC, as required by the Securities Exchange Act of 1934. You may read and copy the full registration statement, and any reports and information filed with the SEC for the
84|ProspectusTIAA Real Estate Account
Account, at the SEC’s public reference room at 100 F Street, N.E., Washington, DC 20549. This information can also be obtained through the SEC’s website on the Internet(http://www.sec.gov). The public may obtain information on the operation of the SEC’s public reference room by calling the SEC at 1-800-SEC-0330.
OTHER REPORTS TO PARTICIPANTS
TIAA will mail to each participant in the Real Estate Account periodic reports providing information relating to their accumulations in the Account, including premiums paid, number and value of accumulations, and withdrawals or transfers during the period, as well as such other information as may be required by applicable law or regulations. Further information may be obtained from TIAA at 730 Third Avenue, New York, New York 10017-3206.
CUSTOMER COMPLAINTS
Customer complaints may be directed to our Participant Relations Unit, P.O.P O. Box 1259, Charlotte, North Carolina 28201-1259, telephone 800 842-2776.
102Prospectus§ TIAA Real Estate Account
The financial statements of the TIAA Real Estate Account, financial statements of certain properties purchased by the Account and condensed unaudited statutory-basis financial statements of TIAA follow. The full audited statutory-basis financial statements of TIAA, which are incorporated into this prospectus by reference, are available upon request by calling 877 518-9161.
The financial statements of TIAA should be distinguished from the financial statements of the Account and should be considered only as bearing on the ability of TIAA to meet its obligations under the contracts. They should not be considered as bearing upon the assets held in the Account.
TIAA Real Estate AccountProspectus|§85 Prospectus103
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86|ProspectusTIAA Real Estate Account
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Audited Financial Statements: |
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| Property Financial Statements: |
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| Joint Venture with Developers Diversified Realty Corporation |
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| 105 |
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Audited Financial Statements: |
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| 108 |
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| TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA |
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| [Note: Will be filed via amendment.] |
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Pro Forma Condensed Financial Statements (Unaudited): |
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| 144 |
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| 145 |
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Report of management responsibilityREPORT OF MANAGEMENT RESPONSIBILITY
To the Participants of the TIAA Real Estate Account:
The accompanying financial statements of the TIAA Real Estate Account (“Account”) of Teachers Insurance and Annuity Association of America (“TIAA”) are the responsibility of TIAA’s management. They have been prepared in accordance with accounting principles generally accepted in the United States of America and have been presented fairly and objectively in accordance with such principles.
TIAA has established and maintains a soundan effective system of internal controls and disclosure controlsover financial reporting designed to provide reasonable assurance that assets are properly safeguarded, andthat transactions are properly executed in accordance with management’s authorization, and to carry out the ongoing responsibilities of management for reliable financial statements. In addition, TIAA’s internal audit personnel provide a continuing reviewregular reviews and assessments of the internal controls and operations of the Account, and the chief audit executiveSenior Vice President of Internal Audit regularly reports to the Audit Committee of the TIAA Audit Committee.Board of Trustees.
The accompanying financial statements have been audited by an independent registered public accounting firm.firm of PricewaterhouseCoopers LLP has audited the accompanying financial statements for the years ended December 31, 2007, 2006 and 2005. To maintain auditor independence and avoid anyeven the appearance of a conflict of interest, it continues to be the Account’s policy (consistent with TIAA’s specific auditor independence policies, which are designed to avoid such conflicts) that any management advisory or consulting services would be obtained from a firm other than the independent registered public accounting firm. The reportsindependent auditors’ report expresses an independent opinion of the independent registered public accounting firms, which follow the statements of investments, express independent opinions on the fairness of presentation of thesethe Account’s financial statements.
The Audit Committee of the TIAA Board of Trustees, consistingcomprised entirely of independent, non-management trustees, who are not officers of TIAA, meets regularly with management, representatives of PricewaterhouseCoopers LLPthe independent registered public accounting firm and the internal audit grouppersonnel to review matters relating to financial reporting, internal controls and auditing. In addition to the annual independent audit of the Account’s financial statements, by the independent registered public accounting firm, the New York State Insurance Department and other state insurance departments perform periodic examinationsregularly examine the operations and financial statements of the Account’s operations.
March 15, 2007Account as part of their periodic corporate examinations.
March 20, 2008 | ||
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Herbert M. Allison, Jr. | Georganne C. Proctor | |
Chairman, President and | Executive Vice President and | |
Chief Executive Officer | Chief Financial Officer |
TIAA TIAA-CREF§Real Estate AccountProspectus|87§Prospectus105
Report of the Audit committeeREPORT OF THE AUDIT COMMITTEE
To the Participants of the TIAA Real Estate Account:
The TIAA Audit Committee (“Committee”) oversees the financial reporting process of the TIAA Real Estate Account (“Account”) on behalf of TIAA’s Board of Trustees. The Committee operates in accordance with a formal written charter (copies of which are available upon request) which describes the Audit Committee’s responsibilities. All members of the Committee are independent, as defined under the listing standards of the New York Stock Exchange.
Management has the primary responsibility for the Account’s financial statements, development and maintenance of a strong system of internal controls and disclosure controls, and compliance with applicable laws and regulations. In fulfilling its oversight responsibilities, the Committee reviewed and approved the audit plans of the internal audit group and the independent registered public accounting firm in connection with their respective audits of the Account. The Committee also meets regularly with the internal audit group and the independent registered public accounting firm, both with and without management present, to discuss the results of their examinations, their evaluation of internal controls, and the overall quality of financial reporting. As required by its charter, the Committee will evaluate rotation of the independent registered public accounting firm whenever circumstances warrant, but in no event will the evaluation be later than between their fifth and tenth years of service.
The Committee reviewed and discussed the accompanying audited financial statements with management, including a discussion of the quality and appropriateness of the accounting principles and financial reporting practices followed, the reasonableness of significant judgments, and the clarity and completeness of disclosures in the financial statements. The Committee has also discussed the audited financial statements with PricewaterhouseCoopers LLP, the independent registered public accounting firm responsible for expressing an opinion on the conformity of these audited financial statements with accounting principles generally accepted in the United States of America.
The discussion with PricewaterhouseCoopers LLP focused on their judgments concerning the quality and appropriateness of the accounting principles and financial reporting practices followed by the Account, the clarity and completeness of the financial statements and related disclosures, and other significant matters, such as any significant changes in accounting policies, internal controls, management judgments and estimates, and the nature of any uncertainties or unusual transactions. In addition, the Committee discussed with PricewaterhouseCoopers LLP the auditors’ independence from management and the Account, and has received a written disclosure regarding such independence, as required by the Securities and Exchange Commission.
88|106ProspectusTIAA §TIAA-CREF§Real Estate Account
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Based on the review and discussions referred to above, the Committee has approved the release of the accompanying audited financial statements for publication and filing with appropriate regulatory authorities.
Rosalie J. Wolf, Audit Committee Chair
Glenn A. Britt, Audit Committee Member
Donald K. Peterson, Audit Committee MemberLeonard S. Simon, Audit Committee MemberPaul R. Tregurtha,David L. Shedlarz, Audit Committee Member
March 15, 200720, 2008
TIAATIAA-CREF§ Real Estate Account§Prospectus107
Statements of assets and liabilities | TIAA Real Estate Account |
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December 31, |
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ASSETS |
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Investments, at value: |
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Real estate properties (cost: $9,804,488,802 and $9,462,471,032) |
| $ | 11,983,715,574 |
| $ | 10,743,487,689 |
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Real estate joint ventures and limited partnerships (cost: $2,260,919,575 and $1,413,322,924) |
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| 3,158,870,373 |
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| 1,948,028,002 |
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Marketable securities: |
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Real estate-related (cost: $439,154,248 and $569,326,795) |
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| 426,630,212 |
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| 704,922,323 |
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Other (cost: $3,371,895,300 and $2,038,681,194) |
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| 3,371,865,684 |
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| 2,038,938,210 |
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Mortgage loans receivable (cost: $75,000,000 and $75,000,000) |
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| 72,519,684 |
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| 74,660,626 |
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Total investments (cost: $15,951,457,925 and $13,558,801,945) |
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| 19,013,601,527 |
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| 15,510,036,850 |
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Cash |
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| 6,143,945 |
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| 3,585,145 |
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Due from investment advisor |
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| 11,195,734 |
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| 8,461,793 |
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Other |
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| 201,826,038 |
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| 237,877,545 |
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TOTAL ASSETS |
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| 19,232,767,244 |
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| 15,759,961,333 |
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LIABILITIES |
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Mortgage loans payable–Note 5 (principal outstanding: $1,427,857,443 and $1,415,032,586) |
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| 1,392,092,982 |
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| 1,437,149,148 |
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Payable for securities transactions |
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| 866,209 |
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| 1,219,323 |
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Accrued real estate property level expenses |
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| 154,638,976 |
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| 169,657,402 |
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Security deposits held |
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| 24,632,278 |
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| 19,242,948 |
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TOTAL LIABILITIES |
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| 1,572,230,445 |
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| 1,627,268,821 |
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NET ASSETS |
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Accumulation Fund |
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| 17,160,703,167 |
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| 13,722,700,176 |
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Annuity Fund |
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| 499,833,632 |
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| 409,992,336 |
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TOTAL NET ASSETS |
| $ | 17,660,536,799 |
| $ | 14,132,692,512 |
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NUMBER OF ACCUMULATION UNITS OUTSTANDING–Notes 6 and 7 |
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| 55,105,718 |
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| 50,146,354 |
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NET ASSET VALUE, PER ACCUMULATION UNIT–Note 6 |
| $ | 311.41 |
| $ | 273.65 |
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SEE NOTES TO THE FINANCIAL STATEMENTS
|108 Prospectus 89§TIAA-CREF§ Real Estate Account
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Years Ended December 31, |
| 2007 |
| 2006 |
| 2005 |
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INVESTMENT INCOME |
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Real estate income, net: |
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Rental income |
| $ | 987,434,298 |
| $ | 834,455,788 |
| $ | 618,633,580 |
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Real estate property level expenses and taxes: |
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Operating expenses |
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| 247,473,125 |
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| 207,452,982 |
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| 150,501,136 |
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Real estate taxes |
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| 126,925,585 |
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| 110,059,852 |
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| 88,014,264 |
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Interest expense |
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| 83,622,829 |
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| 72,160,111 |
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| 40,028,630 |
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Total real estate property level expenses and taxes |
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| 458,021,539 |
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| 389,672,945 |
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| 278,544,030 |
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Real estate income, net |
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| 529,412,759 |
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| 444,782,843 |
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| 340,089,550 |
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Income from real estate joint ventures and limited partnerships |
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| 93,724,569 |
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| 60,788,998 |
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| 71,826,443 |
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Interest |
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| 129,473,616 |
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| 118,621,441 |
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| 54,114,448 |
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Dividends |
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| 12,439,637 |
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| 16,785,769 |
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| 16,884,764 |
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TOTAL INCOME |
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| 765,050,581 |
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| 640,979,051 |
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| 482,915,205 |
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EXPENSES–NOTE 2: |
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Investment advisory charges |
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| 49,239,366 |
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| 26,899,307 |
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| 19,603,225 |
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Administrative and distribution charges |
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| 63,593,008 |
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| 45,712,473 |
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| 27,130,406 |
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Mortality and expense risk charges |
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| 8,052,314 |
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| 6,931,833 |
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| 6,196,549 |
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Liquidity guarantee charges |
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| 19,409,759 |
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| 3,905,051 |
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| 3,170,017 |
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TOTAL EXPENSES |
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| 140,294,447 |
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| 83,448,664 |
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| 56,100,197 |
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INVESTMENT INCOME–NET |
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| 624,756,134 |
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| 557,530,387 |
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| 426,815,008 |
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REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE |
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Net realized gain (loss) on: |
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Real estate properties |
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| 127,834,921 |
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| 76,137,064 |
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| 76,164,380 |
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Real estate joint ventures and limited partnerships |
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| 70,765,537 |
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| — |
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| 8,599,762 |
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Marketable securities |
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| 47,179,736 |
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| 10,257,108 |
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| 36,871,417 |
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Total realized gain on investments |
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| 245,780,194 |
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| 86,394,172 |
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| 121,635,559 |
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Net change in unrealized appreciation (depreciation) on: |
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Real estate properties |
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| 898,172,653 |
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| 659,370,445 |
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| 534,569,631 |
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Real estate joint ventures and limited partnerships |
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| 391,332,636 |
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| 217,360,271 |
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| 167,019,921 |
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Marketable securities |
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| (148,659,083 | ) |
| 120,453,638 |
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| (28,100,691 | ) |
Mortgage loan receivable |
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| (2,140,942 | ) |
| (339,374 | ) |
| — |
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Mortgage loans payable |
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| 53,949,280 |
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| (26,568,857 | ) |
| (29,154,148 | ) |
Net change in unrealized appreciation on investments and mortgage loans payable |
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| 1,192,654,544 |
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| 970,276,123 |
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| 644,334,713 |
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NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS AND MORTGAGE LOANS PAYABLE |
|
| 1,438,434,738 |
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| 1,056,670,295 |
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| 765,970,272 |
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
| $ | 2,063,190,872 |
| $ | 1,614,200,682 |
| $ | 1,192,785,280 |
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SEE NOTES TO THE FINANCIAL STATEMENTS
TIAA-CREF § Real Estate Account § Prospectus 109
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December 31, |
| 2006 |
| 2005 |
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ASSETS |
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Investments, at value: |
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Real estate properties |
| $ | 10,743,487,689 |
| $ | 7,977,600,751 |
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Real estate joint ventures and limited partnerships |
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| 1,948,028,002 |
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| 1,418,583,542 |
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Marketable securities: |
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Real estate-related |
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| 704,922,323 |
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| 448,662,598 |
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Other |
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| 2,038,938,210 |
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| 1,640,894,515 |
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Mortgage loan receivable |
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| 74,660,626 |
|
| — |
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Total investments |
|
| 15,510,036,850 |
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| 11,485,741,406 |
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Cash |
|
| 3,585,145 |
|
| 1,211,370 |
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Due from investment advisor |
|
| 8,461,793 |
|
| 7,717,256 |
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Other |
|
| 237,877,545 |
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| 190,756,381 |
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TOTAL ASSETS |
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| 15,759,961,333 |
|
| 11,685,426,413 |
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LIABILITIES |
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Mortgage loans payable—Note 5 (principal outstanding: |
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$1,384,920,990 and $943,291,236) |
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| 1,437,149,148 |
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| 973,502,186 |
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Payable for securities transactions |
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| 1,219,323 |
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| 993,809 |
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Accrued real estate property level expenses |
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| 169,657,402 |
|
| 145,789,277 |
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Security deposits held |
|
| 19,242,948 |
|
| 16,430,039 |
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TOTAL LIABILITIES |
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| 1,627,268,821 |
|
| 1,136,715,311 |
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NET ASSETS |
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Accumulation Fund |
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| 13,722,700,176 |
|
| 10,227,655,797 |
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Annuity Fund |
|
| 409,992,336 |
|
| 321,055,305 |
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TOTAL NET ASSETS |
| $ | 14,132,692,512 |
| $ | 10,548,711,102 |
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NUMBER OF ACCUMULATION UNITS OUTSTANDING—Notes 6 and 7 |
|
| 50,146,354 |
|
| 42,623,491 |
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NET ASSET VALUE, PER ACCUMULATION UNIT—Note 6 |
| $ | 273.65 |
| $ | 239.95 |
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|
|
|
|
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|
|
|
|
|
Years Ended December 31, |
| 2007 |
| 2006 |
| 2005 |
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FROM OPERATIONS |
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Investment income, net |
| $ | 624,756,134 |
| $ | 557,530,387 |
| $ | 426,815,008 |
|
Net realized gain on investments |
|
| 245,780,194 |
|
| 86,394,172 |
|
| 121,635,559 |
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Net change in unrealized appreciation on investments and mortgage loans payable |
|
| 1,192,654,544 |
|
| 970,276,123 |
|
| 644,334,713 |
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NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
|
| 2,063,190,872 |
|
| 1,614,200,682 |
|
| 1,192,785,280 |
|
FROM PARTICIPANT TRANSACTIONS |
|
|
|
|
|
|
|
|
|
|
Premiums |
|
| 1,186,870,080 |
|
| 1,085,057,614 |
|
| 968,189,436 |
|
Net transfers from TIAA |
|
| 153,136,947 |
|
| 215,893,898 |
|
| 172,305,147 |
|
Net transfers from CREF Accounts |
|
| 832,782,037 |
|
| 1,154,122,836 |
|
| 1,238,160,587 |
|
Net transfers from (to) TIAA-CREF Institutional Mutual Funds |
|
| (51,611,660 | ) |
| (15,318,887 | ) |
| 24,967,250 |
|
Annuity and other periodic payments |
|
| (95,776,359 | ) |
| (65,192,000 | ) |
| (44,487,142 | ) |
Withdrawals and death benefits |
|
| (560,747,630 | ) |
| (404,782,733 | ) |
| (248,759,442 | ) |
NET INCREASE IN NET ASSETS RESULTING FROM PARTICIPANT TRANSACTIONS |
|
| 1,464,653,415 |
|
| 1,969,780,728 |
|
| 2,110,375,836 |
|
NET INCREASE IN NET ASSETS |
|
| 3,527,844,287 |
|
| 3,583,981,410 |
|
| 3,303,161,116 |
|
NET ASSETS |
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
| 14,132,692,512 |
|
| 10,548,711,102 |
|
| 7,245,549,986 |
|
End of period |
| $ | 17,660,536,799 |
| $ | 14,132,692,512 |
| $ | 10,548,711,102 |
|
SEE NOTES TO THE FINANCIAL STATEMENTS
90|110 Prospectus Prospectus§TIAA-CREF§ Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| 2007 |
| 2006 |
| 2005 |
| |||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting from operations |
| $ | 2,063,190,872 |
| $ | 1,614,200,682 |
| $ | 1,192,785,280 |
|
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
Purchase of real estate properties |
|
| (639,704,090 | ) |
| (2,016,229,061 | ) |
| (1,864,646,776 | ) |
Amortization of discount on debt |
|
| 530,626 |
|
| 461,761 |
|
| 170,352 |
|
Capital improvements on real estate properties |
|
| (133,714,188 | ) |
| (117,041,456 | ) |
| (83,150,771 | ) |
Proceeds from sale of real estate properties |
|
| 568,120,000 |
|
| 387,290,000 |
|
| 511,500,399 |
|
Net increase in other investments |
|
| (1,904,858,906 | ) |
| (836,478,000 | ) |
| (1,313,958,742 | ) |
Increase in mortgage loan receivable |
|
| — |
|
| (74,660,626 | ) |
| — |
|
Decrease (increase) in other assets |
|
| 33,317,566 |
|
| (47,865,701 | ) |
| (80,412,203 | ) |
Decrease in amounts due to bank |
|
| — |
|
| — |
|
| (231,476 | ) |
Increase (decrease) in accrued real estate property level expenses and taxes |
|
| (15,018,427 | ) |
| 23,868,125 |
|
| 60,829,395 |
|
Increase in security deposits held |
|
| 5,389,330 |
|
| 2,812,909 |
|
| 2,670,715 |
|
Increase (decrease) in other liabilities |
|
| (353,114 | ) |
| 225,514 |
|
| (1,162,347 | ) |
Net realized gain on investments |
|
| (245,780,194 | ) |
| (86,394,172 | ) |
| (121,635,559 | ) |
Net unrealized gain on investments and mortgage loans payable |
|
| (1,192,654,544 | ) |
| (970,276,123 | ) |
| (644,334,713 | ) |
NET CASH USED IN OPERATING ACTIVITIES |
|
| (1,461,535,069 | ) |
| (2,120,086,148 | ) |
| (2,341,576,446 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Mortgage loan acquired |
|
| — |
|
| 153,000,000 |
|
| 232,585,341 |
|
Principal payments on mortgage loans payable |
|
| (559,546 | ) |
| (320,805 | ) |
| (173,361 | ) |
Premiums |
|
| 1,186,870,080 |
|
| 1,085,057,614 |
|
| 968,189,436 |
|
Net transfers from TIAA |
|
| 153,136,947 |
|
| 215,893,898 |
|
| 172,305,147 |
|
Net transfers from CREF Accounts |
|
| 832,782,037 |
|
| 1,154,122,836 |
|
| 1,238,160,587 |
|
Net transfers from (to) TIAA-CREF Institutional Mutual Funds |
|
| (51,611,660 | ) |
| (15,318,887 | ) |
| 24,967,250 |
|
Annuity and other periodic payments |
|
| (95,776,359 | ) |
| (65,192,000 | ) |
| (44,487,142 | ) |
Withdrawals and death benefits |
|
| (560,747,630 | ) |
| (404,782,733 | ) |
| (248,759,442 | ) |
NET CASH PROVIDED BY FINANCING ACTIVITIES |
|
| 1,464,093,869 |
|
| 2,122,459,923 |
|
| 2,342,787,816 |
|
NET INCREASE IN CASH |
|
| 2,558,800 |
|
| 2,373,775 |
|
| 1,211,370 |
|
CASH |
|
|
|
|
|
|
|
|
|
|
Beginning of period |
|
| 3,585,145 |
|
| 1,211,370 |
|
| — |
|
End of period |
| $ | 6,143,945 |
| $ | 3,585,145 |
| $ | 1,211,370 |
|
SUPPLEMENTAL DISCLOSURES: |
|
|
|
|
|
|
|
|
|
|
Cash paid for interest |
| $ | 83,063,017 |
| $ | 68,034,179 |
| $ | 38,267,618 |
|
Debt assumed in acquisition of properties |
| $ | 8,922,033 |
| $ | 288,950,559 |
| $ | 211,400,000 |
|
SEE NOTES TO THE FINANCIAL STATEMENTS
TIAA-CREF § Real Estate Account § Prospectus 111
| ||
|
| |
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| 2006 |
| 2005 |
| 2004 |
| |||
INVESTMENT INCOME |
|
|
|
|
|
|
|
|
|
|
Real estate income, net: |
|
|
|
|
|
|
|
|
|
|
Rental income |
| $ | 834,455,788 |
| $ | 618,633,580 |
| $ | 397,198,276 |
|
Real estate property level expenses and taxes: |
|
|
|
|
|
|
|
|
|
|
Operating expenses |
|
| 207,452,982 |
|
| 150,501,136 |
|
| 100,991,997 |
|
Real estate taxes |
|
| 110,059,852 |
|
| 88,014,264 |
|
| 55,946,418 |
|
Interest expense |
|
| 72,160,111 |
|
| 40,028,630 |
|
| 830,361 |
|
Total real estate property level expenses |
|
|
|
|
|
|
|
|
|
|
and taxes |
|
| 389,672,945 |
|
| 278,544,030 |
|
| 157,768,776 |
|
Real estate income, net |
|
| 444,782,843 |
|
| 340,089,550 |
|
| 239,429,500 |
|
Income from real estate joint ventures |
|
|
|
|
|
|
|
|
|
|
and limited partnerships |
|
| 84,671,528 |
|
| 71,826,443 |
|
| 71,390,397 |
|
Interest |
|
| 118,621,441 |
|
| 54,114,448 |
|
| 15,055,451 |
|
Dividends |
|
| 16,785,769 |
|
| 16,884,764 |
|
| 12,453,109 |
|
TOTAL INCOME |
|
| 664,861,581 |
|
| 482,915,205 |
|
| 338,328,457 |
|
EXPENSES—NOTE 2: |
|
|
|
|
|
|
|
|
|
|
Investment advisory charges |
|
| 26,899,307 |
|
| 19,603,225 |
|
| 14,393,388 |
|
Administrative and distribution charges |
|
| 45,712,473 |
|
| 27,130,406 |
|
| 16,372,446 |
|
Mortality and expense risk charges |
|
| 6,931,833 |
|
| 6,196,549 |
|
| 4,093,858 |
|
Liquidity guarantee charges |
|
| 3,905,051 |
|
| 3,170,017 |
|
| 1,868,733 |
|
TOTAL EXPENSES |
|
| 83,448,664 |
|
| 56,100,197 |
|
| 36,728,425 |
|
INVESTMENT INCOME—NET |
|
| 581,412,917 |
|
| 426,815,008 |
|
| 301,600,032 |
|
REALIZED AND UNREALIZED GAIN (LOSS) |
|
|
|
|
|
|
|
|
|
|
ON INVESTMENTS AND MORTGAGE LOANS PAYABLE |
|
|
|
|
|
|
|
|
|
|
Net realized gain (loss) on: |
|
|
|
|
|
|
|
|
|
|
Real estate properties |
|
| 76,137,064 |
|
| 84,764,142 |
|
| 13,827,432 |
|
Marketable securities |
|
| 10,257,108 |
|
| 36,871,417 |
|
| 46,714,767 |
|
Total realized gain on investments |
|
| 86,394,172 |
|
| 121,635,559 |
|
| 60,542,199 |
|
Net change in unrealized appreciation |
|
|
|
|
|
|
|
|
|
|
(depreciation) on: |
|
|
|
|
|
|
|
|
|
|
Real estate properties |
|
| 659,370,445 |
|
| 534,569,631 |
|
| 172,486,544 |
|
Real estate joint ventures and |
|
|
|
|
|
|
|
|
|
|
limited partnerships |
|
| 193,477,741 |
|
| 167,019,921 |
|
| 162,245,601 |
|
Marketable securities |
|
| 120,453,638 |
|
| (28,100,691 | ) |
| 21,088,525 |
|
Mortgage loan receivable. |
|
| (339,374 | ) |
| — |
|
| — |
|
Mortgage loans payable |
|
| (26,568,857 | ) |
| (29,154,148 | ) |
| (1,782,566 | ) |
Net change in unrealized appreciation on |
|
|
|
|
|
|
|
|
|
|
investments and mortgage loans payable |
|
| 946,393,593 |
|
| 644,334,713 |
|
| 354,038,104 |
|
NET REALIZED AND UNREALIZED GAIN |
|
|
|
|
|
|
|
|
|
|
ON INVESTMENTS AND MORTGAGE |
|
|
|
|
|
|
|
|
|
|
LOANS PAYABLE |
|
| 1,032,787,765 |
|
| 765,970,272 |
|
| 414,580,303 |
|
NET INCREASE IN NET ASSETS |
|
|
|
|
|
|
|
|
|
|
RESULTING FROM OPERATIONS |
| $ | 1,614,200,682 |
| $ | 1,192,785,280 |
| $ | 716,180,335 |
|
TIAA Real Estate AccountProspectus|91
|
| |
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| 2006 |
| 2005 |
| 2004 |
| |||
FROM OPERATIONS |
|
|
|
|
|
|
|
|
|
|
Investment income, net |
| $ | 581,412,917 |
| $ | 426,815,008 |
| $ | 301,600,032 |
|
Net realized gain on investments |
|
| 86,394,172 |
|
| 121,635,559 |
|
| 60,542,199 |
|
Net change in unrealized appreciation |
|
|
|
|
|
|
|
|
|
|
on investments and mortgage loans payable |
|
| 946,393,593 |
|
| 644,334,713 |
|
| 354,038,104 |
|
NET INCREASE IN NET ASSETS |
|
|
|
|
|
|
|
|
|
|
RESULTING FROM OPERATIONS |
|
| 1,614,200,682 |
|
| 1,192,785,280 |
|
| 716,180,335 |
|
FROM PARTICIPANT TRANSACTIONS |
|
|
|
|
|
|
|
|
|
|
Premiums |
|
| 1,085,057,614 |
|
| 968,189,436 |
|
| 738,048,183 |
|
Net transfers from TIAA |
|
| 215,893,898 |
|
| 172,305,147 |
|
| 147,340,801 |
|
Net transfers from CREF Accounts |
|
| 1,154,122,836 |
|
| 1,238,160,587 |
|
| 1,045,910,051 |
|
Net transfers from (to) TIAA-CREF Institutional |
|
|
|
|
|
|
|
|
|
|
Mutual Funds |
|
| (15,318,887 | ) |
| 24,967,250 |
|
| (4,785,649 | ) |
Annuity and other periodic payments |
|
| (65,192,000 | ) |
| (44,487,142 | ) |
| (30,761,316 | ) |
Withdrawals and death benefits |
|
| (404,782,733 | ) |
| (248,759,442 | ) |
| (159,804,580 | ) |
NET INCREASE IN NET ASSETS RESULTING |
|
|
|
|
|
|
|
|
|
|
FROM PARTICIPANT TRANSACTIONS |
|
| 1,969,780,728 |
|
| 2,110,375,836 |
|
| 1,735,947,490 |
|
NET INCREASE IN NET ASSETS |
|
| 3,583,981,410 |
|
| 3,303,161,116 |
|
| 2,452,127,825 |
|
NET ASSETS |
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
| 10,548,711,102 |
|
| 7,245,549,986 |
|
| 4,793,422,161 |
|
End of year |
| $ | 14,132,692,512 |
| $ | 10,548,711,102 |
| $ | 7,245,549,986 |
|
92|ProspectusTIAA Real Estate Account
|
| |
|
|
|
|
|
|
|
|
|
|
|
Years Ended December 31, |
| 2006 |
| 2005 |
| 2004 |
| |||
CASH FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Net increase in net assets resulting |
|
|
|
|
|
|
|
|
|
|
from operations |
| $ | 1,614,200,682 |
| $ | 1,192,785,280 |
| $ | 716,180,335 |
|
Adjustments to reconcile net increase in |
|
|
|
|
|
|
|
|
|
|
net assets resulting from operations to |
|
|
|
|
|
|
|
|
|
|
net cash used in operating activities: |
|
|
|
|
|
|
|
|
|
|
Purchase of real estate properties |
|
| (2,016,229,061 | ) |
| (1,864,646,776 | ) |
| (1,690,454,136 | ) |
Capital improvements on real |
|
|
|
|
|
|
|
|
|
|
estate properties |
|
| (117,041,456 | ) |
| (83,150,771 | ) |
| (37,770,043 | ) |
Proceeds from sale of real estate properties |
|
| 387,290,000 |
|
| 511,500,399 |
|
| 113,765,000 |
|
Increase in other investments |
|
| (859,898,769 | ) |
| (1,313,788,390 | ) |
| (418,058,889 | ) |
Increase in mortgage loan receivable |
|
| (74,660,626 | ) |
| — |
|
| — |
|
Increase in other assets |
|
| (47,865,701 | ) |
| (80,412,203 | ) |
| (30,270,749 | ) |
Decrease in amounts due to bank |
|
| — |
|
| (231,476 | ) |
| (783,869 | ) |
Increase in accrued real estate property |
|
|
|
|
|
|
|
|
|
|
level expenses and taxes |
|
| 23,868,125 |
|
| 60,829,395 |
|
| 25,445,331 |
|
Increase in security deposits held |
|
| 2,812,909 |
|
| 2,670,715 |
|
| 621,654 |
|
Increase (decrease) in other liabilities |
|
| 225,514 |
|
| (1,162,347 | ) |
| — |
|
Net realized gain on investments |
|
| (86,394,172 | ) |
| (121,635,559 | ) |
| (60,542,199 | ) |
Unrealized gain on investments and |
|
|
|
|
|
|
|
|
|
|
mortgage loans payable |
|
| (946,393,593 | ) |
| (644,334,713 | ) |
| (354,038,104 | ) |
NET CASH USED IN OPERATING ACTIVITIES |
|
| (2,120,086,148 | ) |
| (2,341,576,446 | ) |
| (1,735,905,669 | ) |
CASH FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
|
Mortgage loans payable acquired |
|
| 153,000,000 |
|
| 232,585,341 |
|
| — |
|
Principal payments on mortgage loans payable |
|
| (320,805 | ) |
| (173,361 | ) |
| (41,821 | ) |
Premiums |
|
| 1,085,057,614 |
|
| 968,189,436 |
|
| 738,048,183 |
|
Net transfers from TIAA |
|
| 215,893,898 |
|
| 172,305,147 |
|
| 147,340,801 |
|
Net transfers from CREF Accounts |
|
| 1,154,122,836 |
|
| 1,238,160,587 |
|
| 1,045,910,051 |
|
Net transfers from (to) TIAA-CREF Institutional |
|
|
|
|
|
|
|
|
|
|
Mutual Funds |
|
| (15,318,887 | ) |
| 24,967,250 |
|
| (4,785,649 | ) |
Annuity and other periodic payments |
|
| (65,192,000 | ) |
| (44,487,142 | ) |
| (30,761,316 | ) |
Withdrawals and death benefits |
|
| (404,782,733 | ) |
| (248,759,442 | ) |
| (159,804,580 | ) |
NET CASH PROVIDED BY |
|
|
|
|
|
|
|
|
|
|
FINANCING ACTIVITIES |
|
| 2,122,459,923 |
|
| 2,342,787,816 |
|
| 1,735,905,669 |
|
NET INCREASE IN CASH |
|
| 2,373,775 |
|
| 1,211,370 |
|
| — |
|
CASH |
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
| 1,211,370 |
|
| — |
|
| — |
|
End of year |
| $ | 3,585,145 |
| $ | 1,211,370 |
| $ | — |
|
Supplemental disclosure: Cash paid for interest |
| $ | 68,034,179 |
| $ | 38,267,618 |
| $ | 121,408 |
|
Debt assumed upon acquisition of properties |
| $ | 288,950,559 |
| $ | 211,400,000 |
| $ | 499,521,077 |
|
TIAA Real Estate AccountProspectus|93
Note 1–1—Organization and Significant Accounting Policies
Business: The TIAA Real Estate Account (“Account”) is a segregated investment account of Teachers Insurance and Annuity Association of America (“TIAA”) and was established by resolution of TIAA’s Board of Trustees on February 22, 1995, under the insurance laws of the State of New York, for the purpose of funding variable annuity contracts issued by TIAA. The investment objective of the Account is a favorable long-term rate of return primarily through rental income and capital appreciation from real estate investments owned by the Account. The Account holds real estate properties directly and through wholly-owned subsidiaries. The Account also holds interests in limited partnerships and real estate joint ventures and limited partnerships in which the Account does not hold a controlling interest. Such joint venturesinterest; as such, they are not consolidated for financial statement purposes. The Account also invests in mortgage loans receivable collateralized by commercial real estate properties. The Account also invests in publicly-traded securities and other instruments to maintain adequate liquidity for operating expenses, capital expenditures and to make benefit payments. The Account also invests in mortgage loans receivable collateralized by commercial real estate properties.
The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America which may require the use of estimates made by management. Actual results may vary from those estimates. The following is a summary of the significant accounting policies of the Account.
Basis of Presentation: The accompanying financial statements include the Account and those subsidiaries wholly-owned by TIAA for the benefit of the Account. All significant intercompany accounts and transactions have been eliminated in consolidation.
Reclassifications: During 2007, the Account determined that its pro rata share of 2006 undistributed earnings from joint venture investments totaling approximately $24 million was reported as income from real estate joint ventures and limited partnerships for the year ended December 31, 2006 when the Account should have reported this amount as unrealized appreciation on real estate joint ventures and limited partnerships. Accordingly, the Statement of Operations for the year ended December 31, 2006 has been adjusted to reflect a reclassification of these undistributed earnings to unrealized appreciation on real estate joint ventures and limited partnerships equal to this amount. There is no impact to the Account’s total assets, total net assets or net asset value per accumulation unit for the periods presented as a result of this reclassification.
Certain other prior period amounts have been reclassified to conform to the current presentation. These reclassifications did not affect the total assets, total net assets or net increase in net assets previously reported.
Valuation of Real Estate Properties: Investments in real estate properties are stated at fair value, as determined in accordance with procedures approved by
112 Prospectus§ TIAA-CREF§ Real Estate Account
Notes to financial statements | continued |
the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole; accordingly, the Account does not record depreciation. Fair value for real estate properties is defined as the most probable price for which a property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value involves subjective judgment because the actual market value of real estate can be determined only by negotiation between the parties in a sales transaction. Real estate properties owned by the Account are initially valued at their respective purchase prices (including acquisition costs). Subsequently, the properties are valued on a quarterly cycle andwith an independent appraisersappraisal value completed for each real estate property at least once a year. An independent fiduciary, Real Estate Research Corporation, has been appointed by a special subcommittee of TIAA’s Board of Trustees. The independent fiduciary must approve all independent appraisers used by the Account. TIAA’s appraisal staff performs the other quarterly valuation reviews ofvaluations for each real estate property on a quarterly basis and updates the property value if it believes that the value of a property has changed since the previous valuation review or appraisal.as appropriate. The appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices (USPAP), the real estate appraisal industry standards created by The Appraisal Foundation. Real estate appraisals are estimates of property values based on a professional’s opinion. The independent fiduciary can also require additional appraisals if it believes that a
94|ProspectusTIAA Real Estate Account
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property’s value has changed materially and that such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued correctly.appropriately. The independent fiduciary must also approve an appraisalany valuation change where a property’s value changed by more than 6% or more from the most recent independent annual appraisal. Realappraisal, or if the value of the Account would change by more than 4% within any calendar quarter or more than 2% since the prior month. When a real estate propertiesproperty is subject to a mortgage, are generally valued as described; the mortgage is valued independently of the property and its fair value is reported separately. The independent fiduciary reviews and approves any such mortgage valuation adjustments which exceed certain prescribed limits before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value until the next valuation review or appraisal.
Valuation of Real Estate Joint Ventures and Limited Partnerships: Real estate joint ventures and certain limited partnerships are stated at the Account’s equity in the net assets of the underlying entities, adjusted,and for the joint ventures, are adjusted to value their real estate holdings and mortgage notes payable at fair value. Upon the disposition of all real estate investments by an investee entity, the Account will continue to state its equity in the remaining net assets of the investee entity during the wind down period, if any, that occurs prior to the dissolution of the investee entity.
TIAA-CREF§ Real Estate Account§Prospectus 113
Notes to financial statements | continued |
Valuation of Marketable Securities: Equity securities listed or traded on any national market or exchange are valued at the last sale price as of the close of the principal securities exchange on which such securities are traded or, if there is no sale, at the mean of the last bid and asked prices on such exchange.
Debt securities, other than money market instruments, are valued at the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). Money market instruments, with maturities of one year or less, are valued in the same manner as debt securities or derived from a pricing matrix that has various types of money market instruments along one axis and various maturities along the other. Portfolio securities and certain limited partnership interests for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole.
Mortgage Loans Receivable: Mortgage loans receivable are stated at fair value and are initially valued at the face amount of the mortgage loan funding.funding as representive of fair value. Subsequently, mortgage loans receivable are valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, and the performance of the underlying collateral.
Mortgage Loans Payable: Mortgage loans payable are stated at fair value. Estimated market values of mortgage loans payable are based on the amount at which the liability could be settled (either transferred or paid back) in a current transaction exclusive of direct transaction costs. Different assumptions or changes in future market conditions could significantly affect estimated market value. At times, the Account may assume debt in connection with the purchase of real estate. For debt assumed, the Account allocates a portion of the purchase price to the below- or above-market debt and amortizes the premium or discount over the remaining life of the debt.
Foreign currency transactions and translation: Portfolio investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales
TIAA Real Estate AccountProspectus|95
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of securities, income receipts and expense payments made in foreign currencies are translated into U.S. dollars at the exchange rates prevailing on the respective dates of the transactions. The effect of any changes in foreign currency exchange rates on portfolio investments and mortgage loans payable is included in the net realized and unrealized gains and losses on investments and mortgage loans payable. Net realized gains and losses on foreign currency transactions include maturities of forward foreign currency contracts, disposition of foreign currencies, and currency gains and losses between the accrual and receipt dates of portfolio investment income and between the trade and settlement dates of portfolio investment transactions.
114Prospectus§ TIAA-CREF§ Real Estate Account
Notes to financial statements | continued |
Accumulation and Annuity Funds:The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment. The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments. The net increase or decrease in net assets from investment operations is apportioned between the accounts based upon their relative daily net asset values. Once an Account participant begins receiving lifetime annuity income benefits, monthly payment levels cannot be reduced as a result of the Account’s adverse mortality experience. In addition, the contracts are required to stipulate the maximum expense charge that can be assessed, which is equal to 2.50% of average net assets per year. The Account pays a fee to TIAA to assume these mortality and expense risks.
Accounting for Investments: Real estate transactions are accounted for as of the date on which the purchase or sale transactions for the real estate properties close (settlement date). The Account recognizes a gain on the sale of a real estate property to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A loss occurs when the cost-to-date exceeds the sales price. As the Account is fair valued and all properties are appraised quarterly, anyAny accumulated unrealized gains and losses are reversed in the calculation of realized gains and losses.
Rent from real estate properties consists of all amounts earned under tenant operating leases, including base rent, recoveries of real estate taxes and other expenses and charges for miscellaneous services provided to tenants. Rental income is recognized in accordance with the billing terms of the lease agreements. The Account bears the direct expenses of the real estate properties owned. These expenses include, but are not limited to, fees to local property management companies, property taxes, utilities, maintenance, repairs, insurance, and other operating and administrative costs. An estimate of the net operating income earned from each real estate property is accrued by the Account on a daily basis and such estimates are adjusted as soon aswhen actual operating results are determined.
The Account has limited ownership interests in various real estate funds (limited partnerships and one limited liability corporation) and a private REITreal estate investment trust (“REIT”) (collectively, the “limited partnerships”). The Account records its contributions as increases to the investments, and distributions from the investments are treated as either income or return of capital, as determined by the management of the limited partnerships. Unrealized gains and losses are calculated and recorded quarterly when the Account’s accounting records are compared to the financial statements of the limited partnerships.partnerships are received by the Account.
Income from real estate joint ventures is recorded based on the Account’s proportional interest of the income distributed by the joint venture. Income earned by the joint venture, but not yet distributed to the Account by the joint venture investment, is recorded as unrealized gains and losses on real estate joint ventures.
96TIAA-CREF|§ProspectusTIAA Real Estate Account§Prospectus115
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Notes to financial statements | continued |
Income from real estate joint ventures is recorded based on the Account’s proportional interestTransactions in the income earned by the joint venture.
Securities transactionsmarketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned and includes accrual of discount and amortization of premium.premium as applicable. Dividend income is recorded on the ex-dividend date or as soon as the Account is informed of the dividend. Realized gains and losses on securities transactions are accounted for on the specific identification method.
Federal Income Taxes: Based on provisions of the Internal Revenue Code, Section 817, the Account is taxed as a segregated asset account of TIAA. TheTIAA and as such, the Account should incur no material federal income tax attributable to the net investment experienceactivity of the Account.
Reclassifications: Certain prior period amounts have been reclassified to conform to the current presentation. These reclassifications did not affect the total assets, total net assets or net increase in net assets previously reported.
Note 2–2—Management Agreements and Arrangements
Investment advisory services for the Account are provided by TIAA employees, under the direction of TIAA’s Board of Trustees and its Investment Committee, pursuant to investment management procedures adopted by TIAA for the Account. TIAA’s investment management decisions for the Account are also subject to review by the Account’s independent fiduciary, Real Estate Research Corporation.fiduciary. TIAA also provides all portfolio accounting and related services for the Account.
AdministrativeThrough December 31, 2007, administrative and distribution services for the Account are provided by TIAA-CREF Individual & Institutional Services, LLC (“Services”) pursuant to a Distribution and Administrative Services Agreement with the Account. Services, a wholly-owned subsidiary of TIAA, is a registered broker-dealer and a member of the National Association of Securities Dealers, Inc.Financial Industry Regulatory Authority.
TIAA and Services provide their services at cost. TIAA and Services receive payments from the Account on a daily basis according to formulas established each year with the objective of keeping the payments as close as possible to the Account’s actual expenses.expenses actually incurred. Any differences between actual expenses and the amounts paid by the Account are adjusted quarterly.
TIAA also provides a liquidity guarantee to the Account, for a fee, to ensure that sufficient funds are available to meet participant transfer and cash withdrawal requests in the event that the Account’s cash flows and liquid investments are insufficient to fund such requests. TIAA would fund any such transfer and withdrawal requests by purchasing accumulation units in the Account. TIAA also receives a fee for assuming certain mortality and expense risks.
The expenses for the services noted above that are provided to the Account by TIAA and other related partiesServices are identified in the accompanying Statements of Operations.Operations and are reflected in the Condensed Financial Information disclosed in Note 6.
Effective January 1, 2008, the Account entered into a Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account (the “New Distribution Agreement”), dated as of January 1, 2008, by and among TIAA, for itself and on behalf of the Account, and Services.
116Prospectus|§97 TIAA-CREF§ Real Estate Account
Notes to financial statements | continued |
Pursuant to the New Distribution Agreement, distribution services for the Account, which include, among other things, (i) distribution of annuity contracts issued by TIAA and funded by the Account, (ii) advising existing annuity contract owners in connection with their accumulations, and (iii) providing assistance in designing, installing and providing administrative services for contract owners or institutions, will be performed by Services. The New Distribution Agreement is terminable by either party upon 60 days written notice and terminates automatically upon any assignment thereof.
Effective January 1, 2008, the administrative functions previously performed for the Account by Services, which include, among other things, (i) computing the Account’s daily unit value, (ii) maintaining accounting records and performing accounting services, (iii) receiving and allocating premiums, (iv) calculating and making annuity payments, (v) processing withdrawal requests, (vi) providing regulatory compliance and reporting services, (vii) maintaining the Account’s records of contract ownership, and (viii) otherwise assisting generally in all aspects of the Account’s operations, will be performed by TIAA.
Both distribution services (pursuant to the New Distribution Agreement) and administrative services will continue to be provided to the Account by Services and TIAA, as applicable, on an at cost basis.
Note 3—Leases
The Account’s real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2058. Aggregate minimum annual rentals for the properties owned, excluding short-term residential and storage facility leases, are as follows:
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Years Ending December 31, |
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| |
| ||||
2008 |
| $ | 975,895,973 |
|
2009 |
|
| 906,194,738 |
|
2010 |
|
| 797,243,797 |
|
2011 |
|
| 659,462,763 |
|
2012 |
|
| 549,590,444 |
|
2013–2058 |
|
| 1,934,542,421 |
|
Total |
| $ | 5,822,930,136 |
|
Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts.
TIAA-CREF§ Real Estate Account§Prospectus 117
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Notes to financial statements | continued |
Note 3–Leases
The Account’s real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2035. Aggregate minimum annual rentals for the properties owned, excluding short-term residential and storage facility leases, are as follows:
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Years Ending December 31, |
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| ||||
2007 |
| $ | 795,495,322 |
|
2008 |
|
| 728,447,351 |
|
2009 |
|
| 654,178,920 |
|
2010 |
|
| 557,829,144 |
|
2011 |
|
| 443,396,596 |
|
2012–2035 |
|
| 1,527, 743,118 |
|
| ||||
Total |
| $ | 4,707,090,451 |
|
|
Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts.
Note 4–4—Investment in Joint Ventures and Limited Partnerships
The Account owns interests in several real estate properties through joint ventures and receives distributions and allocations of profits and losses from the joint ventures based on the Account’s ownership interest percentages. Several of these joint ventures have mortgage notes payable on the properties owned. At December 31, 2006,2007, the Account held 12 joint venture investments with non-controlling ownership interest percentages that ranged from 50% to 80%85%. The Account’s allocated portion of the mortgage notes payable was $472,167,225$1,991,782,600 and $468,664,313$472,167,225 at December 31, 20062007 and December 31, 2005,2006, respectively. The Account’s equity in the joint ventures at December 31, 20062007 and December 31, 20052006 was $1,668,744,951$2,827,508,939 and $1,222,036,564,$1,668,744,951, respectively. A condensed summary of the financial position and results of operations of the joint ventures is shown below.
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| December 31, 2006 |
| December 31, 2005 |
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Assets |
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Real estate properties, at value |
| $ | 3,650,902,513 |
| $ | 2,989,209,293 |
|
Other assets |
|
| 101,949,855 |
|
| 80,768,265 |
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| |||||||
Total assets |
| $ | 3,752,852,368 |
| $ | 3,069,977,558 |
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Liabilities and Equity |
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|
|
|
|
|
|
Mortgage loans payable, at value |
| $ | 875,560,195 |
| $ | 865,828,626 |
|
Other liabilities |
|
| 74,287,727 |
|
| 70,471,251 |
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| |||||||
Total liabilities |
|
| 949,847,922 |
|
| 936,299,877 |
|
Equity |
|
| 2,803,004,446 |
|
| 2,133,677,681 |
|
| |||||||
Total liabilities and equity |
| $ | 3,752,852,368 |
| $ | 3,069,977,558 |
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98|ProspectusTIAA Real Estate Account
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| December 31, 2007 |
| December 31, 2006 |
| ||
Assets |
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|
Real estate properties, at value |
|
|
|
| $ | 7,001,687,137 |
| $ | 3,650,902,513 |
|
Other assets |
|
|
|
|
| 99,798,401 |
|
| 63,839,503 |
|
Total assets |
|
|
|
| $ | 7,101,485,538 |
| $ | 3,714,742,016 |
|
Liabilities and Equity |
|
|
|
|
|
|
|
|
|
|
Mortgage loans payable, at value |
|
|
|
| $ | 2,707,160,513 |
| $ | 875,560,195 |
|
Other liabilities |
|
|
|
|
| 64,738,173 |
|
| 47,949,271 |
|
Total liabilities |
|
|
|
|
| 2,771,898,686 |
|
| 923,509,466 |
|
Equity |
|
|
|
|
| 4,329,586,852 |
|
| 2,791,232,550 |
|
Total liabilities and equity |
|
|
|
| $ | 7,101,485,538 |
| $ | 3,714,742,016 |
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|
| Year Ended |
| Year Ended |
| Year Ended |
|
| Year Ended |
| Year Ended |
| Year Ended |
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Operating Revenues and Expenses |
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Revenues |
| $ | 299,078,956 |
| $ | 270,519,206 |
| $ | 250,697,181 |
|
| $ | 534,468,876 |
| $ | 299,078,956 |
| $ | 270,519,206 |
|
Expenses |
| 157,686,944 |
| 142,782,169 |
| 122,017,640 |
|
| 315,076,922 |
| 157,806,671 |
| 142,782,169 |
| ||||||
| ||||||||||||||||||||
Excess of revenues over expenses |
| $ | 141,392,012 |
| $ | 127,737,037 |
| $ | 128,679,541 |
|
| $ | 219,391,954 |
| $ | 141,272,285 |
| $ | 127,737,037 |
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The accountAccount invests in limited partnerships that own real estate properties and receives distributions from the limited partnerships based on the Account’s non-controlling ownership interest percentages. At December 31, 2006,2007, the Account held sixfive limited partnership investments with non-controlling ownership interest percentages that ranged from 5.27% to 19.75%18.45%. The Account’s investment in limited partnerships was $279,283,051$331,361,434 and $196,546,978$279,283,051 at December 31, 20062007 and December 31, 2005,2006, respectively.
Note 5–Mortgage Loans Payable
At December 31, 2006, the Account had outstanding mortgage loans payable on the following properties:
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Property |
| Interest Rate Percentage |
| Amount December 31, 2006 |
| Due | |
50 Fremont |
| 6.40 paid monthly |
| $ | 135,000,000 |
| August 21, 2013 |
Ontario Industrial Portfolio |
| 7.42 paid monthly |
|
| 9,119,033 |
| May 1, 2011 |
IDX Tower |
| 6.40 paid monthly |
|
| 145,000,000 |
| August 21, 2013 |
1001 Pennsylvania Ave |
| 6.40 paid monthly |
|
| 210,000,000 |
| August 21, 2013 |
99 High Street |
| 5.5245 paid monthly |
|
| 185,000,000 |
| November 11, 2015 |
Reserve at Sugarloaf |
| 5.49 paid monthly |
|
| 26,266,057 |
| June 1, 2013 |
Westferry Circus |
| 5.4003 paid quarterly | (a) |
| 232,585,341 |
| November 15, 2012 |
Lincoln Centre |
| 5.51 paid monthly |
|
| 153,000,000 |
| February 1, 2016 |
Wilshire Rodeo Plaza |
| 5.28 paid monthly |
|
| 112,700,000 |
| April 11, 2014 |
1401 H Street |
| 5.97 paid monthly |
|
| 115,000,000 |
| December 7, 2014 |
South Frisco Village |
| 5.85 paid monthly |
|
| 26,250,559 |
| June 1, 2013 |
Publix at Weston Commons |
| 5.08 paid monthly |
|
| 35,000,000 |
| January 1, 2036 |
Total principal outstanding |
|
|
| $ | 1,384,920,990 |
|
|
Unamortized discount |
|
|
|
| (5,277,414 | ) |
|
Amortized cost |
|
|
|
| 1,379,643,576 |
|
|
Fair value adjustment |
|
|
|
| 57,505,572 |
|
|
Total mortgage loans payable |
|
|
| $ | 1,437,149,148 |
|
|
|
|
Principal on mortgage loans payable is due as follows:
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|
|
|
|
|
|
| Amount |
|
|
|
| ||
2007 |
| $ | 576,135 |
|
2008 |
|
| 575,921 |
|
2009 |
|
| 619,325 |
|
2010 |
|
| 659,550 |
|
2011 |
|
| 8,647,276 |
|
Thereafter |
|
| 1,373,842,783 |
|
|
|
| ||
Total maturities |
|
| 1,384,920,990 |
|
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| ||
TIAA Real Estate Account118Prospectus|§99
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Note 6–Condensed Financial Information
Selected condensed financial information for an Accumulation Unit of the Account is presented below.
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| Years Ended December 31, |
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| 2006 |
| 2005 |
| 2004 |
| 2003 |
| 2002 |
| |||||
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Per Accumulation Unit data: |
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Rental income |
| $ | 16.717 |
| $ | 15.604 |
| $ | 13.422 |
| $ | 15.584 |
| $ | 14.225 |
|
Real estate property level expenses and taxes |
|
| 7.807 |
|
| 7.026 |
|
| 5.331 |
|
| 5.890 |
|
| 4.819 |
|
| ||||||||||||||||
Real estate income, net |
|
| 8.910 |
|
| 8.578 |
|
| 8.091 |
|
| 9.694 |
|
| 9.406 |
|
Other income |
|
| 4.409 |
|
| 3.602 |
|
| 3.341 |
|
| 2.218 |
|
| 2.056 |
|
| ||||||||||||||||
Total income |
|
| 13.319 |
|
| 12.180 |
|
| 11.432 |
|
| 11.912 |
|
| 11.462 |
|
Expense charges(1) |
|
| 1.671 |
|
| 1.415 |
|
| 1.241 |
|
| 1.365 |
|
| 1.101 |
|
| ||||||||||||||||
Investment income, net |
|
| 11.648 |
|
| 10.765 |
|
| 10.191 |
|
| 10.547 |
|
| 10.361 |
|
Net realized and unrealized gain (loss) on investments and mortgage loans payable |
|
| 22.052 |
|
| 18.744 |
|
| 13.314 |
|
| 2.492 |
|
| (4.621 | ) |
| ||||||||||||||||
Net increase in Accumulation Unit Value |
|
| 33.700 |
|
| 29.509 |
|
| 23.505 |
|
| 13.039 |
|
| 5.740 |
|
Accumulation Unit Value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
| 239.953 |
|
| 210.444 |
|
| 186.939 |
|
| 173.900 |
|
| 168.160 |
|
| ||||||||||||||||
End of year |
| $ | 273.653 |
| $ | 239.953 |
| $ | 210.444 |
| $ | 186.939 |
| $ | 173.900 |
|
| ||||||||||||||||
Total return |
|
| 14.04 | % |
| 14.02 | % |
| 12.57 | % |
| 7.50 | % |
| 3.41 | % |
Ratios to Average Net Assets: |
|
|
|
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|
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|
|
|
|
|
|
|
|
|
|
Expenses(1) |
|
| 0.67 | % |
| 0.63 | % |
| 0.63 | % |
| 0.76 | % |
| 0.67 | % |
Investment income, net |
|
| 4.68 | % |
| 4.82 | % |
| 5.17 | % |
| 5.87 | % |
| 5.65 | % |
Portfolio turnover rate: |
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Real estate properties |
|
| 3.62 | % |
| 6.72 | % |
| 2.32 | % |
| 5.12 | % |
| 0.93 | % |
Marketable securities |
|
| 51.05 | % |
| 77.63 | % |
| 143.47 | % |
| 71.83 | % |
| 52.08 | % |
Accumulation Units outstanding at end of year (in thousands) |
|
| 50,146 |
|
| 42,623 |
|
| 33,338 |
|
| 24,724 |
|
| 20,347 |
|
Net assets end of year (in thousands) |
| $ | 14,132,693 |
| $ | 10,548,711 |
| $ | 7,245,550 |
| $ | 4,793,422 |
| $ | 3,675,989 |
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100| TIAA-CREFProspectus§TIAA Real Estate Account
|
|
Notes to financial statements | continued |
Note 7 – 5—Mortgage Loans Payable
At December 31, 2007, the Account had outstanding mortgage loans payable on the following properties:
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Property |
| Interest Rate |
| Amount |
| Due |
| |
| ||||||||
50 Fremont |
| 6.40 paid monthly |
| $ | 135,000,000 |
| August 21, 2013 |
|
Ontario Industrial Portfolio(a,b) |
| 7.42 paid monthly |
|
| 8,917,619 |
| May 1, 2011 |
|
Fourth & Madison |
| 6.40 paid monthly |
|
| 145,000,000 |
| August 21, 2013 |
|
1001 Pennsylvania Ave |
| 6.40 paid monthly |
|
| 210,000,000 |
| August 21, 2013 |
|
99 High Street |
| 5.52 paid monthly |
|
| 185,000,000 |
| November 11, 2015 |
|
Reserve at Sugarloaf(a) |
| 5.49 paid monthly |
|
| 25,891,337 |
| June 1, 2013 |
|
1 & 7 Westferry Circus |
| 5.40 paid quarterly | (c) |
| 267,188,869 |
| November 15, 2012 |
|
Lincoln Centre |
| 5.51 paid monthly |
|
| 153,000,000 |
| February 1, 2016 |
|
Wilshire Rodeo Plaza(b) |
| 5.28 paid monthly |
|
| 112,700,000 |
| April 11, 2014 |
|
1401 H Street(b) |
| 5.97 paid monthly |
|
| 115,000,000 |
| December 7, 2014 |
|
South Frisco Village(b) |
| 5.85 paid monthly |
|
| 26,250,559 |
| June 1, 2013 |
|
Pacific Plaza(a) |
| 5.55 paid monthly |
|
| 8,909,059 |
| September 1, 2013 |
|
Publix at Weston Commons(b) |
| 5.08 paid monthly |
|
| 35,000,000 |
| January 1, 2036 |
|
| ||||||||
Total principal outstanding |
|
|
|
| 1,427,857,443 |
|
|
|
Unamortized discount |
|
|
|
| (4,746,752 | ) |
|
|
| ||||||||
Amortized principal |
|
|
|
| 1,423,110,691 |
|
|
|
Fair value adjustment |
|
|
|
| 3,585,820 |
|
|
|
Cumulative foreign currency translation |
|
|
|
| (34,603,529 | ) |
|
|
| ||||||||
Total mortgage loans payable |
|
|
| $ | 1,392,092,982 |
|
|
|
| ||||||||
(a) | The mortgage is adjusted monthly for principal payments. |
(b) | The mortgage was acquired at a discount which is amortized monthly. |
(c) | The mortgage is denominated in British pounds and the principal has been converted to U.S. dollars using the exchange rate as of December 31, 2007. The quarterly payments are interest only, with a balloon payment at maturity. The interest rate is fixed. |
Principal on mortgage loans payable is due as follows: |
|
|
|
|
|
|
| Amount |
| |
|
|
| ||
2008 |
| $ | 736,371 |
|
2009 |
|
| 788,911 |
|
2010 |
|
| 2,161,722 |
|
2011 |
|
| 10,241,993 |
|
2012 |
|
| 269,313,872 |
|
Thereafter |
|
| 1,144,614,574 |
|
|
|
| ||
Total maturities |
| $ | 1,427,857,443 |
|
|
|
| ||
TIAA-CREF§Real Estate Account§Prospectus | 119 |
Notes to financial statements | continued |
Note 6—Condensed Financial Information | |
Selected condensed financial information for an Accumulation Unit of the Account is presented below.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Years Ended December 31, |
| |||||||||||||
|
| |||||||||||||||
|
| 2007 |
| 2006 |
| 2005 |
| 2004 |
| 2003 |
| |||||
Per Accumulation Unit data: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Rental income |
| $ | 17.975 |
| $ | 16.717 |
| $ | 15.604 |
| $ | 13.422 |
| $ | 15.584 |
|
Real estate property level expenses and taxes |
|
| 8.338 |
|
| 7.807 |
|
| 7.026 |
|
| 5.331 |
|
| 5.890 |
|
Real estate income, net |
|
| 9.637 |
|
| 8.910 |
|
| 8.578 |
|
| 8.091 |
|
| 9.694 |
|
Other income |
|
| 4.289 |
|
| 3.931 |
|
| 3.602 |
|
| 3.341 |
|
| 2.218 |
|
Total income |
|
| 13.926 |
|
| 12.841 |
|
| 12.180 |
|
| 11.432 |
|
| 11.912 |
|
Expense charges(1) |
|
| 2.554 |
|
| 1.671 |
|
| 1.415 |
|
| 1.241 |
|
| 1.365 |
|
Investment income, net |
|
| 11.372 |
|
| 11.170 |
|
| 10.765 |
|
| 10.191 |
|
| 10.547 |
|
Net realized and unrealized gain (loss) on investments and mortgage loans payable |
|
| 26.389 |
|
| 22.530 |
|
| 18.744 |
|
| 13.314 |
|
| 2.492 |
|
Net increase in Accumulation Unit Value |
|
| 37.761 |
|
| 33.700 |
|
| 29.509 |
|
| 23.505 |
|
| 13.039 |
|
Accumulation Unit Value: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Beginning of year |
|
| 273.653 |
|
| 239.953 |
|
| 210.444 |
|
| 186.939 |
|
| 173.900 |
|
End of year |
| $ | 311.414 |
| $ | 273.653 |
| $ | 239.953 |
| $ | 210.444 |
| $ | 186.939 |
|
Total return |
|
| 13.80 | % |
| 14.04 | % |
| 14.02 | % |
| 12.57 | % |
| 7.50 | % |
Ratios to Average Net Assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses(1) |
|
| 0.87 | % |
| 0.67 | % |
| 0.63 | % |
| 0.63 | % |
| 0.76 | % |
Investment income, net |
|
| 3.88 | % |
| 4.49 | % |
| 4.82 | % |
| 5.17 | % |
| 5.87 | % |
Portfolio turnover rate: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Real estate properties |
|
| 5.59 | % |
| 3.62 | % |
| 6.72 | % |
| 2.32 | % |
| 5.12 | % |
Marketable securities |
|
| 13.03 | % |
| 51.05 | % |
| 77.63 | % |
| 143.47 | % |
| 71.83 | % |
Accumulation Units outstanding at end of year (in thousands) |
|
| 55,105 |
|
| 50,146 |
|
| 42,623 |
|
| 33,338 |
|
| 24,724 |
|
Net assets end of year (in thousands) |
| $ | 17,660,537 |
| $ | 14,132,693 |
| $ | 10,548,711 |
| $ | 7,245,550 |
| $ | 4,793,422 |
|
(1) | Expense charges per Accumulation Unit and the Ratio of Expenses to Average Net Assets reflect Account-level expenses and exclude real estate property level expenses which are included in net real estate income. If the real estate property level expenses were included, the expense charge per Accumulation Unit for the year ended December 31, 2007 would be $10.892 ($9.478, $8.441, $6.572, and $7.255 for the years ended December 31, 2006, 2005, 2004, and 2003, respectively), and the Ratio of Expenses to Average Net Assets for the year ended December 31, 2007 would be 3.71% (3.81%, 3.78%, 3.33%, and 4.04% for the years ended December 31, 2006, 2005, 2004, and 2003, respectively). |
120 | Prospectus§TIAA-CREF§Real Estate Account |
Notes to financial statements | continued |
Note 7—Accumulation Units | |
Changes in the number of Accumulation Units outstanding were as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| For the Years Ended December 31, |
|
| For the Years Ended December 31, |
| ||||||||||||||
|
|
|
|
| ||||||||||||||||
|
| 2006 |
| 2005 |
| 2004 |
|
| 2007 |
| 2006 |
| 2005 |
| ||||||
|
| |||||||||||||||||||
Credited for premiums |
| 4,056,196 |
| 4,335,121 |
| 3,746,093 |
|
| 3,795,126 |
| 4,056,196 |
| 4,335,121 |
| ||||||
Net units credited for transfers, net disbursements and amounts applied to the Annuity Fund |
| 3,466,667 |
| 4,950,773 |
| 4,867,321 |
|
| 1,164,238 |
| 3,466,667 |
| 4,950,773 |
| ||||||
Outstanding: |
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Beginning of year |
| 42,623,491 |
| 33,337,597 |
| 24,724,183 |
|
| 50,146,354 |
| 42,623,491 |
| 33,337,597 |
| ||||||
|
| |||||||||||||||||||
End of year |
| 50,146,354 |
| 42,623,491 |
| 33,337,597 |
|
| 55,105,718 |
| 50,146,354 |
| 42,623,491 |
| ||||||
|
| |||||||||||||||||||
Note 8–8—Commitments and Subsequent Events
During the normal course of business, the Account enters into discussions and agreements to purchase or sell real estate property investments.properties. As of December 31, 2006,2007, the Account had an outstanding commitmentscommitment to purchase a leasehold interest in approximately 40,000 square feet of retail space located in an apartment property owned by the Account in New York and has subsequently purchased for approximately $42.7 million.
As of December 31, 2007, the Account entered into a commitment to purchase an interest in a limited partnership in the total gross amount of approximately $2.8 billion to purchase two property investments: i) a portfolio of existing retail properties, which are located predominately in$50 million. Together with the Southeastern United States, for approximately $2.5 billion, subject to approximately $1.5 billion in debt, and ii) a retail property located in France for approximately $263.7 million. The retail portfolio will be acquired through the Account’s investment in a newly-formed joint venture. The amounts disclosed above represent the Account’s share of the retail portfolio and the related debt, and the Account’s share of the joint venture will be a non-controlling 85% interest. The acquisition of the retail portfolio and the French property closed in February and March of 2007, respectively.
In addition, the Account had outstanding commitments to purchase interests in sixfive other limited partnerships which totaled approximately $366.7 millionand to purchase shares in the aggregate. Asa private real estate equity investment trust, as of December 31, 2006, approximately $43.92007, $87.6 million remains to be funded under these commitments.
Other than lawsuitsThe Account is party to various other claims and routine litigation arising in the ordinary course of business that are expected to have no material impact, there are no lawsuits to whichbusiness. Management of the Account isdoes not believe that the results of any such claims or litigation, individually, or in the aggregate, will have a party.material effect on the Account’s business, financial position, or results of operations.
Effective March 3, 2008, the Account has entered into an agreement with State Street Bank and Trust Company (“State Street”) to serve as the Account’s service provider to perform certain custodial functions, as well as investment accounting, recordkeeping, and valuation functions relating to portfolio transactions in securities made through the Account, and to provide other data and information as described in the agreement.
TIAA-CREF§Real Estate Account§Prospectus | 121 |
Notes to financial statements | continued |
Note 9–9—New Accounting Pronouncements
In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation (“FIN”) 48, an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements and is effective for fiscal years beginning after December 31, 2006. The Account does not expectadoption of FIN 48 todid not have a significant impact on the Account’s financial position orand results of operations.
In September 2006, FASB issued Statement No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value inunder generally accepted accounting principles in the United States, and requires additional disclosures
TIAA Real Estate AccountProspectus|101
|
|
about fair value measurements. This Statement does not require any new fair value measurements, but the application of this Statement could change current practices in determining fair value. The Account plans to adopt this guidanceThis Statement is effective January 1, 2008.2008 for the Account. The Account is currently assessinghas assessed the impact of Statement No. 157 but doesand determined that it will not expect it to have a significant impact onsignificantly change the Account’s financial position orand results of operations when implemented.at the effective date.
In February 2007, FASB issued Statement No. 159, “The Fair Value Option for Financial Assets and Financial Liabilities.” This Statement permits entities to choose to measure many financial instruments and certain other items at fair value and is expected to expand the use of fair value measurement. The Statement is effective for fiscal years beginning after November 15, 2007.measurement when warranted. The Account is currently assessingeffectively adopted Statement 159 on January 1, 2008 and plans to report all existing and future Mortgage Loans Payable at fair value using this Statement. Historically, the Account recorded Mortgage Loans Payable at fair value. The Account has assessed the impact of Statement No. 159 onin comparison to historical reporting and determined that it will not significantly change the Account’s financial position and results of operations.
In June 2007, the Accounting Standards Executive Committee (“ACSEC”) of the American Institute of Certified Public Accountants (“AICPA”) issued Statement of Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting Guide Investment Companies and Accounting by Parent Companies and Equity Method Investors for Investments in Investment Companies. The SOP clarifies which entities are required to apply the provisions of the Investment Companies Audit and Accounting Guide (“Guide”) and provides guidance on accounting by parent companies and equity method investors for investments in investment companies. The SOP is effective for fiscal years beginning on or after December 15, 2007. In February 2008, FASB issued Staff Position (“FSP”) SOP 07-1-1 indefinitely delaying the effective date of SOP 07-1 to allow FASB time to consider significant issues related to the implementation of SOP 07-1. Management of the Account will continue to monitor FASB developments and will evaluate the financial reporting implications to the Account, as necessary.
102122Prospectus|§TIAA-CREF§Real Estate Account
Notes to financial statements | concluded |
In December 2007, FASB issued Statement No. 141(R), “Business Combinations,” which establishes principles and requirements for how the acquirer shall recognize and measure in its financial statements the identifiable assets acquired, liabilities assumed, any noncontrolling interest in the acquiree and goodwill acquired in a business combination or a gain from a bargain purchase. This Statement is effective for business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. The Account is currently assessing the impact that Statement No. 141(R) will have on its financial position and results of operations.
In December 2007, FASB issued Statement No. 160, “Noncontrolling Interests in Consolidated Financial Statements – an Amendment of ARB No. 51,” which establishes and expands accounting and reporting standards for minority interests, which will be recharacterized as noncontrolling interests, in a subsidiary and the deconsolidation of a subsidiary. This Statement is effective for fiscal years beginning on or after December 15, 2008. The Account is currently assessing the potential impact that Statement No. 160 will have on its financial position and results of operations.
TIAA-CREF§Real Estate Account§Prospectus123
TIAA Real Estate Account | |||
|
|
|
|
|
|
|
|
|
| VALUE | |||||
|
| ||||||
LOCATION/DESCRIPTION |
| 2007 |
| 2006 |
| ||
|
|
|
|
|
|
|
|
REAL ESTATE PROPERTIES—63.04% AND 69.27% |
|
|
|
|
|
|
|
ALABAMA: |
|
|
|
|
|
|
|
Inverness Center—Office building |
| $ | 125,521,529 |
| $ | 112,256,914 |
|
ARIZONA: |
|
|
|
|
|
|
|
Camelback Center—Office building |
|
| 80,000,000 |
|
| — |
|
Kierland Apartment Portfolio—Apartments |
|
| 170,084,494 |
|
| 206,100,000 |
|
Mountain RA Industrial Portfolio—Industrial building |
|
| — |
|
| 6,605,429 |
|
Phoenix Apartment Portfolio—Apartments |
|
| 156,109,517 |
|
| 182,900,000 |
|
CALIFORNIA: |
|
|
|
|
|
|
|
3 Hutton Centre Drive—Office building |
|
| 64,200,000 |
|
| 59,011,323 |
|
9 Hutton Centre—Office building |
|
| — |
|
| 29,000,000 |
|
50 Fremont—Office building |
|
| 478,000,000 | (1) |
| 421,000,000 | (1) |
88 Kearny Street—Office building |
|
| 123,822,200 |
|
| 90,310,024 |
|
275 Battery—Office building |
|
| 271,917,498 |
|
| 231,000,000 |
|
980 9th Street and 1010 8th Street—Office building |
|
| 178,000,000 |
|
| 168,000,000 |
|
Rancho Cucamonga Industrial Portfolio—Industrial building |
|
| 133,000,000 |
|
| 109,000,000 |
|
Capitol Place—Office building |
|
| 53,539,218 |
|
| 50,331,828 |
|
Centerside I—Office building |
|
| 67,500,000 |
|
| 67,000,000 |
|
Centre Pointe and Valley View—Industrial building |
|
| 34,142,741 |
|
| 32,385,980 |
|
Eastgate Distribution Center—Industrial building |
|
| — |
|
| 25,558,962 |
|
Larkspur Courts—Apartments |
|
| 97,000,000 |
|
| 93,043,346 |
|
Northern CA RA Industrial Portfolio—Industrial building |
|
| 69,601,997 |
|
| 71,317,741 |
|
Ontario Industrial Portfolio—Industrial building |
|
| 355,398,714 | (1) |
| 298,045,226 | (1) |
Pacific Plaza—Office building |
|
| 127,130,076 | (1) |
| — |
|
Regents Court—Apartments |
|
| 69,000,000 |
|
| 67,800,000 |
|
Southern CA RA Industrial Portfolio—Industrial building |
|
| 110,718,042 |
|
| 97,558,473 |
|
The Legacy at Westwood—Apartments |
|
| 126,579,694 |
|
| 110,231,593 |
|
Wellpoint—Office building |
|
| 51,000,000 |
|
| 49,000,000 |
|
Westcreek—Apartments |
|
| 39,189,673 |
|
| 35,300,000 |
|
West Lake North Business Park—Office building |
|
| 68,621,818 |
|
| 61,000,000 |
|
Westwood Marketplace—Shopping center |
|
| 96,562,192 |
|
| 91,467,954 |
|
Wilshire Rodeo Plaza—Office building |
|
| 230,439,415 | (1) |
| 204,084,734 | (1) |
COLORADO: |
|
|
|
|
|
|
|
Palomino Park—Apartments |
|
| 194,001,036 |
|
| 184,000,000 |
|
The Lodge at Willow Creek—Apartments |
|
| 43,500,000 |
|
| 39,501,399 |
|
The Market at Southpark—Shopping center |
|
| 35,800,000 |
|
| 35,800,000 |
|
CONNECTICUT: |
|
|
|
|
|
|
|
Ten & Twenty Westport Road—Office building |
|
| 183,006,040 |
|
| 175,000,000 |
|
DELAWARE: |
|
|
|
|
|
|
|
Mideast RA Industrial Portfolio—Industrial building |
|
| — |
|
| 16,014,758 |
|
FLORIDA: |
|
|
|
|
|
|
|
701 Brickell—Office building |
|
| 275,941,582 |
|
| 231,239,379 |
|
4200 West Cypress Street—Office building |
|
| 48,043,650 |
|
| 43,100,425 |
|
Plantation Grove—Shopping center |
|
| 15,400,000 |
|
| 15,010,406 |
|
Pointe on Tampa Bay—Office building |
|
| 60,971,897 |
|
| 50,573,824 |
|
Publix at Weston Commons—Shopping center |
|
| 55,200,000 | (1) |
| 54,411,436 | (1) |
Quiet Waters at Coquina Lakes—Apartments |
|
| 26,204,860 |
|
| 24,006,100 |
|
Royal St. George—Apartments |
|
| 27,000,000 |
|
| 25,000,000 |
|
Sawgrass Office Portfolio—Office building |
|
| — |
|
| 72,000,000 |
|
124Prospectus§TIAA-CREF§ Real Estate Account
|
|
|
TIAA Real Estate Account |
| |
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
| VALUE |
| ||||
|
|
| |||||
LOCATION/DESCRIPTION |
| 2006 |
| 2005 |
| ||
| |||||||
| |||||||
REAL ESTATE PROPERTIES—69.27% AND 69.46% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALABAMA: |
|
|
|
|
|
|
|
Inverness Center—Office building |
| $ | 112,256,914 |
| $ | 98,090,987 |
|
ARIZONA: |
|
|
|
|
|
|
|
Kierland Apartment Portfolio—Apartments |
|
| 206,100,000 |
|
| — |
|
Mountain RA Industrial Portfolio—Industrial building |
|
| 6,605,429 |
|
| 5,754,652 |
|
Phoenix Apartment Portfolio—Apartments |
|
| 182,900,000 |
|
| — |
|
CALIFORNIA: |
|
|
|
|
|
|
|
3 Hutton Centre Drive—Office building |
|
| 59,011,323 |
|
| 48,349,580 |
|
9 Hutton Centre—Office building |
|
| 29,000,000 |
|
| 26,746,837 |
|
50 Fremont—Office building |
|
| 421,000,000 | (1) |
| 373,010,003 | (1) |
88 Kearny Street—Office building |
|
| 90,310,024 |
|
| 81,567,474 |
|
980 9th Street and 1010 8th Street—Office building |
|
| 168,000,000 |
|
| 159,000,000 |
|
1900 South Burgundy Place —Industrial building |
|
| 28,045,226 |
|
| — |
|
Cabot Industrial Portfolio—Industrial building |
|
| 88,200,000 |
|
| 77,000,000 |
|
Capitol Place—Office building |
|
| 50,331,828 |
|
| 48,000,000 |
|
Centerside I—Office building |
|
| 67,000,000 |
|
| 66,000,000 |
|
Centre Pointe and Valley View—Industrial building |
|
| 32,385,980 |
|
| 28,000,000 |
|
Eastgate Distribution Center —Industrial building |
|
| 25,558,962 |
|
| 22,000,000 |
|
Embarcadero Center West—Office building |
|
| 231,000,000 |
|
| 205,965,261 |
|
Kenwood Mews—Apartments |
|
| — |
|
| 30,000,000 |
|
Larkspur Courts—Apartments |
|
| 93,043,346 |
|
| 86,000,000 |
|
Northern CA RA Industrial Portfolio—Industrial building |
|
| 71,317,741 |
|
| 62,325,024 |
|
Ontario Industrial Portfolio—Industrial building |
|
| 270,000,000 | (1) |
| 230,000,000 | (1) |
Regents Court—Apartments |
|
| 67,800,000 |
|
| 62,500,000 |
|
Southern CA RA Industrial Portfolio—Industrial building |
|
| 97,558,473 |
|
| 89,017,793 |
|
The Legacy at Westwood—Apartments |
|
| 110,231,593 |
|
| 100,000,000 |
|
Weber Distribution—Industrial building |
|
| 20,800,000 |
|
| — |
|
Wellpoint—Office building |
|
| 49,000,000 |
|
| — |
|
Westcreek—Apartments |
|
| 35,300,000 |
|
| 30,939,671 |
|
West Lake North Business Park—Office building |
|
| 61,000,000 |
|
| 57,600,000 |
|
Westwood Marketplace—Shopping center |
|
| 91,467,954 |
|
| 86,000,000 |
|
Wilshire Rodeo Plaza—Office building |
|
| 204,084,734 | (1) |
| — |
|
COLORADO: |
|
|
|
|
|
|
|
Monte Vista—Apartments |
|
| — |
|
| 24,647,901 |
|
Palomino Park—Apartments |
|
| 184,000,000 |
|
| 176,232,394 |
|
The Lodge at Willow Creek—Apartments |
|
| 39,501,399 |
|
| 34,600,000 |
|
The Market at Southpark—Shopping center |
|
| 35,800,000 |
|
| 34,001,746 |
|
CONNECTICUT: |
|
|
|
|
|
|
|
Ten & Twenty Westport Road—Office building |
|
| 175,000,000 |
|
| 157,000,000 |
|
DELAWARE: |
|
|
|
|
|
|
|
Mideast RA Industrial Portfolio—Industrial building |
|
| 16,014,758 |
|
| 14,258,555 |
|
FLORIDA: |
|
|
|
|
|
|
|
701 Brickell—Office building |
|
| 231,239,379 |
|
| 201,173,724 |
|
4200 West Cypress Street—Office building |
|
| 43,100,425 |
|
| 36,691,519 |
|
Golfview—Apartments |
|
| — |
|
| 30,835,506 |
|
Maitland Promenade One—Office building |
|
| — |
|
| 37,817,891 |
|
Plantation Grove—Shopping center |
|
| 15,010,406 |
|
| 13,800,000 |
|
Pointe on Tampa Bay—Office building |
|
| 50,573,824 |
|
| 44,711,876 |
|
|
|
|
|
|
|
|
|
|
| VALUE | |||||
|
| ||||||
LOCATION/DESCRIPTION |
| 2007 |
| 2006 |
| ||
|
|
|
|
|
|
|
|
Seneca Industrial Park—Industrial building |
| $ | 122,334,422 |
| $ | — |
|
South Florida Apartment Portfolio—Apartments |
|
| 68,248,605 |
|
| 65,099,785 |
|
Suncrest Village—Shopping center |
|
| 19,500,000 |
|
| 17,009,378 |
|
The Fairways of Carolina—Apartments |
|
| 27,207,661 |
|
| 25,309,965 |
|
The Greens at Metrowest—Apartments |
|
| — |
|
| 21,011,825 |
|
The North 40 Office Complex—Office building |
|
| 67,003,544 |
|
| 63,500,000 |
|
Urban Centre—Office building |
|
| 135,577,463 |
|
| 121,000,000 |
|
FRANCE: |
|
|
|
|
|
|
|
Printemps De L’Homme—Shopping center |
|
| 279,077,542 |
|
| — |
|
GEORGIA: |
|
|
|
|
|
|
|
1050 Lenox Park—Apartments |
|
| 85,500,000 |
|
| 79,470,836 |
|
Atlanta Industrial Portfolio—Industrial building |
|
| 58,300,000 |
|
| 77,863,416 |
|
Glenridge Walk—Apartments |
|
| 52,900,000 |
|
| 48,710,574 |
|
Reserve at Sugarloaf—Apartments |
|
| 52,000,000 | (1) |
| 49,500,000 | (1) |
Shawnee Ridge Industrial Portfolio—Industrial building |
|
| 76,742,231 |
|
| 76,117,193 |
|
ILLINOIS: |
|
|
|
|
|
|
|
Chicago Caleast Industrial Portfolio—Industrial building |
|
| 77,642,826 |
|
| 74,999,590 |
|
Chicago Industrial Portfolio—Industrial building |
|
| 86,420,886 |
|
| 89,104,640 |
|
East North Central RA Industrial Portfolio—Industrial building |
|
| 38,016,397 |
|
| 37,503,284 |
|
Oak Brook Regency Towers—Office building |
|
| 86,891,650 |
|
| 83,200,000 |
|
Parkview Plaza—Office building |
|
| 66,066,513 |
|
| 59,400,000 |
|
KENTUCKY: |
|
|
|
|
|
|
|
IDI Kentucky Portfolio—Industrial building |
|
| — |
|
| 66,552,034 |
|
MARYLAND: |
|
|
|
|
|
|
|
Broadlands Business Park—Industrial building |
|
| 35,500,000 |
|
| 35,002,731 |
|
FEDEX Distribution Facility—Industrial building |
|
| 9,900,000 |
|
| 8,500,000 |
|
GE Appliance East Coast Distribution Facility—Industrial building |
|
| 48,000,000 |
|
| 48,000,000 |
|
MASSACHUSETTS: |
|
|
|
|
|
|
|
99 High Street—Office building |
|
| 344,688,328 | (1) |
| 291,806,564 | (1) |
Batterymarch Park II—Office building |
|
| — |
|
| 13,234,314 |
|
Needham Corporate Center—Office building |
|
| 33,275,228 |
|
| 22,712,550 |
|
Northeast RA Industrial Portfolio—Industrial building |
|
| 33,300,000 |
|
| 30,900,000 |
|
The Newbry—Office building |
|
| 389,880,008 |
|
| 370,745,525 |
|
MINNESOTA: |
|
|
|
|
|
|
|
Champlin Marketplace—Shopping center |
|
| 18,375,000 |
|
| — |
|
NEVADA: |
|
|
|
|
|
|
|
UPS Distribution Facility—Industrial building |
|
| 15,900,000 |
|
| 15,000,000 |
|
NEW JERSEY: |
|
|
|
|
|
|
|
10 Waterview Boulevard—Office building |
|
| — |
|
| 32,100,000 |
|
Konica Photo Imaging Headquarters—Industrial building |
|
| 23,500,000 |
|
| 23,100,000 |
|
Marketfair—Shopping center |
|
| 95,500,000 |
|
| 94,058,427 |
|
Morris Corporate Center III—Office building |
|
| 119,600,001 |
|
| 114,857,104 |
|
NJ Caleast Industrial Portfolio—Industrial building |
|
| 42,225,000 |
|
| 41,920,988 |
|
Plainsboro Plaza—Shopping center |
|
| 51,000,000 |
|
| 50,900,000 |
|
South River Road Industrial—Industrial building |
|
| 53,400,000 |
|
| 60,600,000 |
|
NEW YORK: |
|
|
|
|
|
|
|
780 Third Avenue—Office building |
|
| 375,000,000 |
|
| 298,000,000 |
|
The Colorado—Apartments |
|
| 113,033,240 |
|
| 100,000,000 |
|
TIAATIAA-CREF§ Real Estate Account§Prospectus|103125
|
|
|
| TIAA Real Estate Account |
|
|
|
|
|
|
|
|
|
|
| VALUE |
| ||||
|
|
| |||||
LOCATION/DESCRIPTION |
| 2006 |
| 2005 |
| ||
| |||||||
|
|
|
|
|
|
|
|
Publix at Weston Commons—Shopping center |
| $ | 54,411,436 | (1) | $ | — |
|
Quiet Waters at Coquina Lakes—Apartments |
|
| 24,006,100 |
|
| 20,912,293 |
|
Royal St. George—Apartments |
|
| 25,000,000 |
|
| 21,400,000 |
|
Sawgrass Office Portfolio—Office building |
|
| 72,000,000 |
|
| 59,700,000 |
|
South Florida Apartment Portfolio—Apartments |
|
| 65,099,785 |
|
| 56,400,000 |
|
Suncrest Village—Shopping center |
|
| 17,009,378 |
|
| 16,400,000 |
|
The Fairways of Carolina—Apartments |
|
| 25,309,965 |
|
| 21,100,000 |
|
The Greens at Metrowest—Apartments |
|
| 21,011,825 |
|
| 18,200,000 |
|
The North 40 Office Complex—Office building |
|
| 63,500,000 |
|
| — |
|
Urban Centre—Office building |
|
| 121,000,000 |
|
| 106,007,400 |
|
GEORGIA: |
|
|
|
|
|
|
|
1050 Lenox Park—Apartments |
|
| 79,470,836 |
|
| 71,000,000 |
|
Alexan Buckhead—Apartments |
|
| — |
|
| 34,800,000 |
|
Atlanta Industrial Portfolio—Industrial building |
|
| 77,863,416 |
|
| 73,825,000 |
|
Glenridge Walk—Apartments |
|
| 48,710,574 |
|
| 45,300,000 |
|
Reserve at Sugarloaf—Apartments |
|
| 49,500,000 | (1) |
| 44,800,000 | (1) |
Shawnee Ridge Industrial Portfolio—Industrial building |
|
| 76,117,193 |
|
| 44,418,860 |
|
ILLINOIS: |
|
|
|
|
|
|
|
Chicago Caleast Industrial Portfolio—Industrial building |
|
| 74,999,590 |
|
| 74,622,731 |
|
Chicago Industrial Portfolio—Industrial building |
|
| 89,104,640 |
|
| 72,000,000 |
|
Columbia Centre III—Office building |
|
| — |
|
| 28,700,000 |
|
East North Central RA Industrial Portfolio—Industrial building |
|
| 37,503,284 |
|
| 37,717,159 |
|
Oak Brook Regency Towers—Office building |
|
| 83,200,000 |
|
| 73,400,000 |
|
Parkview Plaza—Office building |
|
| 59,400,000 |
|
| 54,500,000 |
|
KENTUCKY: |
|
|
|
|
|
|
|
IDI Kentucky Portfolio—Industrial building |
|
| 66,552,034 |
|
| 58,500,000 |
|
MARYLAND: |
|
|
|
|
|
|
|
Broadlands Business Park—Industrial building |
|
| 35,002,731 |
|
| — |
|
FEDEX Distribution Facility—Industrial building |
|
| 8,500,000 |
|
| 8,500,000 |
|
GE Appliance East Coast Distribution Facility—Industrial building |
|
| 48,000,000 |
|
| 46,470,475 |
|
MASSACHUSETTS: |
|
|
|
|
|
|
|
99 High Street—Office building |
|
| 291,806,564 | (1) |
| 276,266,900 | (1) |
Batterymarch Park II—Office building |
|
| 13,234,314 |
|
| 11,472,283 |
|
Needham Corporate Center—Office building |
|
| 22,712,550 |
|
| 17,143,612 |
|
Northeast RA Industrial Portfolio—Industrial building |
|
| 30,900,000 |
|
| 29,000,000 |
|
The Newbry—Office building |
|
| 370,745,525 |
|
| — |
|
NEVADA: |
|
|
|
|
|
|
|
UPS Distribution Facility—Industrial building |
|
| 15,000,000 |
|
| 15,000,000 |
|
NEW JERSEY: |
|
|
|
|
|
|
|
10 Waterview Boulevard—Office building |
|
| 32,100,000 |
|
| 27,500,000 |
|
371 Hoes Lane—Office building |
|
| — |
|
| 11,700,000 |
|
Konica Photo Imaging Headquarters—Industrial building |
|
| 23,100,000 |
|
| 25,300,000 |
|
Marketfair—Shopping center |
|
| 94,058,427 |
|
| — |
|
Morris Corporate Center III—Office building |
|
| 114,857,104 |
|
| 97,400,000 |
|
NJ Caleast Industrial Portfolio—Industrial building |
|
| 41,920,988 |
|
| 42,000,000 |
|
Plainsboro Plaza—Shopping center |
|
| 50,900,000 |
|
| 50,745,252 |
|
South River Road Industrial—Industrial building |
|
| 60,600,000 |
|
| 55,000,000 |
|
104|ProspectusTIAA Real Estate Account
| ||||
Statement of investments |
| continued | ||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| VALUE |
|
| VALUE | |||||||||
|
|
|
| |||||||||||
LOCATION/DESCRIPTION |
| 2006 |
| 2005 |
|
| 2007 |
| 2006 |
| ||||
| ||||||||||||||
|
|
|
|
|
|
| ||||||||
NEW YORK: |
|
|
|
|
| |||||||||
780 Third Avenue—Office building |
| $ | 298,000,000 |
| $ | 230,000,000 |
| |||||||
The Colorado—Apartments |
| 100,000,000 |
| 85,048,163 |
| |||||||||
OHIO: |
|
|
|
|
|
|
|
|
|
| ||||
Columbus Portfolio—Office building |
| 24,600,000 |
| 23,000,000 |
|
| $ | 26,314,686 |
| $ | 24,600,000 |
| ||
PENNSYLVANIA: |
|
|
|
|
|
|
|
|
|
| ||||
Lincoln Woods—Apartments |
| 37,781,555 |
| 35,528,316 |
|
| 37,917,165 |
| 37,781,555 |
| ||||
TENNESSEE: |
|
|
|
|
|
|
|
|
|
| ||||
Airways Distribution Center—Industrial building |
| 24,857,278 |
| — |
|
| 24,300,000 |
| 24,857,278 |
| ||||
Memphis Caleast Industrial Portfolio—Industrial building |
| 52,500,000 |
| 54,000,000 |
|
| — |
| 52,500,000 |
| ||||
Summit Distribution Center—Industrial building |
| 26,300,000 |
| 25,900,000 |
|
| 27,500,000 |
| 26,300,000 |
| ||||
TEXAS: |
|
|
|
|
|
|
|
|
|
| ||||
Butterfield Industrial Park—Industrial building |
| 5,100,000 | (2) |
| 4,618,955 | (2) |
| — |
| 5,100,000 | (2) | |||
Dallas Industrial Portfolio—Industrial building |
| 153,210,519 |
| 146,000,000 |
|
| 154,055,892 |
| 153,210,519 |
| ||||
Four Oaks Place—Office building |
| 306,200,984 |
| 295,239,109 |
|
| 419,270,107 |
| 306,200,984 |
| ||||
Houston Apartment Portfolio—Apartments |
| 306,042,523 |
| — |
|
| 296,241,497 |
| 306,042,523 |
| ||||
Lincoln Centre—Office building |
| 270,000,000 | (1) |
| 255,311,299 |
|
| 305,000,000 | (1) |
| 270,000,000 | (1) | ||
Park Place on Turtle Creek—Office building |
| 44,573,669 |
| — |
|
| 48,282,785 |
| 44,573,669 |
| ||||
Pinnacle Industrial /DFW Trade Center—Industrial building |
| 45,874,807 |
| — |
|
| 46,700,000 |
| 45,874,807 |
| ||||
Preston Sherry Plaza—Office building |
| 45,500,000 |
| — |
| |||||||||
South Frisco Village—Shopping center |
| 47,014,065 | (1) |
| — |
|
| 48,500,000 | (1) |
| 47,014,065 | (1) | ||
The Caruth—Apartments |
| 60,007,237 |
| 61,200,000 |
|
| 65,427,458 |
| 60,007,237 |
| ||||
The Legends at Chase Oaks—Apartments |
| 29,025,236 |
| 28,499,971 |
|
| — |
| 29,025,236 |
| ||||
The Maroneal—Apartments |
| 39,113,694 |
| 35,000,000 |
|
| 40,033,822 |
| 39,113,694 |
| ||||
UNITED KINGDOM: |
|
|
|
|
|
|
|
|
|
| ||||
1& 7 Westferry Circus—Office building |
| 428,574,628 | (1) |
| 373,116,817 | (1) | ||||||||
1 & 7 Westferry Circus—Office building |
| 436,127,130 | (1) |
| 428,574,628 | (1) | ||||||||
UTAH: |
|
|
|
|
|
|
|
|
|
| ||||
Landmark at Salt Lake City (Building #4)—Industrial building |
| 16,509,871 |
| 14,700,000 |
|
| — |
| 16,509,871 |
| ||||
VIRGINIA: |
|
|
|
|
|
|
|
|
|
| ||||
8270 Greensboro Drive—Office building |
| 62,000,000 |
| 60,200,000 |
|
| 63,500,000 |
| 62,000,000 |
| ||||
Ashford Meadows—Apartments |
| 89,091,341 |
| 78,904,526 |
|
| 94,059,776 |
| 89,091,341 |
| ||||
Fairgate at Ballston—Office building |
| — |
| 35,300,000 |
| |||||||||
Monument Place—Office building |
| 58,600,000 |
| 53,000,000 |
|
| — |
| 58,600,000 |
| ||||
One Virginia Square—Office building |
| 53,000,000 |
| 47,000,000 |
|
| 59,538,690 |
| 53,000,000 |
| ||||
The Ellipse at Ballston—Office building |
| 85,439,350 |
| — |
|
| 92,504,000 |
| 85,439,350 |
| ||||
WASHINGTON: |
|
|
|
|
|
|
|
|
|
| ||||
Creeksides at Centerpoint—Office building |
| 40,508,139 |
| — |
|
| 42,000,000 |
| 40,508,139 |
| ||||
IDX Tower—Office building |
| 398,990,017 | (1) |
| 370,000,000 | (1) | ||||||||
Fourth & Madison—Office building |
| 487,000,000 | (1) |
| 398,990,017 | (1) | ||||||||
Millennium Corporate Park—Office building |
| 139,107,181 |
| — |
|
| 158,000,000 |
| 139,107,181 |
| ||||
Northwest RA Industrial Portfolio—Industrial building |
| 20,684,499 |
| 19,700,000 |
|
| 23,401,540 |
| 20,684,499 |
| ||||
Rainier Corporate Park—Industrial building |
| 69,362,219 |
| 64,273,372 |
|
| 81,160,792 |
| 69,362,219 |
| ||||
Regal Logistics Campus—Industrial building |
| 66,000,000 |
| 63,103,879 |
|
| 71,000,000 |
| 66,000,000 |
| ||||
WASHINGTON DC: |
|
|
|
|
|
|
|
|
|
| ||||
1001 Pennsylvania Avenue—Office building |
| 552,502,209 | (1) |
| 502,993,710 | (1) |
| 640,149,632 | (1) |
| 552,502,209 | (1) | ||
1015 15th Street—Office building |
| — |
| 73,121,166 |
| |||||||||
1401 H Street, NW—Office building |
| 207,806,286 | (1) |
| — |
|
| 224,576,156 | (1) |
| 207,806,286 | (1) | ||
1900 K Street—Office building |
| 255,002,226 |
| 230,000,000 |
|
| 285,000,000 |
| 255,002,226 |
| ||||
Mazza Gallerie—Shopping center |
| 86,350,179 |
| 86,001,109 |
|
| 97,000,018 |
| 86,350,179 |
| ||||
|
|
|
|
|
|
| ||||||||
TOTAL REAL ESTATE PROPERTIES |
|
|
|
|
|
|
|
|
|
| ||||
(Cost $9,462,471,032 and $7,355,833,152) |
| 10,743,487,689 |
| 7,977,600,751 |
| |||||||||
(Cost $9,804,488,802 and $9,462,471,032) |
| 11,983,715,574 |
| 10,743,487,689 |
| |||||||||
|
|
|
|
|
|
| ||||||||
TIAA Real Estate Account126Prospectus|§105
|
|
|
|
|
|
|
|
|
|
|
|
| VALUE |
| ||||
|
|
| |||||
LOCATION/DESCRIPTION |
| 2006 |
| 2005 |
| ||
| |||||||
|
|
|
|
|
|
|
|
REAL ESTATE JOINT VENTURES AND |
|
|
|
|
|
|
|
LIMITED PARTNERSHIPS—12.56% AND 12.35% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REAL ESTATE JOINT VENTURES—10.76% AND 10.64% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA—Colorado Center LP |
|
|
|
|
|
|
|
Yahoo Center (50% Account Interest) |
| $ | 187,766,625 | (4) | $ | 138,531,366 | (4) |
CA—Treat Towers LP |
|
|
|
|
|
|
|
Treat Towers (75% Account Interest) |
|
| 94,023,131 |
|
| 93,964,192 |
|
GA—Buckhead LLC |
|
|
|
|
|
|
|
Prominence in Buckhead (75% Account Interest) |
|
| 107,256,320 |
|
| 97,142,406 |
|
Florida Mall Associates, Ltd. |
|
|
|
|
|
|
|
The Florida Mall (50% Account Interest) |
|
| 237,919,775 | (4) |
| 208,013,192 | (4) |
IL—161 Clark Street LLC |
|
|
|
|
|
|
|
161 North Clark Street (75% Account Interest) |
|
| 189,183,793 |
|
| 175,578,714 |
|
One Boston Place REIT |
|
|
|
|
|
|
|
One Boston Place (50.25% Account Interest) |
|
| 177,900,327 |
|
| 149,723,498 |
|
Storage Portfolio I, LLC |
|
|
|
|
|
|
|
Storage Portfolio(3) (75% Account Interest) |
|
| 74,864,074 | (4) |
| 63,237,298 | (4) |
Strategic Ind Portfolio I, LLC |
|
|
|
|
|
|
|
IDI Nationwide Industrial Portfolio(3) (60% Account Interest) |
|
| 70,348,753 | (4) |
| 66,871,766 | (4) |
Teachers REA IV, LLC |
|
|
|
|
|
|
|
Tyson’s Executive Plaza II (50% Account Interest) |
|
| 40,570,382 |
|
| 34,032,806 |
|
TREA Florida Retail, LLC |
|
|
|
|
|
|
|
Florida Retail Portfolio (80% Account Interest) |
|
| 265,396,677 |
|
| — |
|
West Dade Associates |
|
|
|
|
|
|
|
Miami International Mall (50% Account Interest) |
|
| 97,300,131 | (4) |
| 82,290,482 | (4) |
West Town Mall, LLC |
|
|
|
|
|
|
|
West Town Mall (50% Account Interest) |
|
| 126,214,963 | (4) |
| 112,650,844 | (4) |
|
|
|
| ||||
TOTAL REAL ESTATE JOINT VENTURES |
|
|
|
|
|
|
|
(Cost $1,168,027,179 and $888,034,873) |
|
| 1,668,744,951 |
|
| 1,222,036,564 |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
LIMITED PARTNERSHIPS—1.80% AND 1.71% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cobalt Industrial Reit (11.0131% Account Interest) |
|
| 26,506,381 |
|
| 8,352,409 |
|
Colony Realty Partners Lp (5.27% Account Interest) |
|
| 26,382,659 |
|
| 13,481,704 |
|
Essex Property Trust, Inc. (10% Account Interest) |
|
| — |
|
| 487,306 |
|
Heitman Value Partners Fund (8.43% Account Interest) |
|
| 24,578,388 |
|
| 8,106,810 |
|
Lion Gables Apartment Fund (18.45% Account Interest) |
|
| 179,013,211 |
|
| 150,000,000 |
|
Mezz Fund (19.75% Account Interest) |
|
| 454,319 |
|
| 1,975,927 |
|
Mony/Transwestern Mezz RP (16.67% Account Interest) |
|
| 22,348,093 |
|
| 14,142,822 |
|
|
|
|
| ||||
TOTAL LIMITED PARTNERSHIPS |
|
|
|
|
|
|
|
(Cost $245,295,745 and $198,006,414) |
|
| 279,283,051 |
|
| 196,546,978 |
|
|
|
|
| ||||
TOTAL REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS |
|
|
|
|
|
|
|
(Cost $1,413,322,924 and $1,086,041,287) |
|
| 1,948,028,002 |
|
| 1,418,583,542 |
|
|
|
|
| ||||
106|TIAA-CREFProspectus§TIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
|
| VALUE |
| |||||||
|
|
|
|
| |||||||||
2006 |
| 2005 |
| ISSUER |
|
| 2006 |
|
| 2005 |
| ||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
MARKETABLE SECURITIES—17.69% AND 18.19% |
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
| ||||||
REAL ESTATE-RELATED MARKETABLE SECURITIES—4.54% AND 3.91% |
|
|
|
| |||||||||
|
|
|
|
|
|
|
| ||||||
REAL ESTATE EQUITY SECURITIES—3.99% AND 3.72% |
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
| 75,000 |
| Aames Investment Corp. |
| $ | — |
| $ | 484,500 |
|
| 53,300 |
|
| — |
| Acadia Realty Trust |
|
| 1,333,566 |
|
| — |
|
| 68,700 |
|
| 550,000 |
| Affordable Residential Communities LP |
|
| 800,355 |
|
| 5,241,500 |
|
| 68,700 |
|
| — |
| Affordable Residential Communities LP |
|
|
|
|
|
|
|
|
|
|
|
|
| share rights (expiring 1/23/07) |
|
| 16,488 |
|
| — |
|
| — |
|
| 303,820 |
| Alesco Financial Inc. |
|
| — |
|
| 2,576,394 |
|
| 3,800 |
|
| — |
| Alexander’s Inc. |
|
| 1,594,670 |
|
| — |
|
| 54,400 |
|
| — |
| Alexandria Real Estate Equities Inc. |
|
| 5,461,760 |
|
| — |
|
| 166,985 |
|
| 36,685 |
| AMB Property Corp. |
|
| 9,786,991 |
|
| 1,803,801 |
|
| 42,500 |
|
| 40,000 |
| American Campus Communities Inc. |
|
| 1,209,975 |
|
| 992,000 |
|
| 244,900 |
|
| 919,000 |
| American Financial Realty Trust |
|
| 2,801,656 |
|
| 11,028,000 |
|
| 181,500 |
|
| — |
| Apartment Investment & Management Co. |
|
| 10,167,630 |
|
| — |
|
| 408,900 |
|
| 450,000 |
| Archstone—Smith Trust |
|
| 23,802,069 |
|
| 18,850,500 |
|
| 118,500 |
|
| 150,000 |
| Ashford Hospitality Trust Inc. |
|
| 1,475,325 |
|
| 1,573,500 |
|
| 33,300 |
|
| — |
| Associated Estates Realty Corp. |
|
| 457,542 |
|
| — |
|
| 138,900 |
|
| 40,000 |
| AvalonBay Communities Inc. |
|
| 18,063,945 |
|
| 3,570,000 |
|
| — |
|
| 150,000 |
| Bimini Mortgage Management Inc. |
|
| — |
|
| 1,357,500 |
|
| 122,400 |
|
| — |
| BioMed Realty Trust Inc. |
|
| 3,500,640 |
|
| — |
|
| 217,200 |
|
| — |
| Boston Properties Inc. |
|
| 24,300,336 |
|
| — |
|
| 171,500 |
|
| — |
| Brandywine Realty Trust |
|
| 5,702,375 |
|
| — |
|
| 94,200 |
|
| 30,000 |
| BRE Properties Inc. |
|
| 6,124,884 |
|
| 1,364,400 |
|
| 220,300 |
|
| 270,000 |
| Brookfield Properties Corp. |
|
| 8,664,399 |
|
| 7,943,400 |
|
| 105,200 |
|
| — |
| Camden Property Trust |
|
| 7,769,020 |
|
| — |
|
| — |
|
| 194,000 |
| Carramerica Realty Corp. |
|
| — |
|
| 6,718,220 |
|
| 121,500 |
|
| — |
| CBL & Associates Properties Inc. |
|
| 5,267,025 |
|
| — |
|
| 74,900 |
|
| 424,000 |
| Cedar Shopping Centers Inc. |
|
| 1,191,659 |
|
| 5,965,680 |
|
| — |
|
| 50,000 |
| Centerpoint Properties Corp. |
|
| — |
|
| 2,474,000 |
|
| — |
|
| 280,000 |
| Cogdell Spencer Inc. |
|
| — |
|
| 4,729,200 |
|
| 87,600 |
|
| — |
| Colonial Properties Trust |
|
| 4,106,688 |
|
| — |
|
| 80,600 |
|
| — |
| Corporate Office Properties Trust |
|
| 4,067,882 |
|
| — |
|
| 75,500 |
|
| — |
| Cousins Properties Inc. |
|
| 2,662,885 |
|
| — |
|
| 179,000 |
|
| — |
| Crescent Real Estate Equities Company |
|
| 3,535,250 |
|
| — |
|
| — |
|
| 976,000 |
| Deerfield Triarc Capital Corp. |
|
| — |
|
| 13,371,200 |
|
| 204,000 |
|
| 380,000 |
| Developers Diversified Realty Corp. |
|
| 12,841,800 |
|
| 17,867,600 |
|
| 125,500 |
|
| — |
| DiamondRock Hospitality Co. |
|
| 2,260,255 |
|
| — |
|
| 84,100 |
|
| — |
| Digital Realty Trust Inc. |
|
| 2,878,743 |
|
| — |
|
| 123,500 |
|
| — |
| Douglas Emmett Inc. |
|
| 3,283,865 |
|
| — |
|
| 252,100 |
|
| 193,400 |
| Duke Realty Corp. |
|
| 10,310,890 |
|
| 6,459,560 |
|
| 42,900 |
|
| — |
| EastGroup Properties Inc. |
|
| 2,297,724 |
|
| — |
|
| — |
|
| 1,087,000 |
| ECC Capital Corp. |
|
| — |
|
| 2,456,620 |
|
| 49,900 |
|
| 600,000 |
| Education Realty Trust Inc. |
|
| 737,023 |
|
| 7,734,000 |
|
| 103,400 |
|
| — |
| Equity Inns Inc. |
|
| 1,650,264 |
|
| — |
|
| 38,800 |
|
| — |
| Equity Lifestyle Properties Inc. |
|
| 2,111,884 |
|
| — |
|
| 654,500 |
|
| — |
| Equity Office Properties Trust |
|
| 31,527,265 |
|
| — |
|
TIAA Real Estate AccountProspectus|107
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
| VALUE |
| ||||||||
|
|
|
| ||||||||||
2006 |
| 2005 |
| ISSUER |
| 2006 |
| 2005 |
| ||||
| |||||||||||||
| |||||||||||||
| 69,900 |
|
| — |
| Equity One Inc. |
| $ | 1,863,534 |
| $ | — |
|
| 544,300 |
|
| 180,000 |
| Equity Residential |
|
| 27,623,225 |
|
| 7,041,600 |
|
| 43,600 |
|
| — |
| Essex Property Trust Inc. |
|
| 5,635,300 |
|
| — |
|
| 120,200 |
|
| 580,577 |
| Extra Space Storage Inc. |
|
| 2,194,852 |
|
| 8,940,886 |
|
| 103,200 |
|
| — |
| Federal Realty Investment Trust |
|
| 8,772,000 |
|
| — |
|
| 115,300 |
|
| — |
| FelCor Lodging Trust Inc. |
|
| 2,518,152 |
|
| — |
|
| — |
|
| 1,367,000 |
| Feldman Mall Properties Inc. |
|
| — |
|
| 16,417,670 |
|
| 84,300 |
|
| — |
| First Industrial Realty Trust Inc. |
|
| 3,952,827 |
|
| — |
|
| 41,600 |
|
| 111,600 |
| First Potomac Realty Trust |
|
| 1,210,976 |
|
| 2,968,560 |
|
| 423,600 |
|
| 110,000 |
| General Growth Properties Inc. |
|
| 22,124,628 |
|
| 5,168,900 |
|
�� | 69,600 |
|
| — |
| Glimcher Realty Trust |
|
| 1,859,016 |
|
| — |
|
| 73,800 |
|
| 404,800 |
| GMH Communities Trust |
|
| 749,070 |
|
| 6,278,448 |
|
| — |
|
| 348,700 |
| Gramercy Capital Corp./New York |
|
| — |
|
| 7,943,386 |
|
| — |
|
| 300,000 |
| Great Wolf Resorts Inc. |
|
| — |
|
| 3,093,000 |
|
| 59,500 |
|
| 562,000 |
| Hersha Hospitality Trust |
|
| 674,730 |
|
| 5,063,620 |
|
| 107,500 |
|
| 150,000 |
| Highland Hospitality Corp. |
|
| 1,531,875 |
|
| 1,657,500 |
|
| 101,700 |
|
| — |
| Highwoods Properties Inc. |
|
| 4,145,292 |
|
| — |
|
| — |
|
| 60,000 |
| Hilton Hotels Corp. |
|
| — |
|
| 1,446,600 |
|
| 64,000 |
|
| 80,000 |
| Home Properties Inc. |
|
| 3,793,280 |
|
| 3,264,000 |
|
| — |
|
| 450,000 |
| HomeBanc Corp./Atlanta GA |
|
| — |
|
| 3,366,000 |
|
| 147,900 |
|
| — |
| Hospitality Properties Trust |
|
| 7,029,687 |
|
| — |
|
| 973,570 |
|
| 300,000 |
| Host Hotels & Resorts Inc. |
|
| 23,901,143 |
|
| 5,685,000 |
|
| 396,700 |
|
| — |
| HRPT Properties Trust |
|
| 4,899,245 |
|
| — |
|
| 116,700 |
|
| — |
| Inland Real Estate Corp. |
|
| 2,184,624 |
|
| — |
|
| 84,800 |
|
| — |
| Innkeepers USA Trust |
|
| 1,314,400 |
|
| — |
|
| — |
|
| 300,000 |
| Interstate Hotels & Resorts Inc. |
|
| — |
|
| 1,311,000 |
|
| — |
|
| 80,000 |
| Istar Financial Inc. |
|
| — |
|
| 2,852,000 |
|
| — |
|
| 1,958,000 |
| Jameson Inns Inc. |
|
| — |
|
| 4,209,700 |
|
| — |
|
| 100,000 |
| JER Investors Trust Inc. |
|
| — |
|
| 1,695,000 |
|
| 59,400 |
|
| — |
| Kilroy Realty Corp. |
|
| 4,633,200 |
|
| — |
|
| 409,521 |
|
| 108,000 |
| Kimco Realty Corp. |
|
| 18,407,969 |
|
| 3,464,640 |
|
| 55,300 |
|
| 426,000 |
| Kite Realty Group Trust |
|
| 1,029,686 |
|
| 6,590,220 |
|
| — |
|
| 300,000 |
| KKR Financial Corp. |
|
| — |
|
| 7,197,000 |
|
| 75,000 |
|
| 200,000 |
| LaSalle Hotel Properties |
|
| 3,438,750 |
|
| 7,344,000 |
|
| — |
|
| 120,000 |
| Lexington Realty Trust |
|
| — |
|
| 2,556,000 |
|
| 167,000 |
|
| — |
| Liberty Property Trust |
|
| 8,206,380 |
|
| — |
|
| — |
|
| 1,266,660 |
| Lodgian Inc. |
|
| — |
|
| 13,591,262 |
|
| — |
|
| 200,000 |
| LTC Properties Inc. |
|
| — |
|
| 4,206,000 |
|
| 135,900 |
|
| 75,000 |
| Macerich Co./The |
|
| 11,764,863 |
|
| 5,035,500 |
|
| 118,700 |
|
| 400,000 |
| Mack—Cali Realty Corp. |
|
| 6,053,700 |
|
| 17,280,000 |
|
| 81,000 |
|
| — |
| Maguire Properties Inc. |
|
| 3,240,000 |
|
| — |
|
| — |
|
| 200,000 |
| Medical Properties Trust Inc. |
|
| — |
|
| 1,956,000 |
|
| 44,000 |
|
| — |
| Mid—America Apartment Communities |
|
| 2,518,560 |
|
| — |
|
| 100,200 |
|
| 40,000 |
| Mills Corp./The |
|
| 2,004,000 |
|
| 1,677,600 |
|
| — |
|
| 100,000 |
| Mission West Properties |
|
| — |
|
| 974,000 |
|
| — |
|
| 331,200 |
| Monmouth Reit |
|
| — |
|
| 2,656,224 |
|
| — |
|
| 300,000 |
| Mortgage IT Holdings Inc. |
|
| — |
|
| 4,098,000 |
|
108|ProspectusTIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
| VALUE |
| ||||||||
|
|
|
| ||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 198,000 |
|
| — |
| New Plan Excel Realty Trust |
| $ | 5,441,040 |
| $ | — |
|
| — |
|
| 130,000 |
| Newcastle Investment Corp. |
|
| — |
|
| 3,230,500 |
|
| — |
|
| 100,000 |
| Novastar Financial Inc. |
|
| — |
|
| 2,811,000 |
|
| — |
|
| 525,000 |
| Origen Financial Inc. |
|
| — |
|
| 3,738,000 |
|
| 25,100 |
|
| 328,100 |
| Parkway Properties Inc./Md |
|
| 1,280,351 |
|
| 13,169,934 |
|
| 69,500 |
|
| — |
| Pennsylvania Real Estate Investment Trust |
|
| 2,736,910 |
|
| — |
|
| 79,300 |
|
| — |
| Post Properties Inc. |
|
| 3,624,010 |
|
| — |
|
| 462,500 |
|
| 400,000 |
| Prologis |
|
| 28,106,125 |
|
| 18,688,000 |
|
| 30,200 |
|
| — |
| PS Business Parks Inc. |
|
| 2,135,442 |
|
| — |
|
| 241,114 |
|
| 30,000 |
| Public Storage Inc. |
|
| 23,508,615 |
|
| 2,031,600 |
|
| — |
|
| 100,000 |
| RAIT Financial Trust |
|
| — |
|
| 2,592,000 |
|
| 28,500 |
|
| — |
| Ramco—Gershenson Properties |
|
| 1,086,990 |
|
| — |
|
| 157,000 |
|
| — |
| Reckson Associates Realty Corp. |
|
| 7,159,200 |
|
| — |
|
| 129,300 |
|
| 236,000 |
| Regency Centers Corp. |
|
| 10,107,381 |
|
| 13,912,200 |
|
| — |
|
| 384,000 |
| Republic Property Trust |
|
| — |
|
| 4,608,000 |
|
| 20,600 |
|
| — |
| Saul Centers Inc. |
|
| 1,136,914 |
|
| — |
|
| 412,821 |
|
| 305,721 |
| Simon Property Group Inc. |
|
| 41,814,639 |
|
| 23,427,400 |
|
| 86,300 |
|
| — |
| SL Green Realty Corp. |
|
| 11,458,914 |
|
| — |
|
| 33,500 |
|
| — |
| Sovran Self Storage Inc. |
|
| 1,918,880 |
|
| — |
|
| — |
|
| 350,000 |
| Starwood Hotels & Resorts Worldwide |
|
| — |
|
| 22,351,000 |
|
| 134,700 |
|
| — |
| Strategic Hotels & Resorts Inc. |
|
| 2,935,113 |
|
| — |
|
| 30,900 |
|
| — |
| Sun Communities Inc. |
|
| 999,924 |
|
| — |
|
| 109,400 |
|
| — |
| Sunstone Hotel Investors Inc. |
|
| 2,924,262 |
|
| — |
|
| 58,300 |
|
| — |
| Tanger Factory Outlet Centers |
|
| 2,278,364 |
|
| — |
|
| 98,400 |
|
| — |
| Taubman Centers Inc. |
|
| 5,004,624 |
|
| — |
|
| — |
|
| 111,200 |
| Thomas Properties Group Inc. |
|
| — |
|
| 1,391,112 |
|
| — |
|
| 50,000 |
| Trizec Properties Inc. |
|
| — |
|
| 1,146,000 |
|
| 250,400 |
|
| 100,000 |
| United Dominion Realty Trust Inc. |
|
| 7,960,216 |
|
| 2,344,000 |
|
| 95,400 |
|
| — |
| U-Store-It Trust |
|
| 1,960,470 |
|
| — |
|
| — |
|
| 95,000 |
| Ventas Inc. |
|
| — |
|
| 3,041,900 |
|
| 245,800 |
|
| 200,000 |
| Vornado Realty Trust |
|
| 29,864,700 |
|
| 16,694,000 |
|
| 85,500 |
|
| — |
| Washington Real Estate Investment Trust |
|
| 3,420,000 |
|
| — |
|
| 148,500 |
|
| — |
| Weingarten Realty Investors |
|
| 6,847,335 |
|
| — |
|
| — |
|
| 944 |
| Windrose Medical Properties Trust |
|
| — |
|
| 14,028 |
|
| 44,700 |
|
| — |
| Winston Hotels Inc. |
|
| 592,275 |
|
| — |
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL REAL ESTATE EQUITY SECURITIES |
|
|
|
|
|
|
| ||||||
(Cost $484,071,757 and $411,877,936) |
|
| 619,342,386 |
|
| 426,781,565 |
| ||||||
|
|
|
| ||||||||||
TIAA Real Estate AccountProspectus|109
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
|
| ||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
| |||||||||||||
|
|
|
|
|
|
|
| ||||||
COMMERCIAL MORTGAGE-BACKED SECURITIES—0.55% AND 0.19% |
|
|
|
|
|
|
| ||||||
| |||||||||||||
$ | 10,000,000 |
| $ | — |
| Commercial Mortgage Pass |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.450% 12/15/20 |
| $ | 10,000,000 |
| $ | — |
|
| 3,389,773 |
|
| — |
| Credit Suisse Mortgage Company |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.470% 4/15/21 |
|
| 3,390,255 |
|
| — |
|
| 10,000,000 |
|
| 10,000,000 |
| GS Mortgage Securities Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.682% 5/3/18 |
|
| 10,186,930 |
|
| 10,217,650 |
|
| 8,780,566 |
|
| — |
| GS Mortgage Securities Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.420% 6/6/20 |
|
| 8,782,059 |
|
| — |
|
| 9,996,970 |
|
| — |
| JP Morgan Chase Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.440% 11/15/18 |
|
| 9,996,970 |
|
| — |
|
| 9,298,609 |
|
| — |
| Lehman Brothers Floating |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.430% 9/15/21 |
|
| 9,298,971 |
|
| — |
|
| 9,143,864 |
|
| — |
| Morgan Stanley Capital |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.440% 7/15/19 |
|
| 9,144,605 |
|
| — |
|
| 10,000,000 |
|
| 10,000,000 |
| Morgan Stanley Dean Witter |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.712% 2/3/16 |
|
| 10,137,150 |
|
| 10,061,730 |
|
| — |
|
| 1,601,634 |
| TrizecHahn Office Property |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.700% 3/15/13 |
|
| — |
|
| 1,601,653 |
|
| 14,642,368 |
|
| — |
| Wachovia Bank Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.440% 9/15/21 |
|
| 14,642,997 |
|
| — |
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES |
|
| 85,579,937 |
|
| 21,881,033 |
| ||||||
|
|
|
|
|
|
|
|
| |||||
TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES |
|
| 704,922,323 |
|
| 448,662,598 |
| ||||||
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER MARKETABLE SECURITIES—13.15% AND 14.28% |
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMERCIAL PAPER—10.79% AND 11.67% |
|
|
|
|
|
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
| 25,000,000 |
| Abbey National North America LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.330% 1/5/06 |
|
| — |
|
| 24,994,000 |
|
| 25,000,000 |
|
| — |
| Abbey National North America LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/17/07 |
|
| 24,945,207 |
|
| — |
|
| — |
|
| 25,000,000 |
| Abbey National Plc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.280% 1/17/06 |
|
| — |
|
| 24,999,500 |
|
| — |
|
| 10,000,000 |
| Alabama Power Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.250% 1/12/06 |
|
| — |
|
| 9,989,100 |
|
| 10,000,000 |
|
| — |
| American Express Bank, FSB |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.565% 1/8/07 |
|
| 10,000,235 |
|
| — |
|
| 1,500,000 |
|
| — |
| American Express Bank, FSB |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.290% 1/12/07 |
|
| 1,499,996 |
|
| — |
|
| 24,000,000 |
|
| — |
| American Express Bank, FSB |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.280% 1/18/07 |
|
| 23,999,578 |
|
| — |
|
| 20,000,000 |
|
| — |
| American Express Centurion Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.290% 1/9/07 |
|
| 19,999,954 |
|
| — |
|
| 19,165,000 |
|
| — |
| American Express Centurion Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.290% 1/8/07 |
|
| 19,164,962 |
|
| — |
|
110|ProspectusTIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
| |||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
| |||||||||||||
$ | — |
| $ | 25,000,000 |
| American Express Centurion Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.310% 1/19/06 |
| $ | — |
| $ | 25,000,000 |
|
| 25,000,000 |
|
| — |
| American Express Centurion Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.290% 1/3/07 |
|
| 24,999,988 |
|
| — |
|
| — |
|
| 2,430,000 |
| American Honda Finance, Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.240% 1/9/06 |
|
| — |
|
| 2,428,250 |
|
| 50,000,000 |
|
| — |
| American Honda Finance, Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/22/07 |
|
| 49,853,055 |
|
| — |
|
| 17,475,000 |
|
| — |
| American Honda Finance, Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.210% 2/9/07 |
|
| 17,377,605 |
|
| — |
|
| 10,000,000 |
|
| — |
| Anheuser — Busch Co. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/19/07 |
|
| 9,975,019 |
|
| — |
|
| — |
|
| 25,000,000 |
| Atlantis One Funding Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.205% 2/8/06 |
|
| — |
|
| 24,890,750 |
|
| — |
|
| 10,000,000 |
| Atlantis One Funding Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.380% 2/24/06 |
|
| — |
|
| 9,936,500 |
|
| — |
|
| 25,000,000 |
| Bank Of Montreal |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.285% 1/26/06 |
|
| — |
|
| 24,999,500 |
|
| — |
|
| 30,000,000 |
| Barclays Bank, PLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.420% 3/14/06 |
|
| — |
|
| 29,998,200 |
|
| — |
|
| 15,000,000 |
| Barclays Bank, PLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.329% 8/30/06 |
|
| — |
|
| 14,999,400 |
|
| 25,000,000 |
|
| — |
| Barclay’s U.S. Funding Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/26/07 |
|
| 24,912,383 |
|
| — |
|
| — |
|
| 18,040,000 |
| Becton Dickinson & Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.210% 1/24/06 |
|
| — |
|
| 17,994,720 |
|
| — |
|
| 13,100,000 |
| Beta Finance, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.140% 1/12/06 |
|
| — |
|
| 13,085,590 |
|
| — |
|
| 11,000,000 |
| Beta Finance, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.070% 1/17/06 |
|
| — |
|
| 10,981,190 |
|
| 20,000,000 |
|
| — |
| BMW US Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/7/07 |
|
| 19,894,400 |
|
| — |
|
| 23,050,000 |
|
| — |
| BMW US Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.210% 2/9/07 |
|
| 22,921,533 |
|
| — |
|
| — |
|
| 20,000,000 |
| Calyon |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.100% 1/19/06 |
|
| — |
|
| 19,997,800 |
|
| — |
|
| 10,000,000 |
| Canadian Wheat Board (The) |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.870% 2/6/06 |
|
| — |
|
| 9,959,500 |
|
| — |
|
| 14,000,000 |
| CC (USA), Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 3.830% 1/13/06 |
|
| — |
|
| 13,982,920 |
|
| — |
|
| 40,000,000 |
| Ciesco LP |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.280% 1/23/06 |
|
| — |
|
| 39,903,200 |
|
| — |
|
| 10,000,000 |
| Ciesco LP |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.370% 2/24/06 |
|
| — |
|
| 9,936,500 |
|
| 25,000,000 |
|
| — |
| Ciesco LP |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/9/07 |
|
| 24,973,942 |
|
| — |
|
| 14,000,000 |
|
| — |
| Ciesco LP |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/25/07 |
|
| 13,952,299 |
|
| — |
|
TIAA Real Estate AccountProspectus|111
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
| |||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
| |||||||||||||
$ | — |
| $ | 37,000,000 |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.220% 1/20/06 |
| $ | — |
| $ | 36,925,260 |
|
| — |
|
| 13,000,000 |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.350% 2/21/06 |
|
| — |
|
| 12,923,560 |
|
| 50,000,000 |
|
| — |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/11/07 |
|
| 49,934,060 |
|
| — |
|
| 35,825,000 |
|
| — |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/5/07 |
|
| 35,647,365 |
|
| — |
|
| — |
|
| 24,150,000 |
| Colgate-Palmolive Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.250% 1/6/06 |
|
| — |
|
| 24,141,306 |
|
| — |
|
| 15,000,000 |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.150% 1/13/06 |
|
| — |
|
| 14,981,700 |
|
| — |
|
| 5,035,000 |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.200% 1/23/06 |
|
| — |
|
| 5,022,815 |
|
| — |
|
| 16,000,000 |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.210% 1/25/06 |
|
| — |
|
| 15,957,440 |
|
| — |
|
| 5,905,000 |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.290% 1/31/06 |
|
| — |
|
| 5,884,982 |
|
| — |
|
| 2,020,000 |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.340% 2/17/06 |
|
| — |
|
| 2,008,930 |
|
| 6,000,000 |
|
| — |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/22/07 |
|
| 5,982,193 |
|
| — |
|
| 8,760,000 |
|
| — |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/29/07 |
|
| 8,725,048 |
|
| — |
|
| 25,000,000 |
|
| — |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/7/07 |
|
| 24,867,250 |
|
| — |
|
| 54,000,000 |
|
| — |
| Corporate Asset Funding Corp, Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/8/07 |
|
| 53,705,295 |
|
| — |
|
| — |
|
| 25,000,000 |
| Deutsche Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.270% 2/14/06 |
|
| — |
|
| 24,997,000 |
|
| 3,000,000 |
|
| — |
| Deutsche Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.290% 1/9/07 |
|
| 2,999,962 |
|
| — |
|
| 30,000,000 |
|
| — |
| Deutsche Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.300% 1/22/07 |
|
| 29,999,154 |
|
| — |
|
| — |
|
| 50,000,000 |
| Dexia Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.280% 1/30/06 |
|
| — |
|
| 49,998,000 |
|
| — |
|
| 8,000,000 |
| Dorada Finance Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 3.900% 1/23/06 |
|
| — |
|
| 7,980,640 |
|
| — |
|
| 21,500,000 |
| Dorada Finance Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.250% 2/16/06 |
|
| — |
|
| 21,384,975 |
|
| — |
|
| 20,000,000 |
| Dorada Finance Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.300% 2/27/06 |
|
| — |
|
| 19,865,600 |
|
| 7,000,000 |
|
| — |
| Dorada Finance Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/9/07 |
|
| 6,992,704 |
|
| — |
|
| — |
|
| 13,000,000 |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.190% 1/17/06 |
|
| — |
|
| 12,977,770 |
|
112|ProspectusTIAA Real Estate Account
|
|
|
TIAA Real Estate Account | ||
Statement of investments |
| continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
| |||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
| $ | 20,000,000 |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.720% 2/22/06 |
| $ | — |
| $ | 19,877,800 |
|
| — |
|
| 7,248,000 |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.390% 4/7/06 |
|
| — |
|
| 7,162,981 |
|
| 24,000,000 |
|
| — |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/19/07 |
|
| 23,939,287 |
|
| — |
|
| 10,000,000 |
|
| — |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/1/07 |
|
| 9,955,666 |
|
| — |
|
| 32,900,000 |
|
| — |
| Fairway Finance Company, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/17/07 |
|
| 32,826,521 |
|
| — |
|
| — |
|
| 20,000,000 |
| FCAR Owner Trust I |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.340% 2/7/06 |
|
| — |
|
| 19,915,000 |
|
| — |
|
| 17,000,000 |
| First Tennessee National Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.330% 2/6/06 |
|
| — |
|
| 16,999,660 |
|
| — |
|
| 21,590,000 |
| General Electric Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.440% 4/28/06 |
|
| — |
|
| 21,282,343 |
|
| — |
|
| 25,000,000 |
| General Electric Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.520% 6/28/06 |
|
| — |
|
| 24,435,000 |
|
| 23,760,000 |
|
| — |
| General Electric Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/18/07 |
|
| 23,704,454 |
|
| — |
|
| 13,155,000 |
|
| — |
| General Electric Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/8/07 |
|
| 13,084,017 |
|
| — |
|
| 30,000,000 |
|
| — |
| General Electric Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/15/07 |
|
| 29,807,499 |
|
| — |
|
| — |
|
| 35,000,000 |
| Goldman Sachs Group, LP |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.280% 2/3/06 |
|
| — |
|
| 34,870,150 |
|
| — |
|
| 29,140,000 |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.020% 1/9/06 |
|
| — |
|
| 29,118,436 |
|
| — |
|
| 10,000,000 |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 2.280% 1/18/06 |
|
| — |
|
| 9,981,700 |
|
| — |
|
| 9,000,000 |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.390% 3/14/06 |
|
| — |
|
| 8,922,420 |
|
| 50,000,000 |
|
| — |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/5/07 |
|
| 49,977,665 |
|
| — |
|
| 25,700,000 |
|
| — |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 3/8/07 |
|
| 25,454,668 |
|
| — |
|
| — |
|
| 5,015,000 |
| Grampian Funding LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.320% 1/23/06 |
|
| — |
|
| 5,002,814 |
|
| — |
|
| 20,000,000 |
| Grampian Funding LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.040% 2/1/06 |
|
| — |
|
| 19,929,600 |
|
| — |
|
| 10,000,000 |
| Greyhawk Funding LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.000% 1/6/06 |
|
| — |
|
| 9,996,300 |
|
| 33,000,000 |
|
| — |
| Greyhawk Funding LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 2/6/07 |
|
| 32,829,314 |
|
| — |
|
| — |
|
| 25,000,000 |
| Harrier Finance Funding (US) LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 3.810% 1/25/06 |
|
| — |
|
| 24,933,500 |
|
|
|
|
|
|
|
|
|
|
| VALUE |
| ||||
|
| ||||||
LOCATION/DESCRIPTION |
| 2007 |
| 2006 |
| ||
|
|
|
|
|
|
|
|
OTHER REAL ESTATE-RELATED INVESTMENTS—16.61% |
|
|
|
|
|
|
|
AND 12.56% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
REAL ESTATE JOINT VENTURES—14.87% AND 10.76% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CA—Colorado Center LP |
|
|
|
|
|
|
|
Yahoo! Center (50% Account Interest) |
| $ | 369,402,407 | (3) | $ | 187,766,625 | (3) |
CA—Treat Towers LP |
|
|
|
|
|
|
|
Treat Towers (75% Account Interest) |
|
| 118,997,021 |
|
| 94,023,131 |
|
GA—Buckhead LLC |
|
|
|
|
|
|
|
Prominence in Buckhead (75% Account Interest) |
|
| 115,427,071 |
|
| 107,256,320 |
|
Florida Mall Associates, Ltd. |
|
|
|
|
|
|
|
The Florida Mall (50% Account Interest) |
|
| 296,486,153 | (3) |
| 237,919,775 | (3) |
IL—161 Clark Street LLC |
|
|
|
|
|
|
|
161 North Clark Street (75% Account Interest) |
|
| 3,150,995 | (4) |
| 189,183,793 |
|
MA—One Boston Place REIT |
|
|
|
|
|
|
|
One Boston Place (50.25% Account Interest) |
|
| 246,440,493 |
|
| 177,900,327 |
|
DDR TC LLC |
|
|
|
|
|
|
|
DDR Joint Venture–Various (85% Account Interest) |
|
| 1,028,297,460 | (3,5) |
| — |
|
Storage Portfolio I, LLC |
|
|
|
|
|
|
|
Storage Portfolio (75% Account Interest) |
|
| 81,943,321 | (3,5) |
| 74,864,074 | (3,5) |
Strategic Ind Portfolio I, LLC |
|
|
|
|
|
|
|
IDI Nationwide Industrial Portfolio (60% Account Interest) |
|
| 76,536,044 | (3,5) |
| 70,348,753 | (3,5) |
Teachers REA IV, LLC |
|
|
|
|
|
|
|
Tyson’s Executive Plaza II (50% Account Interest) |
|
| 44,178,210 |
|
| 40,570,382 |
|
TREA Florida Retail, LLC |
|
|
|
|
|
|
|
Florida Retail Portfolio (80% Account Interest) |
|
| 260,879,060 |
|
| 265,396,677 |
|
West Dade Associates |
|
|
|
|
|
|
|
Miami International Mall (50% Account Interest) |
|
| 109,944,638 | (3) |
| 97,300,131 | (3) |
West Town Mall, LLC |
|
|
|
|
|
|
|
West Town Mall (50% Account Interest) |
|
| 75,826,066 | (3) |
| 126,214,963 | (3) |
|
|
|
| ||||
TOTAL REAL ESTATE JOINT VENTURES |
|
|
|
|
|
|
|
(Cost $2,005,340,226 and $1,168,027,179) |
|
| 2,827,508,939 |
|
| 1,668,744,951 |
|
|
|
|
| ||||
|
|
|
|
|
|
|
|
LIMITED PARTNERSHIPS—1.74% AND 1.80% |
|
|
|
|
|
|
|
Cobalt Industrial REIT (10.998% Account Interest) |
|
| 32,840,031 |
|
| 26,506,381 |
|
Colony Realty Partners LP (5.27% Account Interest) |
|
| 32,505,008 |
|
| 26,382,659 |
|
Heitman Value Partners Fund (8.43% Account Interest) |
|
| 24,488,535 |
|
| 24,578,388 |
|
Lion Gables Apartment Fund (18.45% Account Interest) |
|
| 205,162,203 |
|
| 179,013,211 |
|
MONY/Transwestern Mezzanine Fund RP (19.75% Account Interest) |
|
| — |
|
| 454,319 |
|
MONY/Transwestern Mezz RP II (16.67% Account Interest) |
|
| 36,365,657 |
|
| 22,348,093 |
|
|
|
|
| ||||
TOTAL LIMITED PARTNERSHIPS |
|
|
|
|
|
|
|
(Cost $255,579,349 and $245,295,745) |
|
| 331,361,434 |
|
| 279,283,051 |
|
|
|
|
| ||||
TOTAL REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS |
|
|
|
|
|
|
|
(Cost $2,260,919,575 and $1,413,322,924) |
|
| 3,158,870,373 |
|
| 1,948,028,002 |
|
|
|
|
| ||||
TIAATIAA-CREF§ Real Estate AccountProspectus|113§ Prospectus 127
|
|
|
TIAA Real Estate Account | ||
Statement of investments |
| continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
| |||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
| $ | 10,085,000 |
| HBOS Treasury Srvcs Plc |
|
|
|
|
|
|
|
|
|
|
|
| 4.200% 2/15/06 |
| $ | — |
| $ | 10,033,163 |
| |
| 8,415,000 |
|
| — |
| HBOS Treasury Srvcs Plc |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 3/21/07 |
|
| 8,319,680 |
|
| — |
|
| 40,000,000 |
|
| — |
| HSBC Finance Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/26/07 |
|
| 39,859,012 |
|
| — |
|
| 19,000,000 |
|
| — |
| IBM (International Business Machine Corp) |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/10/07 |
|
| 18,966,750 |
|
| — |
|
| 22,200,000 |
|
| — |
| IBM Capital Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 3/16/07 |
|
| 21,963,166 |
|
| — |
|
| 25,000,000 |
|
| — |
| ING (US) Finance |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 3/27/07 |
|
| 24,695,265 |
|
| — |
|
| 24,000,000 |
|
| — |
| Johnson & Johnson |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.200% 1/2/07 |
|
| 24,000,000 |
|
| — |
|
| 25,000,000 |
|
| — |
| Johnson & Johnson |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/18/07 |
|
| 24,941,555 |
|
| — |
|
| 20,259,000 |
|
| — |
| Kimberly—Clark Worldwide, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.265% 1/29/07 |
|
| 20,179,184 |
|
| — |
|
| — |
|
| 31,740,000 |
| Kitty Hawk Funding Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.295% 1/12/06 |
|
| — |
|
| 31,705,086 |
|
| — |
|
| 10,000,000 |
| Kitty Hawk Funding Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.680% 2/15/06 |
|
| — |
|
| 9,947,600 |
|
| — |
|
| 25,000,000 |
| Links Finance L.L.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.270% 2/10/06 |
|
| — |
|
| 24,884,750 |
|
| — |
|
| 25,000,000 |
| Links Finance L.L.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.380% 3/13/06 |
|
| — |
|
| 24,787,750 |
|
| 10,000,000 |
|
| — |
| Links Finance L.L.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/16/07 |
|
| 9,979,190 |
|
| — |
|
| 30,000,000 |
|
| — |
| Morgan Stanley Dean Witter |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.255% 2/12/07 |
|
| 29,819,598 |
|
| — |
|
| — |
|
| 10,000,000 |
| Paccar Financial Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.020% 1/12/06 |
|
| — |
|
| 9,989,200 |
|
| — |
|
| 13,655,000 |
| Paccar Financial Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.360% 3/3/06 |
|
| — |
|
| 13,557,913 |
|
| — |
|
| 10,000,000 |
| Park Avenue Receivables Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 2.150% 1/4/06 |
|
| — |
|
| 9,998,800 |
|
| — |
|
| 20,080,000 |
| Park Avenue Receivables Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.270% 1/27/06 |
|
| — |
|
| 20,021,166 |
|
| 11,601,000 |
|
| — |
| Pitney Bowes Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/4/07 |
|
| 11,597,578 |
|
| — |
|
| — |
|
| 10,000,000 |
| Preferred Receivables Funding Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.130% 1/6/06 |
|
| — |
|
| 9,996,300 |
|
| — |
|
| 19,150,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.170% 2/7/06 |
|
| — |
|
| 19,070,145 |
|
| — |
|
| 15,000,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.080% 2/13/06 |
|
| — |
|
| 14,926,500 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
| VALUE |
| |||||||
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER |
| 2007 |
| 2006 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
MARKETABLE SECURITIES—19.97% AND 17.69% |
| |||||||||||
|
| |||||||||||
REAL ESTATE-RELATED MARKETABLE SECURITIES—2.24% AND 4.54% |
| |||||||||||
|
| |||||||||||
REAL ESTATE EQUITY SECURITIES—2.24% AND 3.99% |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
51,200 |
|
| 53,300 |
| Acadia Realty Trust |
| $ | 1,311,232 |
| $ | 1,333,566 |
|
— |
|
| 68,700 |
| Affordable Residential Communities LP |
|
| — |
|
| 800,355 |
|
— |
|
| 68,700 |
| Affordable Residential Communities LP share rights |
|
| — |
|
| 16,488 |
|
3,300 |
|
| 3,800 |
| Alexander’s Inc. |
|
| 1,165,725 |
|
| 1,594,670 |
|
53,100 |
|
| 54,400 |
| Alexandria Real Estate Equities Inc. |
|
| 5,398,677 |
|
| 5,461,760 |
|
164,585 |
|
| 166,985 |
| AMB Property Corp. |
|
| 9,473,513 |
|
| 9,786,991 |
|
45,100 |
|
| 42,500 |
| American Campus Communities Inc. |
|
| 1,210,935 |
|
| 1,209,975 |
|
214,600 |
|
| 244,900 |
| American Financial Realty Trust |
|
| 1,721,092 |
|
| 2,801,656 |
|
159,700 |
|
| 181,500 |
| Apartment Investment & Management Co. |
|
| 5,546,381 |
|
| 10,167,630 |
|
— |
|
| 408,900 |
| Archstone-Smith Trust |
|
| — |
|
| 23,802,069 |
|
200,000 |
|
| 118,500 |
| Ashford Hospitality Trust Inc. |
|
| 1,438,000 |
|
| 1,475,325 |
|
27,500 |
|
| 33,300 |
| Associated Estates Realty Corp. |
|
| 259,600 |
|
| 457,542 |
|
132,200 |
|
| 138,900 |
| AvalonBay Communities Inc. |
|
| 12,445,308 |
|
| 18,063,945 |
|
109,100 |
|
| 122,400 |
| BioMed Realty Trust Inc. |
|
| 2,527,847 |
|
| 3,500,640 |
|
198,600 |
|
| 217,200 |
| Boston Properties Inc. |
|
| 18,233,466 |
|
| 24,300,336 |
|
148,100 |
|
| 171,500 |
| Brandywine Realty Trust |
|
| 2,655,433 |
|
| 5,702,375 |
|
86,500 |
|
| 94,200 |
| BRE Properties Inc. |
|
| 3,505,845 |
|
| 6,124,884 |
|
341,650 |
|
| 220,300 |
| Brookfield Properties Corp. |
|
| 6,576,763 |
|
| 8,664,399 |
|
93,500 |
|
| 105,200 |
| Camden Property Trust |
|
| 4,502,025 |
|
| 7,769,020 |
|
110,900 |
|
| 121,500 |
| CBL & Associates Properties Inc. |
|
| 2,651,619 |
|
| 5,267,025 |
|
74,900 |
|
| 74,900 |
| Cedar Shopping Centers Inc. |
|
| 766,227 |
|
| 1,191,659 |
|
75,400 |
|
| 87,600 |
| Colonial Properties Trust |
|
| 1,706,302 |
|
| 4,106,688 |
|
79,500 |
|
| 80,600 |
| Corporate Office Properties Trust |
|
| 2,504,250 |
|
| 4,067,882 |
|
71,100 |
|
| 75,500 |
| Cousins Properties Inc. |
|
| 1,571,310 |
|
| 2,662,885 |
|
— |
|
| 179,000 |
| Crescent Real Estate Equities Company |
|
| — |
|
| 3,535,250 |
|
281,100 |
|
| — |
| DCT Industrial Trust Inc. |
|
| 2,617,041 |
|
| — |
|
205,000 |
|
| 204,000 |
| Developers Diversified Realty Corp. |
|
| 7,849,450 |
|
| 12,841,800 |
|
157,000 |
|
| 125,500 |
| DiamondRock Hospitality Co. |
|
| 2,351,860 |
|
| 2,260,255 |
|
99,000 |
|
| 84,100 |
| Digital Realty Trust Inc. |
|
| 3,798,630 |
|
| 2,878,743 |
|
164,400 |
|
| 123,500 |
| Douglas Emmett Inc. |
|
| 3,717,084 |
|
| 3,283,865 |
|
243,000 |
|
| 252,100 |
| Duke Realty Corp. |
|
| 6,337,440 |
|
| 10,310,890 |
|
51,700 |
|
| — |
| Dupont Fabros Technology |
|
| 1,013,320 |
|
| — |
|
39,400 |
|
| 42,900 |
| EastGroup Properties Inc. |
|
| 1,648,890 |
|
| 2,297,724 |
|
49,900 |
|
| 49,900 |
| Education Realty Trust Inc. |
|
| 560,876 |
|
| 737,023 |
|
— |
|
| 103,400 |
| Equity Inns Inc. |
|
| — |
|
| 1,650,264 |
|
37,300 |
|
| 38,800 |
| Equity Lifestyle Properties Inc. |
|
| 1,703,491 |
|
| 2,111,884 |
|
— |
|
| 654,500 |
| Equity Office Properties Trust |
|
| — |
|
| 31,527,265 |
|
60,800 |
|
| 69,900 |
| Equity One Inc. |
|
| 1,400,224 |
|
| 1,863,534 |
|
452,300 |
|
| 544,300 |
| Equity Residential |
|
| 16,495,381 |
|
| 27,623,225 |
|
42,000 |
|
| 43,600 |
| Essex Property Trust Inc. |
|
| 4,094,580 |
|
| 5,635,300 |
|
108,700 |
|
| 120,200 |
| Extra Space Storage Inc. |
|
| 1,553,323 |
|
| 2,194,852 |
|
93,700 |
|
| 103,200 |
| Federal Realty Investment Trust |
|
| 7,697,455 |
|
| 8,772,000 |
|
114128 Prospectus|§Prospectus TIAA-CREFTIAA§ Real Estate Account
|
|
|
TIAA Real Estate Account | ||
Statement of investments |
| continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
| |||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
| $ | 9,000,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.300% 3/9/06 |
| $ | — |
| $ | 8,929,260 |
|
| — |
|
| 5,000,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.335% 4/4/06 |
|
| — |
|
| 4,944,250 |
|
| 20,500,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.220% 1/3/07 |
|
| 20,496,976 |
|
| — |
|
| 1,845,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.300% 1/11/07 |
|
| 1,842,553 |
|
| — |
|
| 23,000,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/18/07 |
|
| 22,945,922 |
|
| — |
|
| 6,000,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/23/07 |
|
| 5,981,485 |
|
| — |
|
| 15,000,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.220% 2/15/07 |
|
| 14,903,199 |
|
| — |
|
| 14,120,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 3/6/07 |
|
| 13,989,828 |
|
| — |
|
| — |
|
| 20,000,000 |
| Procter & Gamble |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.025% 1/10/06 |
|
| — |
|
| 19,983,200 |
|
| — |
|
| 3,500,000 |
| Procter & Gamble |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.090% 1/26/06 |
|
| — |
|
| 3,490,445 |
|
| 25,000,000 |
|
| — |
| Procter & Gamble |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.225% 1/12/07 |
|
| 24,963,380 |
|
| — |
|
| 25,000,000 |
|
| — |
| Procter & Gamble International S.C |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/1/07 |
|
| 24,890,625 |
|
| — |
|
| 50,000,000 |
|
| — |
| Procter & Gamble International S.C |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 2/14/07 |
|
| 49,686,455 |
|
| — |
|
| — |
|
| 50,000,000 |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.075% 1/17/06 |
|
| — |
|
| 49,914,500 |
|
| 10,000,000 |
|
| — |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/24/07 |
|
| 9,967,385 |
|
| — |
|
| 20,000,000 |
|
| — |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/25/07 |
|
| 19,931,856 |
|
| — |
|
| 23,760,000 |
|
| — |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 2/12/07 |
|
| 23,616,311 |
|
| — |
|
| — |
|
| 17,000,000 |
| Regions Bank (Alabama) |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.180% 1/30/06 |
|
| — |
|
| 16,998,130 |
|
| 10,000,000 |
|
| — |
| Scaldis Capital LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.300% 1/10/07 |
|
| 9,988,068 |
|
| — |
|
| 25,000,000 |
|
| — |
| Sheffield Receivables Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/12/07 |
|
| 24,962,735 |
|
| — |
|
| 35,750,000 |
|
| — |
| Sheffield Receivables Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/17/07 |
|
| 35,670,156 |
|
| — |
|
| — |
|
| 540,000 |
| Sherwin—Williams Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.080% 2/7/06 |
|
| — |
|
| 537,732 |
|
| — |
|
| 14,390,000 |
| Sigma Finance Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 3.890% 1/12/06 |
|
| — |
|
| 14,374,171 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
| VALUE |
| |||||||
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER |
| 2007 |
| 2006 |
| |||
|
|
|
|
|
|
|
|
|
|
|
|
|
101,300 |
|
| 115,300 |
| FelCor Lodging Trust Inc. |
| $ | 1,579,267 |
| $ | 2,518,152 |
|
74,700 |
|
| 84,300 |
| First Industrial Realty Trust Inc. |
|
| 2,584,620 |
|
| 3,952,827 |
|
41,600 |
|
| 41,600 |
| First Potomac Realty Trust |
|
| 719,264 |
|
| 1,210,976 |
|
384,500 |
|
| 423,600 |
| General Growth Properties Inc. |
|
| 15,833,710 |
|
| 22,124,628 |
|
62,700 |
|
| 69,600 |
| Glimcher Realty Trust |
|
| 895,983 |
|
| 1,859,016 |
|
64,200 |
|
| 73,800 |
| GMH Communities Trust |
|
| 354,384 |
|
| 749,070 |
|
360,900 |
|
| — |
| HCP Inc |
|
| 12,552,102 |
|
| — |
|
141,700 |
|
| — |
| Health Care REIT Inc |
|
| 6,332,573 |
|
| — |
|
84,600 |
|
| — |
| Healthcare Realty Trust Inc |
|
| 2,147,994 |
|
| — |
|
70,900 |
|
| 59,500 |
| Hersha Hospitality Trust |
|
| 673,550 |
|
| 674,730 |
|
— |
|
| 107,500 |
| Highland Hospitality Corp. |
|
| — |
|
| 1,531,875 |
|
96,300 |
|
| 101,700 |
| Highwoods Properties Inc. |
|
| 2,829,294 |
|
| 4,145,292 |
|
55,500 |
|
| 64,000 |
| Home Properties Inc. |
|
| 2,489,175 |
|
| 3,793,280 |
|
155,800 |
|
| 147,900 |
| Hospitality Properties Trust |
|
| 5,019,876 |
|
| 7,029,687 |
|
869,070 |
|
| 973,570 |
| Host Hotels & Resorts Inc. |
|
| 14,808,953 |
|
| 23,901,143 |
|
375,400 |
|
| 396,700 |
| HRPT Properties Trust |
|
| 2,901,842 |
|
| 4,899,245 |
|
95,300 |
|
| 116,700 |
| Inland Real Estate Corp. |
|
| 1,349,448 |
|
| 2,184,624 |
|
— |
|
| 84,800 |
| Innkeepers USA Trust |
|
| — |
|
| 1,314,400 |
|
54,100 |
|
| 59,400 |
| Kilroy Realty Corp. |
|
| 2,973,336 |
|
| 4,633,200 |
|
365,921 |
|
| 409,521 |
| Kimco Realty Corp. |
|
| 13,319,524 |
|
| 18,407,969 |
|
47,600 |
|
| 55,300 |
| Kite Realty Group Trust |
|
| 726,852 |
|
| 1,029,686 |
|
66,600 |
|
| 75,000 |
| LaSalle Hotel Properties |
|
| 2,124,540 |
|
| 3,438,750 |
|
151,900 |
|
| 167,000 |
| Liberty Property Trust |
|
| 4,376,239 |
|
| 8,206,380 |
|
121,000 |
|
| 135,900 |
| Macerich Co./The |
|
| 8,598,260 |
|
| 11,764,863 |
|
111,900 |
|
| 118,700 |
| Mack-Cali Realty Corp. |
|
| 3,804,600 |
|
| 6,053,700 |
|
59,900 |
|
| 81,000 |
| Maguire Properties Inc. |
|
| 1,765,253 |
|
| 3,240,000 |
|
42,300 |
|
| 44,000 |
| Mid-America Apartment Communities |
|
| 1,808,325 |
|
| 2,518,560 |
|
— |
|
| 100,200 |
| Mills Corp./The |
|
| — |
|
| 2,004,000 |
|
155,200 |
|
| — |
| Nationwide Health Properties Inc. |
|
| 4,868,624 |
|
| — |
|
— |
|
| 198,000 |
| New Plan Excel Realty Trust |
|
| — |
|
| 5,441,040 |
|
25,400 |
|
| 25,100 |
| Parkway Properties Inc./Md |
|
| 939,292 |
|
| 1,280,351 |
|
65,900 |
|
| 69,500 |
| Pennsylvania Real Estate Investment Trust |
|
| 1,955,912 |
|
| 2,736,910 |
|
72,200 |
|
| 79,300 |
| Post Properties Inc. |
|
| 2,535,664 |
|
| 3,624,010 |
|
427,900 |
|
| 462,500 |
| Prologis |
|
| 27,120,302 |
|
| 28,106,125 |
|
26,900 |
|
| 30,200 |
| PS Business Parks Inc. |
|
| 1,413,595 |
|
| 2,135,442 |
|
214,614 |
|
| 241,114 |
| Public Storage Inc. |
|
| 15,754,814 |
|
| 23,508,615 |
|
31,500 |
|
| 28,500 |
| Ramco-Gershenson Properties |
|
| 673,155 |
|
| 1,086,990 |
|
— |
|
| 157,000 |
| Reckson Associates Realty Corp. |
|
| — |
|
| 7,159,200 |
|
115,100 |
|
| 129,300 |
| Regency Centers Corp. |
|
| 7,422,799 |
|
| 10,107,381 |
|
19,300 |
|
| 20,600 |
| Saul Centers Inc. |
|
| 1,031,199 |
|
| 1,136,914 |
|
139,600 |
|
| — |
| Senior Housing Properties Trust |
|
| 3,166,128 |
|
| — |
|
373,221 |
|
| 412,821 |
| Simon Property Group Inc. |
|
| 32,417,976 |
|
| 41,814,639 |
|
98,507 |
|
| 86,300 |
| SL Green Realty Corp. |
|
| 9,206,464 |
|
| 11,458,914 |
|
36,500 |
|
| 33,500 |
| Sovran Self Storage Inc. |
|
| 1,463,650 |
|
| 1,918,880 |
|
124,300 |
|
| 134,700 |
| Strategic Hotels & Resorts Inc. |
|
| 2,079,539 |
|
| 2,935,113 |
|
27,800 |
|
| 30,900 |
| Sun Communities Inc. |
|
| 585,746 |
|
| 999,924 |
|
98,200 |
|
| 109,400 |
| Sunstone Hotel Investors Inc. |
|
| 1,796,078 |
|
| 2,924,262 |
|
52,300 |
|
| 58,300 |
| Tanger Factory Outlet Centers |
|
| 1,972,233 |
|
| 2,278,364 |
|
TIAATIAA-CREF§ Real Estate Account§Prospectus|115 129
|
|
|
TIAA Real Estate Account | ||
Statement of investments |
| continued |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SHARES |
|
|
| VALUE |
| ||||||||
|
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER |
| 2007 |
| 2006 |
| ||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 88,800 |
|
| 98,400 |
| Taubman Centers Inc. |
| $ | 4,368,072 |
| $ | 5,004,624 |
|
| 224,000 |
|
| — |
| UDR, Inc. |
|
| 4,446,400 |
|
| — |
|
| — |
|
| 250,400 |
| United Dominion Realty Trust Inc. |
|
| — |
|
| 7,960,216 |
|
| 17,000 |
|
| — |
| Universal Health Realty Income Trust |
|
| 602,480 |
|
| — |
|
| 78,500 |
|
| 95,400 |
| U-Store-It Trust |
|
| 719,060 |
|
| 1,960,470 |
|
| 221,800 |
|
| — |
| Ventas Inc. |
|
| 10,036,450 |
|
| — |
|
| 237,100 |
|
| 245,800 |
| Vornado Realty Trust |
|
| 20,852,945 |
|
| 29,864,700 |
|
| 77,700 |
|
| 85,500 |
| Washington Real Estate Investment |
|
| 2,440,556 |
|
| 3,420,000 |
|
| 133,000 |
|
| 148,500 |
| Weingarten Realty Investors |
|
| 4,181,520 |
|
| 6,847,335 |
|
| — |
|
| 44,700 |
| Winston Hotels Inc. |
|
| — |
|
| 592,275 |
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL REAL ESTATE EQUITY SECURITIES |
|
| 426,630,212 |
|
| 619,342,386 |
| ||||||
|
|
|
|
|
|
|
|
|
| ||||
COMMERCIAL MORTGAGE-BACKED SECURITIES—0.00% AND 0.55%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER, INTEREST RATE AND MATURITY DATE |
| 2007 |
| 2006 |
| ||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
| $ | 10,000,000 |
| Commercial Mortgage Pass |
|
|
|
|
|
|
|
| — |
|
|
|
| 5.450% 12/15/20 |
|
| — |
|
| 10,000,000 |
|
|
|
|
| 3,389,773 |
| Credit Suisse Mortgage Company |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.470% 4/15/21 |
|
| — |
|
| 3,390,255 |
|
| — |
|
| 10,000,000 |
| GS Mortgage Securities Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.682% 5/3/18 |
|
| — |
|
| 10,186,930 |
|
| — |
|
| 8,780,566 |
| GS Mortgage Securities Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.420% 6/6/20 |
|
| — |
|
| 8,782,059 |
|
| — |
|
| 9,996,970 |
| JP Morgan Chase Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.440% 11/15/18 |
|
| — |
|
| 9,996,970 |
|
| — |
|
| 9,298,609 |
| Lehman Brothers Floating |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.430% 9/15/21 |
|
| — |
|
| 9,298,971 |
|
| — |
|
| 9,143,864 |
| Morgan Stanley Capital |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.440% 7/15/19 |
|
| — |
|
| 9,144,605 |
|
| — |
|
| 10,000,000 |
| Morgan Stanley Dean Witter |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.712% 2/3/16 |
|
| — |
|
| 10,137,150 |
|
| — |
|
| 14,642,368 |
| Wachovia Bank Commercial |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.440% 9/15/21 |
|
| — |
|
| 14,642,997 |
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES |
|
| — |
|
| 85,579,937 |
| ||||||
|
|
|
|
|
|
|
|
|
| ||||
TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES |
|
| 426,630,212 |
|
| 704,922,323 |
| ||||||
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OTHER MARKETABLE SECURITIES—17.73% AND 13.15% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CERTIFICATES OF DEPOSIT—2.22% AND .86% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| — |
|
| 10,000,000 |
| American Express Bank, FSB |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.565% 1/8/07 |
|
| — |
|
| 10,000,235 |
|
| — |
|
| 1,500,000 |
| American Express Bank, FSB |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.290% 1/12/07 |
|
| — |
|
| 1,499,996 |
|
130Prospectus§TIAA-CREF§Real Estate Account
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL | PRINCIPAL |
| VALUE |
| PRINCIPAL |
| VALUE |
| ||||||||||||||||||
|
|
| ||||||||||||||||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| |||||||||||||||||
2007 | 2007 |
| 2006 |
| ISSUER, INTEREST RATE AND MATURITY DATE |
| 2007 |
| 2006 |
| ||||||||||||||||
| ||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||||||||
$ | — |
| $ | 17,000,000 |
| Sigma Finance Inc |
|
| — |
| $ | 24,000,000 |
| American Express Bank, FSB |
| |||||||||||
|
|
| 4.230% 1/31/06 |
| $ | — |
| $ | 16,942,370 |
|
|
|
|
| 5.280% 1/18/07 |
| $ | — |
| $ | 23,999,578 |
| ||||
| — |
| 5,575,000 |
| Sigma Finance Inc |
|
| 25,000,000 |
| — |
| American Express Centurion Bank |
|
|
|
|
|
|
| |||||||
|
|
| 4.340% 2/27/06 |
| — |
| 5,537,536 |
|
|
|
|
| 4.750% 2/4/08 |
|
| 25,001,875 |
|
| — |
| ||||||
| — |
| 5,000,000 |
| Sigma Finance Inc |
|
| 20,000,000 |
| — |
| American Express Centurion Bank |
|
|
|
|
|
|
| |||||||
|
|
| 3.940% 3/1/06 |
| — |
| 4,965,150 |
|
|
|
|
| 4.750% 2/5/08 |
|
| 20,001,556 |
|
| — |
| ||||||
| — |
| 8,000,000 |
| Sigma Finance Inc |
|
| — |
| 25,000,000 |
| American Express Centurion Bank |
|
|
|
|
|
|
| |||||||
|
|
| 4.390% 3/8/06 |
| — |
| 7,937,120 |
|
|
|
|
| 5.290% 1/3/07 |
|
| — |
|
| 24,999,988 |
| ||||||
| 7,850,000 |
| — |
| Societe Generale North America, Inc |
|
| — |
| 19,165,000 |
| American Express Centurion Bank |
|
|
|
|
|
|
| |||||||
|
|
| 5.255% 1/10/07 |
| 7,836,262 |
| — |
|
|
|
|
| 5.290% 1/8/07 |
|
| — |
|
| 19,164,962 |
| ||||||
| 25,000,000 |
| — |
| Societe Generale North America, Inc |
|
| — |
| 20,000,000 |
| American Express Centurion Bank |
|
|
|
|
|
|
| |||||||
|
|
| 5.250% 1/19/07 |
| 24,937,902 |
| — |
|
|
|
|
| 5.290% 1/9/07 |
|
| — |
|
| 19,999,954 |
| ||||||
| — |
| 6,030,000 |
| Societe Generale North America, Inc |
|
| 10,000,000 |
| — |
| Bank of Montreal |
|
|
|
|
|
|
| |||||||
|
|
| 4.390% 3/20/06 |
| — |
| 5,974,281 |
|
|
|
|
| 5.030% 2/14/08 |
|
| 10,004,439 |
|
| — |
| ||||||
| 20,000,000 |
| — |
| SunTrust Banks, Inc. |
|
| 45,000,000 |
| — |
| Bank of Montreal |
|
|
|
|
|
|
| |||||||
|
|
| 5.245% 5/1/07 |
| 20,001,700 |
| — |
|
|
|
|
| 5.100% 3/7/08 |
|
| 45,031,437 |
|
| — |
| ||||||
| — |
| 27,600,000 |
| Swedish Export Credit Corp |
|
| 25,000,000 |
| — |
| Bank of Nova Scotia |
|
|
|
|
|
|
| |||||||
|
|
| 4.260% 1/18/06 |
| — |
| 27,550,596 |
|
|
|
|
| 5.060% 1/16/08 |
|
| 25,003,988 |
|
| — |
| ||||||
| 14,675,000 |
| — |
| Swedish Export Credit Corp |
|
| 25,000,000 |
| — |
| Barclays Bank |
|
|
|
|
|
|
| |||||||
|
|
| 5.319% 1/10/07 |
| 14,657,788 |
| — |
|
|
|
|
| 4.990% 2/27/08 |
|
| 25,012,510 |
|
| — |
| ||||||
| 33,895,000 |
| — |
| Swedish Export Credit Corp |
|
| 10,000,000 |
| — |
| Calyon |
|
|
|
|
|
|
| |||||||
|
|
| 5.250% 1/16/07 |
| 33,825,624 |
| — |
|
|
|
|
| 4.820% 1/31/08 |
|
| 10,001,100 |
|
| — |
| ||||||
| 30,000,000 |
| — |
| Swedish Export Credit Corp |
|
| 50,000,000 |
| — |
| Calyon |
|
|
|
|
|
|
| |||||||
|
|
| 5.240% 2/13/07 |
| 29,816,250 |
| — |
|
|
|
|
| 5.050% 3/12/08 |
|
| 50,032,645 |
|
| — |
| ||||||
| 5,800,000 |
| — |
| The Concentrate Manufacturing Company of |
|
| 25,000,000 |
| — |
| Deutsche Bank |
|
|
|
|
|
|
| |||||||
|
|
| Ireland 5.260% 1/9/07 |
| 5,790,695 |
| — |
|
|
|
|
| 4.950% 1/24/08 |
|
| 25,004,197 |
|
| — |
| ||||||
| 50,000,000 |
| — |
| Toyota Motor Credit Corp |
|
| — |
| 3,000,000 |
| Deutsche Bank |
|
|
|
|
|
|
| |||||||
|
|
| 5.235% 1/23/07 |
| 49,846,580 |
| — |
|
|
|
|
| 5.290% 1/9/07 |
|
| — |
|
| 2,999,962 |
| ||||||
| 30,000,000 |
| — |
| Toyota Motor Credit Corp |
|
| — |
| 30,000,000 |
| Deutsche Bank |
|
|
|
|
|
|
| |||||||
|
|
| 5.230% 1/25/07 |
| 29,899,221 |
| — |
|
|
|
|
| 5.300% 1/22/07 |
|
| — |
|
| 29,999,154 |
| ||||||
| — |
| 15,000,000 |
| Toyota Motor Credit Corp |
|
| 32,000,000 |
| — |
| Dexia Banque SA |
|
|
|
|
|
|
| |||||||
|
|
| 4.300% 10/10/06 |
| — |
| 15,000,900 |
|
|
|
|
| 4.990% 3/10/08 |
|
| 32,016,554 |
|
| — |
| ||||||
| 19,000,000 |
| — |
| U.S. Bancorp |
|
| 20,000,000 |
| — |
| Dexia Banque SA |
|
|
|
|
|
|
| |||||||
|
|
| 5.245% 12/5/07 |
| 18,998,765 |
| — |
|
|
|
|
| 4.880% 3/25/08 |
|
| 20,008,286 |
|
| — |
| ||||||
| — |
| 24,000,000 |
| UBS Finance, (Delaware) Inc |
|
| 30,000,000 |
| — |
| Rabobank Nederland |
|
|
|
|
|
|
| |||||||
|
|
| 4.310% 2/10/06 |
| — |
| 23,891,280 |
|
|
|
|
| 5.020% 3/5/08 |
|
| 30,016,305 |
|
| — |
| ||||||
| — |
| 3,120,000 |
| UBS Finance, (Delaware) Inc |
|
| 30,000,000 |
| — |
| Royal Bank of Canada |
|
|
|
|
|
|
| |||||||
|
|
| 1.760% 4/19/06 |
| — |
| 3,079,190 |
|
|
|
|
| 5.060% 1/25/08 |
|
| 30,007,494 |
|
| — |
| ||||||
| 17,500,000 |
| — |
| UBS Finance, (Delaware) Inc |
|
| 20,000,000 |
| — |
| SunTrust Banks, Inc. |
|
|
|
|
|
|
| |||||||
|
|
| 5.230% 2/20/07 |
| 17,375,018 |
| — |
|
|
|
|
| 4.845% 1/28/08 |
|
| 19,998,920 |
|
| — |
| ||||||
|
|
|
|
|
| 40,000,000 |
| — |
| Toronto Dominion Bank |
|
|
|
|
|
|
| |||||||||
| 34,530,000 |
| — |
| Variable Funding Capital Corporation |
|
|
|
|
|
| 5.300% 1/22/08 |
|
| 40,014,108 |
|
| — |
| |||||||
|
|
| 5.320% 2/2/07 |
| 34,371,217 |
| — |
| 15,000,000 |
| — |
| Toronto Dominion Bank |
|
|
|
|
|
|
| ||||||
| 30,000,000 |
| — |
| Variable Funding Capital Corporation |
|
|
|
|
|
| 5.040% 2/26/08 |
|
| 15,008,718 |
|
| — |
| |||||||
|
|
| 5.250% 2/5/07 |
| 29,848,698 |
| — |
|
|
|
|
|
|
|
|
| ||||||||||
TOTAL CERTIFICATES OF DEPOSIT | TOTAL CERTIFICATES OF DEPOSIT |
|
| 422,164,132 |
|
| 132,663,829 |
| ||||||||||||||||||
| 25,000,000 |
| — |
| Variable Funding Capital Corporation |
|
|
|
|
|
| |||||||||||||||
|
|
| 5.250% 2/6/07 |
| 24,870,208 |
| — |
| ||||||||||||||||||
116TIAA-CREF|§Real Estate Account§Prospectus131
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER, YIELD(6)AND MATURITY DATE |
| 2007 |
| 2006 |
| ||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
COMMERCIAL PAPER—9.23% AND 9.81% | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 10,000,000 |
| $ | — |
| Abbey National North America LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.670% 1/8/08 |
| $ | 9,989,577 |
| $ | — |
|
| 20,000,000 |
|
| — |
| Abbey National North America LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.930% 1/9/08 |
|
| 19,976,550 |
|
| — |
|
| — |
|
| 25,000,000 |
| Abbey National North America LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/17/07 |
|
| — |
|
| 24,945,207 |
|
| 50,000,000 |
|
| — |
| American Express Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.510% 1/14/08 |
|
| 49,908,220 |
|
| — |
|
| 32,490,000 |
|
| — |
| American Honda Finance Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.50-4.510% 1/29/08 |
|
| 32,369,946 |
|
| — |
|
| 2,137,000 |
|
| — |
| American Honda Finance Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.380% 1/4/08 |
|
| 2,135,879 |
|
| — |
|
| 15,438,000 |
|
| — |
| American Honda Finance Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.310% 2/11/08 |
|
| 15,355,978 |
|
| — |
|
| 7,050,000 |
|
|
|
| American Honda Finance Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.250% 2/28/08 |
|
| 6,996,781 |
|
| — |
|
| — |
|
| 50,000,000 |
| American Honda Finance Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.210-5.240% 1/22/07 |
|
| — |
|
| 49,853,055 |
|
| — |
|
| 17,475,000 |
| American Honda Finance Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/9/07 |
|
| — |
|
| 17,377,605 |
|
| — |
|
| 10,000,000 |
| Anheuser - Busch Co. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/19/07 |
|
| — |
|
| 9,975,019 |
|
| 20,000,000 |
|
| — |
| Bank of America Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.970% 1/15/08 |
|
| 19,960,666 |
|
| — |
|
| 13,200,000 |
|
| — |
| Bank of America Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.780% 3/6/08 |
|
| 13,087,663 |
|
| — |
|
| 30,000,000 |
|
| — |
| Bank of America Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.800% 4/8/08 |
|
| 29,604,246 |
|
| — |
|
| 27,400,000 |
|
| — |
| Bank of Scotland |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.710% 2/26/08 |
|
| 27,200,523 |
|
| — |
|
| 34,525,000 |
|
| — |
| Bank of Scotland |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.720% 2/29/08 |
|
| 34,259,731 |
|
| — |
|
| — |
|
| 25,000,000 |
| Barclay’s U.S. Funding Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/26/07 |
|
| — |
|
| 24,912,383 |
|
| — |
|
| 20,000,000 |
| BMW US Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.210% 2/7/07 |
|
| — |
|
| 19,894,400 |
|
| — |
|
| 23,050,000 |
| BMW US Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/9/07 |
|
| — |
|
| 22,921,533 |
|
| 20,000,000 |
|
| — |
| Canadian Imperial Holdings, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.703% 1/29/08 |
|
| 19,926,098 |
|
| — |
|
| — |
|
| 25,000,000 |
| Ciesco LP |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/9/07 |
|
| — |
|
| 24,973,942 |
|
| — |
|
| 14,000,000 |
| Ciesco LP |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/25/07 |
|
| — |
|
| 13,952,299 |
|
| 40,000,000 |
|
| — |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.850% 1/23/08 |
|
| 39,880,984 |
|
| — |
|
132Prospectus§TIAA-CREF§Real Estate Account
|
|
| ||
| TIAA Real Estate Account | |||
Statement of investments | continued | |||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
| |||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
|
| $25,000,000 |
| Variable Funding Capital Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.000% 1/5/06 |
| $ | — |
| $ | 24,993,750 |
|
| — |
|
| 5,010,000 |
| Washington Gas Light Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.330% 1/9/06 |
|
| — |
|
| 5,006,393 |
|
| — |
|
| 20,000,000 |
| Wells Fargo |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.320% 2/9/06 |
|
| — |
|
| 19,999,600 |
|
| — |
|
| 19,460,000 |
| Yorktown Capital, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.190% 1/4/06 |
|
| — |
|
| 19,457,665 |
|
| — |
|
| 4,066,000 |
| Yorktown Capital, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.275% 1/6/06 |
|
| — |
|
| 4,064,496 |
|
| — |
|
| 2,625,000 |
| Yorktown Capital, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.280% 2/10/06 |
|
| — |
|
| 2,611,893 |
|
| 23,415,000 |
|
| — |
| Yorktown Capital, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.340% 1/4/07 |
|
| 23,408,027 |
|
| — |
|
|
|
|
|
|
|
|
|
| |||||
TOTAL COMMERCIAL PAPER |
|
|
|
|
|
|
| ||||||
(Cost $1,672,398,634 and $1,340,511,661) |
|
| 1,672,544,145 |
|
| 1,340,656,583 |
| ||||||
|
|
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GOVERNMENT AGENCY BONDS—2.36% AND 2.61% |
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17,700,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.135% 1/5/07 |
|
| 17,694,938 |
|
| — |
|
| 19,745,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.190% 1/12/07 |
|
| 19,719,628 |
|
| — |
|
| 39,969,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.130% 1/19/07 |
|
| 39,877,711 |
|
| — |
|
| 23,753,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
|
| 2.330% 2/28/07 |
|
| 23,563,451 |
|
| — |
|
| — |
|
| 7,030,000 |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.750% 1/3/06 |
|
| — |
| 7,027,383 |
| |
| — |
|
| 50,000,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.150% 1/31/06 |
|
| — |
| 49,839,500 |
| |
| 13,654,000 |
|
| — |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 2.190% 1/2/07 |
|
| 13,654,000 |
|
| — |
|
| 22,250,000 |
|
| — |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.250% 1/16/07 |
|
| 22,208,704 |
|
| — |
|
| 43,400,000 |
|
| — |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.151% 1/24/07 |
|
| 43,269,887 |
|
| — |
|
| 50,000,000 |
|
| — |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.240% 1/30/07 |
|
| 49,807,250 |
|
| — |
|
| 33,675,000 |
|
| — |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.150% 1/31/07 |
|
| 33,540,367 |
|
| — |
|
| — |
| 30,000,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
| |
|
|
|
|
|
| 2.380% 1/3/06 |
|
| — |
| 30,000,000 |
| |
| — |
| 3,840,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
| |
|
|
|
|
|
| 1.780% 1/9/06 |
|
| — |
| 3,837,350 |
| |
| — |
| 18,000,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
| |
|
|
|
|
|
| 4.210% 2/9/06 |
|
| — |
| 17,922,240 |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
| ISSUER, YIELD(6)AND MATURITY DATE |
|
| ||||||||||
2007 |
| 2006 |
|
| 2007 |
| 2006 |
| |||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 25,000,000 |
| $ | — |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.650% 2/12/08 |
| $ | 24,864,937 |
| $ | — |
|
| 25,000,000 |
|
| — |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.650% 2/7/08 |
|
| 24,880,483 |
|
| — |
|
| — |
|
| 50,000,000 |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/11/07 |
|
| — |
|
| 49,934,060 |
|
| — |
|
| 35,825,000 |
| Citigroup Funding Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 2/5/07 |
|
| — |
|
| 35,647,365 |
|
| 5,255,000 |
|
| — |
| Coca Cola Co. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.200% 2/15/08 |
|
| 5,224,421 |
|
| — |
|
| 20,000,000 |
|
| — |
| Coca Cola Co. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.430% 2/19/08 |
|
| 19,873,054 |
|
| — |
|
| 13,000,000 |
|
| — |
| Coca Cola Co. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.390% 2/25/08 |
|
| 12,907,098 |
|
| — |
|
| — |
|
| 6,000,000 |
| Corporate Asset Funding Corp, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/22/07 |
|
| — |
|
| 5,982,193 |
|
| — |
|
| 8,760,000 |
| Corporate Asset Funding Corp, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/29/07 |
|
| — |
|
| 8,725,048 |
|
| — |
|
| 25,000,000 |
| Corporate Asset Funding Corp, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/7/07 |
|
| — |
|
| 24,867,250 |
|
| — |
|
| 54,000,000 |
| Corporate Asset Funding Corp, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 2/8/07 |
|
| — |
|
| 53,705,295 |
|
| 30,000,000 |
|
| — |
| Danske Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.920% 3/6/08 |
|
| 29,746,338 |
|
| — |
|
| — |
|
| 7,000,000 |
| Dorada Finance Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/9/07 |
|
| — |
|
| 6,992,704 |
|
| 20,000,000 |
|
| — |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 3/11/08 |
|
| 19,789,840 |
|
| — |
|
| — |
|
| 24,000,000 |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/19/07 |
|
| — |
|
| 23,939,287 |
|
| — |
|
| 10,000,000 |
| Edison Asset Securitization, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/1/07 |
|
| — |
|
| 9,955,666 |
|
| — |
|
| 32,900,000 |
| Fairway Finance Company, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/17/07 |
|
| — |
|
| 32,826,521 |
|
| 20,460,000 |
|
| — |
| General Electric Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.510% 2/19/08 |
|
| 20,330,987 |
|
| — |
|
| 15,340,000 |
|
| — |
| General Electric Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.550% 2/20/08 |
|
| 15,241,250 |
|
| — |
|
| 30,000,000 |
|
| — |
| General Electric Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.580% 4/8/08 |
|
| 29,606,721 |
|
| — |
|
| — |
|
| 23,760,000 |
| General Electric Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/18/07 |
|
| — |
|
| 23,704,454 |
|
| — |
|
| 13,155,000 |
| General Electric Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/8/07 |
|
| — |
|
| 13,084,017 |
|
| — |
|
| 30,000,000 |
| General Electric Capital Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/15/07 |
|
| — |
|
| 29,807,499 |
|
TIAATIAA-CREF§ Real Estate AccountProspectus|117§Prospectus 133
|
|
|
| TIAA Real Estate Account | |
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
| ISSUER, YIELD(6)AND MATURITY DATE |
|
| ||||||||||
| 2007 |
| 2006 |
|
| 2007 |
| 2006 |
| ||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 30,540,000 |
| $ | — |
| General Electric Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.540% 3/4/08 |
| $ | 30,290,195 |
| $ | — |
|
| 13,200,000 |
|
| — |
| Goldman Sachs Group Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.200% 1/08/08 |
|
| 13,186,155 |
|
| — |
|
| 12,000,000 |
|
| — |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.680% 1/28/08 |
|
| 11,948,442 |
|
| — |
|
| 20,000,000 |
|
| — |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.400% 2/12/08 |
|
| 19,869,924 |
|
| — |
|
| 37,860,000 |
|
| — |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.100% 2/20/08 |
|
| 37,570,693 |
|
| — |
|
| 29,000,000 |
|
| — |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.850% 3/13/08 |
|
| 28,687,505 |
|
| — |
|
| — |
|
| 25,700,000 |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 3/8/07 |
|
| — |
|
| 25,454,668 |
|
| — |
|
| 50,000,000 |
| Govco Incorporated |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.330% 1/5/07 |
|
| — |
|
| 49,977,665 |
|
| 35,140,000 |
|
| — |
| Greenwich Capital Holding |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.850% 4/14/08 |
|
| 34,649,576 |
|
| — |
|
| — |
|
| 33,000,000 |
| Greyhawk Funding LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 2/6/07 |
|
| — |
|
| 32,829,314 |
|
| 6,990,000 |
|
| — |
| Harley-Davidson Funding |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.480% 2/21/08 |
|
| 6,943,777 |
|
| — |
|
| — |
|
| 8,415,000 |
| HBOS Treasury Srvcs PLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 3/21/07 |
|
| — |
|
| 8,319,680 |
|
| 30,000,000 |
|
| — |
| HSBC Finance Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.700% 2/21/08 |
|
| 29,757,135 |
|
| — |
|
| — |
|
| 40,000,000 |
| HSBC Finance Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/26/07 |
|
| — |
|
| 39,859,012 |
|
| 25,000,000 |
|
| — |
| IBM Capital Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.250% 3/10/08 |
|
| 24,773,325 |
|
| — |
|
| — |
|
| 22,200,000 |
| IBM Capital Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.220% 3/16/07 |
|
| — |
|
| 21,963,166 |
|
| 10,000,000 |
|
| — |
| IBM International Group |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.725% 1/14/08 |
|
| 9,981,644 |
|
| — |
|
| 18,900,000 |
|
| — |
| IBM International Group |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.725% 1/15/08 |
|
| 18,862,829 |
|
| — |
|
| 20,000,000 |
|
| — |
| IBM International Group |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.220% 2/27/08 |
|
| 19,851,712 |
|
| — |
|
| 5,420,000 |
|
| — |
| IBM (International Business Machines Corp.) |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.230% 1/3/08 |
|
| 5,417,868 |
|
| — |
|
| — |
|
| 19,000,000 |
| IBM (International Business Machines Corp.) |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/10/07 |
|
| — |
|
| 18,966,750 |
|
| 20,000,000 |
|
| — |
| ING (US) Finance |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.730% 1/30/08 |
|
| 19,924,332 |
|
| — |
|
| 25,000,000 |
|
| — |
| ING (US) Finance |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.820% 2/22/08 |
|
| 24,832,460 |
|
| — |
|
134 Prospectus§TIAA-CREF§ Real Estate Account
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
| ISSUER, YIELD(6)AND MATURITY DATE |
|
| ||||||||||
2007 |
| 2006 |
|
| 2007 |
| 2006 |
| |||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
| $ | 25,000,000 |
| ING (US) Finance |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 3/27/07 |
| $ | — |
| $ | 24,695,265 |
|
| — |
|
| 24,000,000 |
| Johnson & Johnson |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.270% 1/2/07 |
|
| — |
|
| 24,000,000 |
|
| — |
|
| 25,000,000 |
| Johnson & Johnson |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.200% 1/18/07 |
|
| — |
|
| 24,941,555 |
|
| — |
|
| 20,259,000 |
| Kimberly-Clark Worldwide, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/29/07 |
|
| — |
|
| 20,179,184 |
|
| 22,904,000 |
|
| — |
| Kitty Hawk Funding Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.030% 3/14/08 |
|
| 22,653,437 |
|
| — |
|
| — |
|
| 10,000,000 |
| Links Finance L.L.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/16/07 |
|
| — |
|
| 9,979,190 |
|
| — |
|
| 30,000,000 |
| Morgan Stanley Dean Witter |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/12/07 |
|
| — |
|
| 29,819,598 |
|
| 20,000,000 |
|
| — |
| Nestle Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 2/6/08 |
|
| 19,906,862 |
|
| — |
|
| 14,500,000 |
|
| — |
| Nestle Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.090% 3/11/08 |
|
| 14,367,337 |
|
| — |
|
| 20,000,000 |
|
| — |
| Nestle Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.210% 3/5/08 |
|
| 19,833,636 |
|
| — |
|
| 9,300,000 |
|
| — |
| Paccar Financial Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.730% 1/14/08 |
|
| 9,283,038 |
|
| — |
|
| 10,000,000 |
|
| — |
| Paccar Financial Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.490% 2/11/08 |
|
| 9,947,220 |
|
| — |
|
| 15,300,000 |
|
| — |
| Paccar Financial Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.500% 2/28/08 |
|
| 15,185,256 |
|
| — |
|
| 10,000,000 |
|
| — |
| Park Avenue Receivables |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.650% 3/18/08 |
|
| 9,884,430 |
|
| — |
|
| 19,645,000 |
|
| — |
| Pfizer Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.410% 5/15/08 |
|
| 19,285,726 |
|
| — |
|
| — |
|
| 11,601,000 |
| Pitney Bowes Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.300% 1/4/07 |
|
| — |
|
| 11,597,578 |
|
| 28,000,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.640-4.750% 1/30/08 |
|
| 27,893,365 |
|
| — |
|
| 1,500,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.530% 1/31/08 |
|
| 1,494,098 |
|
| — |
|
| 10,000,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.680% 2/11/08 |
|
| 9,946,870 |
|
| — |
|
| 20,000,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 2/5/08 |
|
| 19,908,760 |
|
| — |
|
| 10,000,000 |
|
| — |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.680% 3/3/08 |
|
| 9,919,045 |
|
| — |
|
| — |
|
| 20,500,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.220% 1/3/07 |
|
| — |
|
| 20,496,976 |
|
| — |
|
| 1,845,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/11/07 |
|
| — |
|
| 1,842,553 |
|
TIAA-CREF§ Real Estate Account§ Prospectus135
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
| ISSUER, YIELD(6)AND MATURITY DATE |
|
| ||||||||||
2007 |
| 2006 |
|
| 2007 |
| 2006 |
| |||||
| |||||||||||||
| |||||||||||||
$ | — |
| $ | 23,000,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.22-5.23% 1/18/07 |
| $ | — |
| $ | 22,945,922 |
|
| — |
|
| 6,000,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.220% 1/23/07 |
|
| — |
|
| 5,981,485 |
|
| — |
|
| 15,000,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 2/15/07 |
|
| — |
|
| 14,903,199 |
|
| — |
|
| 14,120,000 |
| Private Export Funding Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 3/6/07 |
|
| — |
|
| 13,989,828 |
|
| — |
|
| 25,000,000 |
| Procter & Gamble Co |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/12/07 |
|
| — |
|
| 24,963,380 |
|
| — |
|
| 25,000,000 |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/1/07 |
|
| — |
|
| 24,890,625 |
|
| — |
|
| 50,000,000 |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/14/07 |
|
| — |
|
| 49,686,455 |
|
| 10,000,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 1/16/08 |
|
| 9,979,155 |
|
| — |
|
| 10,000,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.750% 1/18/08 |
|
| 9,976,550 |
|
| — |
|
| 10,000,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.200% 1/31/08 |
|
| 9,960,914 |
|
| — |
|
| 4,665,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.750% 1/4/08 |
|
| 4,662,569 |
|
| — |
|
| 30,000,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 2/14/08 |
|
| 29,830,500 |
|
| — |
|
| 17,000,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.600% 2/1/08 |
|
| 16,931,441 |
|
| — |
|
| 8,000,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.350% 3/12/08 |
|
| 7,925,696 |
|
| — |
|
| 9,000,000 |
|
| — |
| Procter & Gamble International S.C. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.190% 3/14/08 |
|
| 8,913,882 |
|
| — |
|
| 12,000,000 |
|
| — |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.110% 1/10/08 |
|
| 11,981,685 |
|
| — |
|
| 31,573,000 |
|
| — |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.080-5.580% 1/18/08 |
|
| 31,486,411 |
|
| — |
|
| — |
|
| 10,000,000 |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/24/07 |
|
| — |
|
| 9,967,385 |
|
| — |
|
| 20,000,000 |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/25/07 |
|
| — |
|
| 19,931,856 |
|
| — |
|
| 23,760,000 |
| Ranger Funding Company LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.300% 2/12/07 |
|
| — |
|
| 23,616,311 |
|
| 25,000,000 |
|
| — |
| Royal Bank of Scotland |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 2/8/08 |
|
| 24,877,365 |
|
| — |
|
| — |
|
| 10,000,000 |
| Scaldis Capital LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/10/07 |
|
| — |
|
| 9,988,068 |
|
| — |
|
| 25,000,000 |
| Sheffield Receivables Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/12/07 |
|
| — |
|
| 24,962,735 |
|
136Prospectus§TIAA-CREF§Real Estate Account
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
| ISSUER, YIELD(6)AND MATURITY DATE |
|
| ||||||||||
2007 |
| 2006 |
|
| 2007 |
| 2006 |
| |||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
| $ | 35,750,000 |
| Sheffield Receivables Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/17/07 |
| $ | — |
| $ | 35,670,156 |
|
| 10,000,000 |
|
| — |
| Shell International Financial |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.470% 3/28/08 |
|
| 9,884,402 |
|
| — |
|
| 20,000,000 |
|
| — |
| Societe Generale North America, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.155% 1/10/08 |
|
| 19,973,944 |
|
| — |
|
| 15,000,000 |
|
| — |
| Societe Generale North America, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.780% 2/1/08 |
|
| 14,939,506 |
|
| — |
|
| 25,000,000 |
|
| — |
| Societe Generale North America, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.830% 3/26/08 |
|
| 24,718,170 |
|
| — |
|
| 17,420,000 |
|
| — |
| Societe Generale North America, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.640% 4/4/08 |
|
| 17,201,414 |
|
| — |
|
| — |
|
| 7,850,000 |
| Societe Generale North America, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/10/07 |
|
| — |
|
| 7,836,262 |
|
| — |
|
| 25,000,000 |
| Societe Generale North America, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 1/19/07 |
|
| — |
|
| 24,937,902 |
|
| — |
|
| 20,000,000 |
| SunTrust Banks, Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.245% 5/1/07 |
|
| — |
|
| 20,001,700 |
|
| 18,505,000 |
|
| — |
| Svensk Exportkredit AB |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.720-4.820% 01/14/08 |
|
| 18,471,249 |
|
| — |
|
| 17,800,000 |
|
| — |
| Svensk Exportkredit AB |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.860% 1/15/08 |
|
| 17,765,215 |
|
| — |
|
| 36,000,000 |
|
| — |
| Svensk Exportkredit AB |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 1/17/08 |
|
| 35,920,267 |
|
| — |
|
| 16,000,000 |
|
| — |
| Svensk Exportkredit AB |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.370% 3/12/08 |
|
| 15,851,392 |
|
| — |
|
| 10,000,000 |
|
| — |
| Svensk Exportkredit AB |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.720% 04/09/08 |
|
| 9,867,500 |
|
| — |
|
| — |
|
| 14,675,000 |
| Swedish Export Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 1/10/07 |
|
| — |
|
| 14,657,788 |
|
| — |
|
| 33,895,000 |
| Swedish Export Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.24-5.26% 1/16/07 |
|
| — |
|
| 33,825,624 |
|
| — |
|
| 30,000,000 |
| Swedish Export Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.240% 2/13/07 |
|
| — |
|
| 29,816,250 |
|
| — |
|
| 5,800,000 |
| The Concentrate Manufacturing Company of Ireland |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/9/07 |
|
| — |
|
| 5,790,695 |
|
| 10,000,000 |
|
| — |
| Toronto-Dominion Holdings |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.060% 01/31/08 |
|
| 9,960,914 |
|
| — |
|
| 25,000,000 |
|
| — |
| Toronto-Dominion Holdings |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.710% 2/11/08 |
|
| 24,868,050 |
|
| — |
|
| 19,000,000 |
|
| — |
| Toyota Motor Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.520% 1/8/08 |
|
| 18,980,196 |
|
| — |
|
| 30,000,000 |
|
| — |
| Toyota Motor Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.880% 2/15/08 |
|
| 29,826,579 |
|
| — |
|
| 30,000,000 |
|
| — |
| Toyota Motor Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.740% 2/25/08 |
|
| 29,787,012 |
|
| — |
|
TIAA-CREF§Real Estate Account§Prospectus 137
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
| ISSUER, YIELD(6)AND MATURITY DATE |
|
| ||||||||||
2007 |
| 2006 |
|
| 2007 |
| 2006 |
| |||||
| |||||||||||||
| |||||||||||||
$ | 20,000,000 |
| $ | — |
| Toyota Motor Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.530% 2/28/08 |
| $ | 19,850,008 |
| $ | — |
|
| — |
|
| 50,000,000 |
| Toyota Motor Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/23/07 |
|
| — |
|
| 49,846,580 |
|
| — |
|
| 30,000,000 |
| Toyota Motor Credit Corp. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.230% 1/25/07 |
|
| — |
|
| 29,899,221 |
|
| 20,000,000 |
|
| — |
| UBS Finance, (Delaware) Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.030% 2/13/08 |
|
| 19,889,486 |
|
| — |
|
| 17,215,000 |
|
| — |
| UBS Finance, (Delaware) Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.000% 2/21/08 |
|
| 17,101,908 |
|
| — |
|
| 25,000,000 |
|
| — |
| UBS Finance, (Delaware) Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.910% 4/7/08 |
|
| 24,675,782 |
|
| — |
|
| — |
|
| 17,500,000 |
| UBS Finance, (Delaware) Inc. |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/20/07 |
|
| — |
|
| 17,375,018 |
|
| 3,970,000 |
|
| — |
| Unilever Capital Corp |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.230% 1/11/08 |
|
| 3,964,274 |
|
| — |
|
| 10,000,000 |
|
| — |
| United Parcel Service Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.300% 3/18/08 |
|
| 9,898,686 |
|
| — |
|
| 30,000,000 |
|
| — |
| United Parcel Service Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.400% 3/31/08 |
|
| 29,640,321 |
|
| — |
|
| 20,000,000 |
|
| — |
| United Parcel Service Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.340% 4/28/08 |
|
| 19,680,880 |
|
| — |
|
| 20,000,000 |
|
| — |
| United Parcel Service Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.340% 4/29/08 |
|
| 19,678,000 |
|
| — |
|
| 20,000,000 |
|
| — |
| United Parcel Service Inc |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.380% 4/1/08 |
|
| 19,757,426 |
|
| — |
|
| 7,831,000 |
|
| — |
| Variable Funding Capital Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.640% 4/15/08 |
|
| 7,694,387 |
|
| — |
|
| — |
|
| 34,530,000 |
| Variable Funding Capital Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/2/07 |
|
| — |
|
| 34,371,217 |
|
| — |
|
| 30,000,000 |
| Variable Funding Capital Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/5/07 |
|
| — |
|
| 29,848,698 |
|
| — |
|
| 25,000,000 |
| Variable Funding Capital Corporation |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.250% 2/6/07 |
|
| — |
|
| 24,870,208 |
|
| 30,000,000 |
|
| — |
| Yorktown Capital, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.875% 4/15/08 |
|
| 29,527,943 |
|
| — |
|
| — |
|
| 23,415,000 |
| Yorktown Capital, LLC |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.260% 1/4/07 |
|
| — |
|
| 23,408,027 |
|
|
|
|
| ||||||||||
TOTAL COMMERCIAL PAPER |
|
| 1,755,075,702 |
|
| 1,520,881,551 |
| ||||||
|
|
|
| ||||||||||
138Prospectus§TIAA-CREF§Real Estate Account
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE | ||||||||
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER, INTEREST RATE AND MATURITY DATE |
| 2007 |
| 2006 | ||||
|
|
|
|
|
|
|
|
| ||||
GOVERNMENT AGENCY BONDS—5.82% AND 2.36% |
|
|
|
| ||||||||
$ | — |
| $ | 17,700,000 |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 5.130% 1/5/07 |
| $ | — |
| $ | 17,694,938 |
| — |
|
| 19,745,000 |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 5.180% 1/12/07 |
|
| — |
|
| 19,719,628 |
| — |
|
| 39,969,000 |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 5.200% 1/19/07 |
|
| — |
|
| 39,877,711 |
| — |
|
| 23,753,000 |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 5.180% 2/28/07 |
|
| — |
|
| 23,563,451 |
| 25,000,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.450% 1/2/08 |
|
| 25,000,000 |
|
| — |
| 25,000,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.450% 1/3/08 |
|
| 24,997,275 |
|
| — |
| 28,850,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.661% 1/4/08 |
|
| 28,843,711 |
|
| — |
| 34,945,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.450% 1/7/08 |
|
| 34,925,990 |
|
| — |
| 41,450,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.260-4.900% 1/11/08 |
|
| 41,409,379 |
|
| — |
| 77,800,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.280-4.290% 1/16/08 |
|
| 77,681,433 |
|
| — |
| 32,500,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.260% 1/25/08 |
|
| 32,418,620 |
|
| — |
| 43,830,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.300% 1/28/08 |
|
| 43,705,917 |
|
| — |
| 2,000,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.480% 2/1/08 |
|
| 1,993,134 |
|
| — |
| 25,000,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.200% 2/13/08 |
|
| 24,879,825 |
|
| — |
| 23,694,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.250% 3/12/08 |
|
| 23,504,638 |
|
| — |
| 30,000,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.270% 3/17/08 |
|
| 29,743,140 |
|
| — |
| 20,000,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.270% 3/19/08 |
|
| 19,824,180 |
|
| — |
| 85,900,000 |
|
| — |
| Federal Home Loan Banks |
|
|
|
|
|
|
|
|
|
|
|
| 4.260% 3/24/08 |
|
| 85,095,804 |
|
| — |
| 15,000,000 |
|
| — |
| Federal Home Loan Bank Systems |
|
|
|
|
|
|
|
|
|
|
|
| 4.700% 11/20/08 |
|
| 14,991,900 |
|
| — |
| — |
|
| 13,654,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
| 5.110% 1/2/07 |
|
| — |
|
| 13,654,000 |
| — |
|
| 22,250,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
| 5.130% 1/16/07 |
|
| — |
|
| 22,208,704 |
| — |
|
| 43,400,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
| 5.150% 1/24/07 |
|
| — |
|
| 43,269,887 |
| — |
|
| 50,000,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
| 5.130% 1/30/07 |
|
| — |
|
| 49,807,250 |
TIAA-CREF§Real Estate Account§Prospectus 139
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE | ||||||||
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER, INTEREST RATE AND MATURITY DATE |
| 2007 |
| 2006 | ||||
| ||||||||||||
$ | — |
| $ | 33,675,000 |
| Federal Home Loan Mortgage Corporation |
|
|
|
|
|
|
|
|
|
|
|
| 5.150% 1/31/07 |
| $ | — |
| $ | 33,540,367 |
| — |
|
| 30,000,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
| 5.150% 2/6/07 |
|
| — |
|
| 29,854,650 |
| — |
|
| 23,768,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
| 5.150% 1/8/07 |
|
| — |
|
| 23,751,029 |
| — |
|
| 50,000,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
| 5.160% 3/21/07 |
|
| — |
|
| 49,452,450 |
| 32,465,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.330% 1/4/08 |
|
| 32,457,922 |
|
| — |
| 18,990,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.230% 2/15/08 |
|
| 18,894,366 |
|
| — |
| 20,000,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.200% 2/19/08 |
|
| 19,890,140 |
|
| — |
| 16,600,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.280% 2/21/08 |
|
| 16,505,015 |
|
| — |
| 25,000,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.270% 2/22/08 |
|
| 24,854,075 |
|
| — |
| 23,725,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.170% 3/5/08 |
|
| 23,554,345 |
|
| — |
| 44,000,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.260% 3/6/08 |
|
| 43,678,492 |
|
| — |
| 29,045,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.190-4.280% 3/20/08 |
|
| 28,786,354 |
|
| — |
| 30,000,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.280% 3/21/08 |
|
| 29,729,430 |
|
| — |
| 12,840,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.285% 3/26/08 |
|
| 12,716,864 |
|
| — |
| 22,518,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.190-4.240% 3/27/08 |
|
| 22,299,485 |
|
| — |
| 17,890,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.270% 3/28/08 |
|
| 17,714,356 |
|
| — |
| 30,000,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.220% 4/24/08 |
|
| 29,613,930 |
|
| — |
| 41,650,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.150-4.180% 4/30/08 |
|
| 41,085,518 |
|
| — |
| 31,901,000 |
|
| — |
| Fannie Mae Discount Notes |
|
|
|
|
|
|
|
|
|
|
|
| 4.100% 5/28/08 |
|
| 31,359,658 |
|
| — |
| 30,000,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
| 4.330% 1/24/08 |
|
| 29,928,120 |
|
| — |
| 32,470,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
| 4.320% 1/31/08 |
|
| 32,367,460 |
|
| — |
| 22,400,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
| 4.220% 2/14/08 |
|
| 22,289,770 |
|
| — |
| 25,487,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
| 4.210% 2/20/08 |
|
| 25,344,069 |
|
| — |
140Prospectus§TIAA-CREF§Real Estate Account
TIAA Real Estate Account | ||
Statement of investments | continued | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
|
| ||||||||||
2007 |
| 2006 |
| ISSUER, INTEREST RATE AND MATURITY DATE |
| 2007 |
| 2006 |
| ||||
| |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | 10,000,000 |
| $ | — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.320% 2/21/08 |
| $ | 9,942,780 |
| $ | — |
|
| 8,500,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.240% 3/3/08 |
|
| 8,440,806 |
|
| — |
|
| 17,925,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.120% 3/31/08 |
|
| 17,737,868 |
|
| — |
|
| 26,735,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.145% 4/10/08 |
|
| 26,433,563 |
|
| — |
|
| 20,817,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.175% 4/18/08 |
|
| 20,563,324 |
|
| — |
|
| 10,795,000 |
|
| — |
| Freddie Mac Discount Note |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.180% 4/25/08 |
|
| 10,654,849 |
|
| — |
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL GOVERNMENT AGENCY BONDS |
|
|
|
|
|
|
| ||||||
(Cost $1,105,524,756 and $366,282,560) |
|
| 1,105,857,505 |
|
| 366,394,065 |
| ||||||
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
VARIABLE NOTES—0.26% AND 0.12% |
|
|
|
|
|
|
| ||||||
| — |
|
| 19,000,000 |
| US Bank NA |
|
|
|
|
|
|
|
|
|
|
|
|
| 5.735% 12/5/07 |
|
| — |
|
| 18,998,765 |
|
| 25,000,000 |
|
| — |
| Wells Fargo Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.600% 1/7/08 |
|
| 24,999,308 |
|
| — |
|
| 25,000,000 |
|
| — |
| Wells Fargo Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.600% 1/8/08 |
|
| 24,999,210 |
|
| — |
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL VARIABLE NOTES |
|
|
|
|
|
|
| ||||||
(Cost $50,000,000 and $19,003,401) |
|
| 49,998,518 |
|
| 18,998,765 |
| ||||||
|
|
|
| ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
BANKERS ACCEPTANCE—0.20% AND 0.00% |
|
|
|
|
|
|
| ||||||
| 4,359,000 |
|
| — |
| JPMorgan Chase Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.400% 1/18/08 |
|
| 4,349,127 |
|
| — |
|
| 10,000,000 |
|
| — |
| Wachovia Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.380% 4/21/08 |
|
| 9,850,480 |
|
| — |
|
| 25,000,000 |
|
| — |
| Wachovia Bank |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.300% 5/7/08 |
|
| 24,570,220 |
|
| — |
|
|
|
|
|
|
|
|
|
|
| ||||
TOTAL BANKERS ACCEPTANCE |
|
|
|
|
|
|
| ||||||
(Cost $38,835,657 and $0) |
|
| 38,769,827 |
|
| — |
| ||||||
|
|
|
|
|
|
|
|
|
| ||||
TOTAL OTHER MARKETABLE SECURITIES |
|
|
|
|
|
|
| ||||||
(Cost $3,371,895,300 and $2,038,681,194) |
|
| 3,371,865,684 |
|
| 2,038,938,210 |
| ||||||
|
|
|
|
|
|
|
|
|
| ||||
TOTAL MARKETABLE SECURITIES |
|
|
|
|
|
|
| ||||||
(Cost $3,811,049,548 and $2,608,007,989) |
|
| 3,798,495,896 |
|
| 2,743,860,533 |
| ||||||
|
|
|
| ||||||||||
TIAA-CREF§Real Estate Account§Prospectus 141
TIAA Real Estate Account | ||
Statement of investments | concluded | |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL |
|
|
| VALUE |
| ||||||||
|
|
| |||||||||||
2006 |
| 2005 |
| ISSUER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ | — |
| $ | 46,555,000 |
| Federal National Mortgage |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.350% 1/11/06 |
| $ | — |
| $ | 46,512,169 |
|
| 30,000,000 |
|
| — |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.260% 2/6/07 |
|
| 29,854,650 |
|
| — |
|
| 23,768,000 |
|
| — |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.740% 1/8/07 |
|
| 23,751,029 |
|
| — |
|
| 50,000,000 |
|
| — |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.240% 3/21/07 |
|
| 49,452,450 |
|
| — |
|
| — |
|
| 37,615,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 2.290% 1/10/06 |
|
| — |
|
| 37,584,908 |
|
| — |
|
| 3,015,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.830% 2/1/06 |
|
| — |
|
| 3,004,809 |
|
| — |
|
| 29,320,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.200% 2/2/06 |
|
| — |
|
| 29,217,380 |
|
| — |
|
| 1,766,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 1.740% 2/15/06 |
|
| — |
|
| 1,757,135 |
|
| — |
|
| 50,000,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.240% 2/17/06 |
|
| — |
|
| 49,737,500 |
|
| — |
|
| 23,940,000 |
| Federal National Mortgage Association |
|
|
|
|
|
|
|
|
|
|
|
|
| 4.240% 2/23/06 |
|
| — |
|
| 23,797,558 |
|
|
|
|
|
|
|
|
|
| |||||
TOTAL GOVERNMENT AGENCY BONDS |
|
|
|
|
|
|
| ||||||
(Cost $366,282,560 and $300,164,529) |
|
| 366,394,065 |
|
| 300,237,932 | |||||||
|
|
| |||||||||||
TOTAL OTHER MARKETABLE SECURITIES |
|
|
|
|
|
|
| ||||||
(Cost $2,038,681,194 and $1,640,676,190) |
|
| 2,038,938,210 |
|
| 1,640,894,515 |
| ||||||
|
|
| |||||||||||
TOTAL MARKETABLE SECURITIES |
|
|
|
|
|
|
| ||||||
(Cost $2,608,007,989 and $2,074,158,205) |
|
| 2,743,860,533 |
|
| 2,089,557,113 |
| ||||||
|
|
| |||||||||||
| |||||||||||||
MORTGAGE LOAN RECEIVABLE—0.48% AND 0.00% |
|
|
|
|
|
|
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
PRINCIPAL | PRINCIPAL |
| VALUE |
| PRINCIPAL |
| VALUE |
| ||||||||||||||||||
|
|
| ||||||||||||||||||||||||
2006 |
| 2005 |
| BORROWER, CURRENT RATE AND MATURITY DATE |
| 2006 |
| 2005 |
| |||||||||||||||||
2007 | 2007 |
| 2006 |
| ISSUER, INTEREST RATE AND MATURITY DATE |
| 2007 |
| 2006 |
| ||||||||||||||||
| ||||||||||||||||||||||||||
| 75,000,000 |
| — |
| Klingle Corporation |
|
|
|
|
| ||||||||||||||||
MORTGAGE LOAN RECEIVABLE—0.38% AND 0.48% | MORTGAGE LOAN RECEIVABLE—0.38% AND 0.48% |
| ||||||||||||||||||||||||
$ | 75,000,000 |
| $ | 75,000,000 |
| Klingle Corporation |
| |||||||||||||||||||
|
|
| 6.17% 07/10/11 |
|
| 74,660,626 |
| — |
|
|
|
|
| 6.17% 07/10/11 |
| $ | 72,519,684 |
| $ | 74,660,626 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
TOTAL MORTGAGE LOAN RECEIVABLE | TOTAL MORTGAGE LOAN RECEIVABLE |
|
|
| TOTAL MORTGAGE LOAN RECEIVABLE |
|
|
|
|
| ||||||||||||||||
(Cost $75,000,000) |
|
| 74,660,626 |
| — |
| ||||||||||||||||||||
(Cost $75,000,000 and $75,000,000) | (Cost $75,000,000 and $75,000,000) |
| 72,519,684 |
| 74,660,626 |
| ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
TOTAL INVESTMENTS | TOTAL INVESTMENTS |
|
|
| TOTAL INVESTMENTS |
|
|
|
|
| ||||||||||||||||
(Cost $13,558,801,945 and $10,516,032,644) |
| $ | 15,510,036,850 |
| $ | 11,485,741,406 |
| |||||||||||||||||||
(Cost $15,951,457,925 and $13,558,801,945) | (Cost $15,951,457,925 and $13,558,801,945) |
| $ | 19,013,601,527 |
| $ | 15,510,036,850 |
| ||||||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||||||||
|
|
|
| |||||||||||||||||||||||
|
|
(1) | The investment has a mortgage loan payable outstanding as indicated in Note 5. |
(2) | Leasehold interest only. |
(3) |
|
| The market value reflects the Account’s interest in the joint venture, net of any debt. |
(4) | The market value reflects the final settlement due the Account. The investment was sold on 8/24/07. |
(5) | Located throughout the U.S. |
(6) | Yield represents the annualized yield at the date of purchase. |
118|142ProspectusTIAA §TIAA-CREF§Real Estate Account
Report of Independent Registered Public Accounting Firm
To the Participants of the TIAA Real Estate Account and the Board of
Trustees of Teachers Insurance and Annuity Association of America:
In our opinion, the accompanying statements of assets and liabilities, including the statementstatements of investments, and the related statements of operations, changes in net assets and cash flows, present fairly, in all material respects, the financial position of the TIAA Real Estate Account (the “Account”) at December 31, 20052007 and December 31, 2006 and the results of its operations and its cash flows for each of the three years thenin the period ended December 31, 2007 in conformity with accounting principles generally accepted in the United States of America. These financial statements are the responsibility of the Account’s management. Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the auditaudits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers LLPNew York, New YorkMarch 15, 2007
/s/ PricewaterhouseCoopers LLP |
New York, New York |
March 20, 2008 |
TIAA TIAA-CREF§Real Estate AccountProspectus|119§Prospectus 143
Report of Independent Registered Public Accounting Firm
To the Participants of the TIAA Real Estate Account and the Board of Trustees of Teachers Insurance and Annuity Association of America:
We have audited the accompanying statements of operations, changes in net assets and cash flows of the TIAA Real Estate Account (“Account”) of Teachers Insurance and Annuity Association of America (“TIAA”) for the year ended December 31, 2004. These financial statements are the responsibility of TIAA’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations, changes in net assets and cash flows of the Account for the year ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.
/s/ Ernst & Young LLP
New York, New YorkApril 14, 2005
120|ProspectusTIAA Real Estate Account
ProformaPro forma Condensed Statement of Assets and Liabilities (Unaudited)
TIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2006 |
|
|
|
|
|
|
|
|
|
|
|
| Historical |
| Adjustments |
| Proforma |
| |||
| ||||||||||
ASSETS |
|
|
|
|
|
|
|
|
|
|
Real estate and other real estate-related investments |
| $ | 12,691,515,691 |
| $ | 2,889,456,503 | (a) | $ | 15,580,972,194 |
|
Marketable securities |
|
| 2,743,860,533 |
|
| — |
|
| 2,743,860,533 |
|
Other |
|
| 324,585,109 |
|
| — |
|
| 324,585,109 |
|
| ||||||||||
TOTAL ASSETS |
|
| 15,759,961,333 |
|
| 2,889,456,503 |
|
| 18,649,417,836 |
|
| ||||||||||
Mortgage notes payable |
|
| 1,437,149,148 |
|
| 2,889,456,503 | (a) |
| 4,326,605,651 |
|
Payable for securities transactions |
|
| 1,219,323 |
|
| — |
|
| 1,219,323 |
|
Accrued real estate property level expenses and taxes |
|
| 169,657,402 |
|
| — |
|
| 169,657,402 |
|
Security deposits held |
|
| 19,242,948 |
|
| — |
|
| 19,242,948 |
|
| ||||||||||
TOTAL LIABILITIES |
|
| 1,627,268,821 |
|
| 2,889,456,503 |
|
| 4,516,725,324 |
|
| ||||||||||
NET ASSETS |
| $ | 14,132,692,512 |
| $ | — |
| $ | 14,132,692,512 |
|
| ||||||||||
As of December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
| Historical |
| Adjustments |
| Pro forma |
| |||
ASSETS |
|
|
|
|
|
|
|
|
|
|
Real estate properties and |
|
|
|
|
|
|
|
|
|
|
Real estate joint ventures and |
|
|
|
|
|
|
|
|
|
|
limited partnerships, at value |
| $ | 15,142,585,947 |
| $ | 42,728,299 | (a) | $ | 15,185,314,246 |
|
Marketable securities |
|
| 3,798,495,896 |
|
| — |
|
| 3,798,495,896 |
|
Other |
|
| 291,685,401 |
|
| — |
|
| 291,685,401 |
|
TOTAL ASSETS |
|
| 19,232,767,244 |
|
| 42,728,299 |
|
| 19,275,495,543 |
|
Mortgage notes payable |
|
| 1,392,092,982 |
|
| 42,728,299 | (a) |
| 1,434,821,281 |
|
Payable for securities transactions |
|
| 866,209 |
|
| — |
|
| 866,209 |
|
Accrued real estate property level |
|
|
|
|
|
|
|
|
|
|
expenses and taxes |
|
| 154,638,976 |
|
| — |
|
| 154,638,976 |
|
Security deposits held |
|
| 24,632,278 |
|
| — |
|
| 24,632,278 |
|
TOTAL LIABILITIES |
|
| 1,572,230,445 |
|
| 42,728,299 |
|
| 1,614,958,744 |
|
NET ASSETS |
| $ | 17,660,536,799 |
| $ | — |
| $ | 17,660,536,799 |
|
TIAA 144Prospectus§TIAA-CREF§Real Estate AccountProspectus|121
ProformaPro forma Condensed Statement of Operations (Unaudited)
TIAA Real Estate Account
|
|
|
|
|
|
|
|
|
|
|
For the Year Ended December 31, 2006 |
|
|
|
|
|
|
|
|
|
|
|
| Historical |
| Adjustments |
| Proforma |
| |||
| ||||||||||
Rental income |
| $ | 834,455,788 |
| $ | 110,540,084 | (b) | $ | 944,995,872 |
|
| ||||||||||
Operating expenses |
|
| 207,452,982 |
|
| 31,567,152 | (b) |
| 239,020,134 |
|
Real estate taxes |
|
| 110,059,852 |
|
| 14,143,847 | (b) |
| 124,203,699 |
|
Interest expense |
|
| 72,160,111 |
|
| 82,609,148 | (b) |
| 154,769,259 |
|
| ||||||||||
Total real estate property expenses and taxes |
|
| 389,672,945 |
|
| 128,320,147 |
|
| 517,993,092 |
|
| ||||||||||
Real estate income, net |
|
| 444,782,843 |
|
| (17,780,063 | ) |
| 427,002,780 |
|
Income from real estate joint ventures and limited partnerships |
|
| 84,671,528 |
|
| 48,440,533 | (c) |
| 133,112,061 |
|
Interest and dividends |
|
| 135,407,210 |
|
| — |
|
| 135,407,210 |
|
| ||||||||||
TOTAL INCOME, NET |
|
| 664,861,581 |
|
| 30,660,470 |
|
| 695,522,051 |
|
EXPENSES |
|
| 83,448,664 |
|
| 11,695,465 | (d) |
| 95,144,129 |
|
| ||||||||||
INVESTMENT INCOME, NET |
|
| 581,412,917 |
|
| 18,965,005 |
|
| 600,377,922 |
|
REALIZED AND UNREALIZED GAINS |
|
| 1,032,787,765 |
|
| — |
|
| 1,032,787,765 |
|
| ||||||||||
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS |
| $ | 1,614,200,682 |
| $ | 18,965,005 |
| $ | 1,633,165,687 |
|
| ||||||||||
For the Year Ended December 31, 2007
|
|
|
|
|
|
|
|
|
|
|
|
| Historical |
| Adjustments |
| Pro forma |
| |||
Rental income |
| $ | 987,434,298 |
| $ | 17,906,168 | (b) | $ | 1,005,340,466 |
|
Operating expenses |
|
| 247,473,125 |
|
| 2,819,329 | (b) |
| 250,292,454 |
|
Real estate taxes |
|
| 126,925,585 |
|
| 2,560,376 | (b) |
| 129,485,961 |
|
Interest expense |
|
| 83,622,829 |
|
| 18,635,553 | (b) |
| 102,258,382 |
|
Total real estate property |
|
|
|
|
|
|
|
|
|
|
expenses and taxes |
|
| 458,021,539 |
|
| 24,015,258 |
|
| 482,036,797 |
|
Real estate income, net |
|
| 529,412,759 |
|
| (6,109,090 | ) |
| 523,303,669 |
|
Income from real estate joint ventures |
|
|
|
|
|
|
|
|
|
|
and limited partnerships |
|
| 93,724,569 |
|
| 6,257,959 | (c) |
| 99,982,528 |
|
Interest and dividends |
|
| 141,913,253 |
|
| — |
|
| 141,913,253 |
|
TOTAL INCOME |
|
| 765,050,581 |
|
| 148,869 |
|
| 765,199,450 |
|
EXPENSES |
|
| 140,294,447 |
|
| 2,102,999 | (d) |
| 142,397,446 |
|
INVESTMENT INCOME, NET |
|
| 624,756,134 |
|
| (1,954,130 | ) |
| 622,802,004 |
|
REALIZED AND UNREALIZED GAINS |
|
| 1,438,434,738 |
|
| — |
|
| 1,438,434,738 |
|
NET INCREASE IN NET ASSETS |
|
|
|
|
|
|
|
|
|
|
RESULTING FROM OPERATIONS |
| $ | 2,063,190,872 |
| $ | (1,954,130 | ) | $ | 2,061,236,742 |
|
122TIAA-CREF|§Real Estate Account§ProspectusTIAA Real Estate Account 145
Notes to ProformaPro Forma Condensed Financial Statements (Unaudited)
TIAA Real Estate Account
Note 1—Purpose and Assumptions
As required by the Securities and Exchange Commission under Regulation S-X Article 11-01(5), these proformapro forma condensed financial statements of the TIAA Real Estate Account (“Account”) have been prepared because the Account has made significant purchases of real estate property investments during the period from January 1, 20062007 through the date of this prospectus. During 2006,2007, the Account purchased 237 property investments: ninethree office properties, sevenone industrial properties, three apartment properties, threeproperty, two retail properties and an 85% interest in a joint venture that owns foursixty-five retail centers.properties. During the period from January 1, 2007 through the date of this prospectus, the Account purchased one office property, one retail property in Paris, France and an 85% interest in a joint venture that owns 66 retail centers.lease buyback. Information regarding some of these propertiesthis lease buyback is included under “Recent Transactions” on page 31.
38.
Various assumptions have been made in order to prepare these proformapro forma condensed financial statements. The proformapro forma condensed statement of assets and liabilities has been prepared assuming the real estate property investments purchased during the period from January 1, 20072008 through the date of this prospectus were purchased as of December 31, 2006.2007. The proformapro forma condensed statement of operations for the year ended December 31, 20062007 has been prepared assuming real estate property investments purchased during the period from January 1, 20062007 through the date of this prospectus were purchased as of January 1, 2006.2007.
Note 2—ProformaPro Forma Adjustments
The following proformapro forma adjustments were made in preparing the proformapro forma condensed financial statements to reflect the purpose described in Note 1.
ProformaPro forma Condensed Statement of Assets and Liabilities:
|
|
| |
| (a) | To record the cost of the real estate property |
Proforma Condensed Statement of Operations:
|
|
| |
Pro forma Condensed Statement of Operations: | |||
| (b) | To record the rental income and real estate property level expenses of the real estate properties purchased during the period from January 1, | |
TIAA 146Prospectus§TIAA-CREF§Real Estate AccountProspectus|123
|
|
|
| (c) | To record the real estate joint venture income of the joint ventures purchased during the period from January 1, |
|
|
|
| (d) | To record additional investment advisory expense charges which would have been incurred during the year ended December 31, |
124|TIAA-CREFProspectus§TIAA Real Estate Account§Prospectus147
The North 40 Office Complex, Boca Raton, Florida
INDEPENDENT AUDITORS’ REPORT
To the Management of Teachers Insurance and Annuity Association
We have audited the accompanying statement of revenues and certain expenses of the property known as The North 40 Office Complex, located in Boca Raton, Florida (the “Property”), as described in Note 1, for the year ended December 31, 2005. This financial statement is the responsibility of the Property’s management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with Rule 3-14 of Securities and Exchange Commission Regulation S-X and, as described in Note 1, is not intended to be a complete presentation of the Property’s revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Property for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
April 28, 2006
TIAA Real Estate AccountProspectus|125
The North 40 Office Complex, Boca Raton, Florida
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
|
|
|
|
|
|
|
|
|
|
|
| Year Ended |
| Three Months Ended |
| ||||
REVENUES |
|
|
|
|
|
|
|
|
|
Base rent |
|
| $ | 3,683,032 |
|
| $ | 964,882 |
|
FASB Statement No. 13 accrual |
|
|
| 181,557 |
|
|
| 33,404 |
|
Other income |
|
|
| 2,743,829 |
|
|
| 736,252 |
|
|
|
|
| 6,608,418 |
|
|
| 1,734,538 |
|
CERTAIN EXPENSES |
|
|
|
|
|
|
|
|
|
Utilities |
|
|
| 747,905 |
|
|
| 206,362 |
|
Real estate taxes |
|
|
| 562,585 |
|
|
| 140,646 |
|
Management fees |
|
|
| 260,519 |
|
|
| 68,944 |
|
Salaries |
|
|
| 246,698 |
|
|
| 64,766 |
|
Insurance |
|
|
| 240,030 |
|
|
| 47,342 |
|
Janitorial |
|
|
| 231,922 |
|
|
| 57,572 |
|
Hurricane costs |
|
|
| 199,040 |
|
|
| 74,316 |
|
Repairs and maintenance |
|
|
| 175,998 |
|
|
| 26,056 |
|
Landscaping |
|
|
| 128,192 |
|
|
| 29,817 |
|
Security |
|
|
| 47,573 |
|
|
| 13,646 |
|
Professional fees |
|
|
| 10,076 |
|
|
| 2,050 |
|
Administrative |
|
|
| 7,767 |
|
|
| 3,708 |
|
Other |
|
|
| 11,138 |
|
|
| 2,531 |
|
|
|
|
| 2,869,443 |
|
|
| 737,756 |
|
Excess of revenues over certain expenses |
|
| $ | 3,738,975 |
|
| $ | 996,782 |
|
See notes to statements of revenues and certain expenses.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
1 — Organizaton and Basis of Presentation
The Property, located in Boca Raton, Florida, consists of two buildings, 5201 Congress Avenue and 901 Yamato Road. The buildings contain approximately 350,000 square feet of commercial space, 202,000 square feet at 5201 Congress Avenue and 148,000 square feet at 901 Yamato Road, which are currently 99.6% and 100% leased, respectively, to a total of 13 tenants. The tenant leases contain provisions for additional rent based on increases in operating expenses and real estate taxes over base period amounts.
The accompanying financial statements are presented in conformity with Rule 3-14 of Securities and Exchange Commission Regulation S-X. Accordingly, the financial statements are not representative of actual operations for the periods presented, as certain expenses, which may not be comparable to the expenses expected to be incurred in the future operations of the Property, have been excluded.
126|ProspectusTIAA Real Estate Account
Expenses excluded consist of interest, depreciation and amortization and certain other expenses not directly related to the future operations of the Property.
The statement of revenues and certain expenses for the three months ended March 31, 2006 is unaudited. However, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of this statement of revenues and certain expenses for the interim period on the basis described above have been included. The results for such an interim period are not necessarily indicative of the results for the entire year.
2 — Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Revenue Recognition
Rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term, as required by the Financial Accounting Standards Board’s Statement No. 13, “Accounting for Leases” (FASB Statement No. 13). Recoveries, based on payments for real estate taxes and operating expenses, are estimated and accrued.
3 — Major Tenants
Three tenants lease approximately 60% of the Property’s square footage, and base rent income from these tenants represented approximately 60% of the total for the year ended December 31, 2005.
4 — Operating Leases
Space in the Property is leased to tenants under noncancelable operating leases. Approximate minimum future rents required under leases in effect at December 31, 2005 are as follows:
|
|
|
|
|
Year Ending December 31, |
|
|
|
|
| ||||
2006 |
| $ | 3,959,000 |
|
2007 |
|
| 3,796,000 |
|
2008 |
|
| 3,609,000 |
|
2009 |
|
| 3,721,000 |
|
2010 |
|
| 3,787,000 |
|
Thereafter |
|
| 7,020,000 |
|
| ||||
|
| $ | 25,892,000 |
|
|
TIAA Real Estate AccountProspectus|127
5 — Related Party Transaction
The Property is managed by Flagship Group, Inc., an affiliate of the Property’s owner. Management fees of approximately $261,000 were incurred for the year ended December 31, 2005. Management fees for the three months ended March 31, 2006 were approximately $69,000 (unaudited).
128|ProspectusTIAA Real Estate Account
Publix at Weston Commons, Weston, Florida
INDEPENDENT AUDITORS’ REPORT
To the Management of Teachers Insurance and Annuity Association
We have audited the accompanying statement of revenues and certain expenses of the property known as Publix at Weston Commons, Weston, Florida (the “Property”), as described in Note 1, for the year ended December 31, 2005. This financial statement is the responsibility of the Property’s management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with Rule 3-14 of Securities and Exchange Commission Regulation S-X and, as described in Note 1, is not intended to be a complete presentation of the Property’s revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Property for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
June 2, 2006
TIAA Real Estate AccountProspectus|129
Publix at Weston Commons, Weston, Florida
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
|
|
|
|
|
|
|
|
|
| Year Ended |
| Four Months Ended |
| ||
|
| December 31, 2005 |
| April 30, 2006 |
| ||
|
| (Audited) |
| (Unaudited) |
| ||
REVENUES |
|
|
|
|
|
|
|
Rental income |
| $ | 2,019,171 |
| $ | 932,153 |
|
Recoveries |
|
| 543,423 |
|
| 249,603 |
|
Other income |
|
| 480 |
|
| 30 |
|
|
|
| 2,563,074 |
|
| 1,181,786 |
|
CERTAIN EXPENSES |
|
|
|
|
|
|
|
Utilities |
|
| 96,926 |
|
| 72,214 |
|
Administrative |
|
| 8,763 |
|
| 6,367 |
|
Repairs and maintenance |
|
| 11,718 |
|
| 8,817 |
|
Site maintenance |
|
| 223,322 |
|
| 102,253 |
|
Real estate taxes |
|
| 267,272 |
|
| 168,000 |
|
Insurance |
|
| 98,049 |
|
| 44,340 |
|
Management fees |
|
| 93,100 |
|
| 44,562 |
|
Nonreimbursed expenses |
|
| 222,960 |
|
| 124,213 |
|
|
|
| 1,022,110 |
|
| 570,766 |
|
Excess of revenues over certain expenses |
| $ | 1,540,964 |
| $ | 611,020 |
|
See notes to statements of revenues and certain expenses.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
1 – Organizaton and Basis of Presentation
The Property, located in Weston, Florida, contains approximately 127,000 square feet of commercial space. At April 30, 2006, the Property was 96% leased. The tenant leases contain provisions for additional rent based on the pro-rata share of common area maintenance expenses and real estate taxes.
The accompanying financial statements are presented in conformity with Rule 3-14 of Securities and Exchange Commission Regulation S-X. Accordingly, the financial statements are not representative of actual operations for the periods presented, as certain expenses, which may not be comparable to the expenses expected to be incurred in the future operations of the Property, have been excluded. Expenses excluded consist of interest, depreciation and amortization and certain other expenses not directly related to the future operations of the Property.
The statement of revenues and certain expenses for the four months ended April 30, 2006 is unaudited. However, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of this statement of revenues and certain expenses for the interim period on the basis described above have been included. The results for such an interim period are not necessarily indicative of the results for the entire year.
130|ProspectusTIAA Real Estate Account
2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Revenue Recognition
Rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Recoveries, based on payments for real estate taxes and common area maintenance expenses, are estimated and accrued.
3 – Major Tenant
One tenant leases approximately 35% of the Property’s square footage. Rent from this tenant represented approximately 36% of rental income for the year ended December 31, 2005 and 25% for the four months ended April 30, 2006.
4 – Operating Leases
Space in the Property is rented to tenants under various noncancelable operating leases. Approximate minimum future rents required under leases in effect at December 31, 2005 are as follows:
|
|
|
|
|
Year Ending December 31, |
|
|
|
|
| ||||
2006 |
| $ | 1,896,000 |
|
2007 |
|
| 2,686,000 |
|
2008 |
|
| 2,699,000 |
|
2009 |
|
| 2,678,000 |
|
2010 |
|
| 2,445,000 |
|
Thereafter |
|
| 19,574,000 |
|
| ||||
|
| $ | 31,978,000 |
|
|
5 – Related Party Transaction
The current owner of the Property pays a monthly management fee to West City Partners, an affiliate, computed at 4% of billings. Management fees paid were approximately $93,100 for the year ended December 31, 2005 and $44,500 for the four months ended April 30, 2006.
TIAA Real Estate AccountProspectus|131
INDEPENDENT AUDITORS’ REPORT
To the Management of Teachers Insurance and Annuity Association
We have audited the accompanying statement of revenues and certain expenses of the property known as City Center, located in Washington, DC (the “Property”), as described in Note 1, for the year ended December 31, 2005. This financial statement is the responsibility of the Property’s management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with Rule 3-14 of Securities and Exchange Commission Regulation S-X and, as described in Note 1, is not intended to be a complete presentation of the Property’s revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Property for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
June 5, 2006
132|ProspectusTIAA Real Estate Account
City Center, Washington, DC
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
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|
|
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|
|
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|
|
| Year Ended |
| Three Months Ended |
| ||
|
| December 31, 2005 |
| March 31, 2006 |
| ||
|
| (Audited) |
| (Unaudited) |
| ||
REVENUES |
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|
|
|
|
|
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Rental income |
| $ | 13,138,258 |
| $ | 3,432,414 |
|
FASB Statement No. 13 accrual |
|
| 485,767 |
|
| 14,155 |
|
Recoveries |
|
| 1,127,357 |
|
| 167,333 |
|
Parking income |
|
| 194,422 |
|
| 92,160 |
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Storage |
|
| 98,779 |
|
| 24,158 |
|
Other income |
|
| 131,727 |
|
| 26,411 |
|
|
|
| 15,176,310 |
|
| 3,756,631 |
|
CERTAIN EXPENSES |
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|
|
|
|
|
|
Operating expenses |
|
| 2,972,614 |
|
| 726,925 |
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Management fees |
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| 440,999 |
|
| 112,127 |
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Insurance |
|
| 97,717 |
|
| 27,003 |
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Real estate taxes |
|
| 2,042,959 |
|
| 798,888 |
|
|
|
| 5,554,289 |
|
| 1,664,943 |
|
Excess of revenues over certain expenses |
| $ | 9,622,021 |
| $ | 2,091,688 |
|
See notes to statements of revenues and certain expenses.
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
1 – Organizaton and Basis of Presentation
The Property, located in Washington, DC, contains approximately 499,000 square feet of commercial space and is currently 90% leased to 16 tenants. The tenant leases contain provisions for additional rent based on increases in operating expenses and real estate taxes over base period amounts.
The accompanying financial statement for 2005 is presented in conformity with Rule 3-14 of Securities and Exchange Commission Regulation S-X. Accordingly, the financial statement is not representative of actual operations for the periods presented, as certain expenses, which may not be comparable to the expenses expected to be incurred in the future operations of the Property, have been excluded. Expenses excluded consist of interest, depreciation and amortization and certain other expenses not directly related to the future operations of the Property.
The statement of revenues and certain expenses for the three months ended March 31, 2006 is unaudited. However, in the opinion of management, all adjustments (consisting solely of normal recurring adjustments) necessary for the fair presentation of this statement of revenues and certain expenses for the interim period on the basis described above have been included. The results for such an interim period are not necessarily indicative of the results for the entire year.
TIAA Real Estate AccountProspectus|133
2 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates.
Revenue Recognition
Rental income from leases with scheduled rent increases is recognized on a straight-line basis over the lease term. Recoveries, based on payments for real estate taxes and operating expenses, are estimated and accrued.
3 – Major Tenants
Two tenants lease approximately 55% of the Property’s square footage. Rent from these tenants represented approximately 70% of total revenues for the year ended December 31, 2005.
4 – Operating Leases
Space in the Property is rented to tenants under various noncancelable operating leases. Approximate minimum future rents required under leases in effect at December 31, 2005 are as follows:
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|
|
|
|
Year Ending December 31, |
|
|
|
|
| ||||
2006 |
| $ | 13,350,000 |
|
2007 |
|
| 12,784,000 |
|
2008 |
|
| 11,539,000 |
|
2009 |
|
| 6,676,000 |
|
2010 |
|
| 6,107,000 |
|
Thereafter |
|
| 16,991,000 |
|
| ||||
|
| $ | 67,447,000 |
|
|
5 – Related Party Transaction
The Property is managed by George Comfort & Sons Inc., an affiliate of the Property’s owner. Management fees of approximately $441,000 were incurred for the year ended December 31, 2005. Management fees for the three months ended March 31, 2006 were approximately $112,000 (unaudited).
134|ProspectusTIAA Real Estate Account
WellPoint Office Campus, Westlake, California
INDEPENDENT AUDITORS’ REPORT
To the Management of Teachers’ Insurance and Annuity Association We have audited the accompanying statement of revenues and certain expenses of WellPoint Office Campus, Westlake Village, California, located at 4553 La Tienda Drive and 120 Via Merida (the “Property”), as described in Note 1, for the year ended December 31, 2005. This financial statement is the responsibility of the Property’s management. Our responsibility is to express an opinion on this financial statement based on our audit.
We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statement is free of material misstatement. An audit includes consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Property’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statement, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the purpose of complying with Rule 3-14 of Securities and Exchange Commission Regulation S-X and, as described in Note 1, is not intended to be a complete presentation of the Property’s revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in all material respects, the revenues and certain expenses of the Property for the year ended December 31, 2005, in conformity with accounting principles generally accepted in the United States of America.
June 9, 2006
TIAA Real Estate AccountProspectus|135
WellPoint Office Campus, Westlake, California
STATEMENTS OF REVENUES AND CERTAIN EXPENSES