Tiaa Real Estate Account S-1/A IPO registration (amended)

As filed with the Securities and Exchange Commission on April 30, 2009

Registration No. 333-158136

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Amendment No. 1

to

FORM S-1

FOR REGISTRATION UNDER THE SECURITIES ACT OF 1933

TIAA REAL ESTATE ACCOUNT

(Exact name of Registrant as Specified in its Charter)

New York
(State or other jurisdiction of
incorporation or organization) (Not applicable)
(Primary Standard Industrial
Classification Code Number) (Not applicable)
(I.R.S. Employer
Identification No.)

c/o Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017-3206
(212) 490-9000

(Address including zip code, and telephone number, including area code, of registrant’s principal executive offices)

Keith F. Atkinson, Esquire
Teachers Insurance and Annuity Association of America
8500 Andrew Carnegie Blvd.
Charlotte, North Carolina 28226
(704) 988-1000

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copy to:
Jeffrey S. Puretz, Esquire
Dechert LLP
1775 I Street, N.W.
Washington, D.C. 20006

          Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of the registration statement.

          If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box:x

          If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:o

          If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:o

          If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:o

          Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.

          Large accelerated filero Accelerated filero Non-accelerated filerx Smaller Reporting Companyo

          Pursuant to Rule 429 under the Securities Act, the prospectus contained herein also relates to and constitutes a post-effective amendment to Securities Act registration statements 33-92990, 333-13477, 333-22809, 333-59778, 333-83964, 333-113602, 333-121493, 333-132580, 333-141513 and 333-149862 (collectively, the “Prior Registration Statements”).

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities to be Registered	Amount to be Registered	Proposed Maximum Offering Price Per Unit	Proposed Maximum Aggregate Offering Price			Amount of Registration Fee(1)(2)
Accumulation units in TIAA Real Estate Account	*	*	$	5,000,000,000	**	$	279,000	**

*	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.
**	In addition to the $5,000,000,000 of accumulation units registered hereunder, the registrant is carrying forward securities which remain unsold but which were previously registered under the Prior Registration Statements for which filing fees were previously paid.
(1)	The Registrant paid filing fees in the amount of $196,500 in connection with the registration of accumulation units on its Registration Statement on Form S-1 (File No. 333-149862), which was initially filed with the Commission on March 24, 2008 and declared effective on May 1, 2008. The Registrant is not offsetting any filing fees previously paid in connection with any prior Registration Statement.
(2)	Previously paid.

          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 APRIL 30, 2009

PROSPECTUS

____________, 2009

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, the income generated by those investments and the Account’s expenses. 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” on page 14.

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 1.01%.

The Real Estate Account is designed as an option for retirement and tax-deferred savings plans for employees of non-profit institutions. TIAA offers the Real Estate Account under the following annuity contracts:

§	RA and GRAs (Retirement Annuities and Group Retirement Annuities)
§	SRAs (Supplemental Retirement Annuities)
§	GSRAs (Group Supplemental Retirement Annuities)
§	Retirement Choice and Retirement Choice Plus Annuity
§	GAs (Group Annuities) and Institutionally-Owned GSRAs
§	Classic and Roth IRAs (Individual Retirement Annuities) including SEP IRAs (Simplified Employee Pension Plans)
§	Keoghs
§	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.

Neither the Securities and Exchange Commission (SEC) nor any state securities commission has 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

About the Real Estate Account and TIAA	2
The Account’s Investment Objective and Strategy	3
Past Performance	5
Summary of Account’s Expense Deductions	5
About the Account’s Investments — In General	7
General Investment and Operating Policies	10
Risks	13
Establishing and Managing the Account — The Role of TIAA	28
Description of Properties	34
Legal Proceedings	45
Selected Financial Data	46
Quarterly Selected Financial Information	47
Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations	48
Quantitative and Qualitative Disclosures About Market Risk	82

Valuing the Account’s Assets	85
Expense Deductions	90
Certain Relationships With TIAA	92
The Contracts	93
How to Transfer and Withdraw Your Money	99
Receiving Annuity Income	104
Death Benefits	109
Taxes	111
General Matters	116
Distribution	118
State Regulation	118
Legal Matters	119
Experts	119
Additional Information	119
Financial Statements	120
Index to Financial Statements	120
Appendix A — Management of TIAA	174
Appendix B — Special Terms	176

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. The Account commenced operations on July 3, 1995, and interests in the Account were first offered to eligible participants on October 2, 1995.

          With its over 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, 2008, the TIAA general account had a mortgage and real property portfolio valued at approximately $25.8 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. CREF is a nonprofit membership corporation established in New York State in 1952. 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 serves approximately 3.4 million people and over 15,400 institutions. As of December 31, 2008, TIAA’s assets were approximately $195.2 billion; the combined assets for TIAA, CREF and other entities within the TIAA-CREF organization totaled approximately $363.0 billion (although CREF does not stand behind TIAA’s guarantees).

          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, NY 10017-3206, calling us at 877 518-9161 or visiting our website at www.tiaa-cref.org. Information contained on this website is expressly not incorporated into this prospectus.

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 will also invest in publicly traded securities and short-term higher quality liquid investments that are easily converted to cash to enable the Account to meet participant redemption requests, purchase or improve properties or cover other expense needs.

          Investment Strategy: The Account intends to have between 75 percent and 85 percent of its assets invested directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. 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 from time to time will also make foreign real estate investments, which, together with foreign real estate related and foreign liquid investments, are expected to comprise no more than 25 percent of the Account’s total assets.

          The Account can also invest in other real estate or real estate-related investments through joint ventures, real estate partnerships or common or

TIAA Real Estate Account§Prospectus 3

preferred stock or other equity securities of companies whose operations involve real estate (i.e., that primarily own or manage real estate). To a limited extent, the Account can also invest in conventional mortgage loans, participating mortgage loans, and collateralized mortgage obligations, including commercial mortgage-backed securities and other similar investments.

          The Account will invest the remaining portion of its assets in liquid investments; namely, securities issued by U.S. government agencies or U.S. government sponsored entities, corporate debt securities, money market instruments and, at times, stock of companies that do not primarily own or manage real estate. The amount the Account has invested in real estate and real estate-related investments at a given time will vary depending on its liquidity position (including the Account’s obligations to meet participant redemption requests) as well as market conditions and real estate prospects, among other factors.

          There will be periods of time (such as in the fourth quarter of 2008 and in early 2009) during which the Account’s liquid investments will comprise less than 15% of its total assets, especially during and immediately following periods of significant net participant outflows. As discussed in more detail on page 29 under “Establishing and Managing the Account – The Role of TIAA – Liquidity Guarantee” and pursuant to its existing liquidity guarantee obligation, TIAA has agreed to purchase accumulation units issued by the Account in the event the Account has insufficient cash and liquid investments to ensure the ability, on its own, to fund participant transfer, redemption or withdrawal requests. This liquidity guarantee was first exercised in December 2008.

          In some circumstances, the Account can increase the portion of its assets invested in debt securities or money market instruments above 25 percent. This could happen, for example, if the Account 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.

          As of December 31, 2008, the Account’s net assets totaled approximately $11.5 billion and as of March 31, 2009, the Account’s net assets totaled approximately $10.4 billion. At December 31, 2008, the Account held a total of 108 real estate property investments (including its interests in 12 real estate-related joint ventures), representing 93.48% of the Account’s total investment portfolio (“Total Investments”). As of that date, the Account also held investments in a mortgage loan receivable (representing 0.54% of Total Investments), real estate limited partnerships (representing 2.15% of Total Investments), commercial paper (representing 1.84% of Total Investments) and government agency bonds (representing 1.99% of Total Investments).

          Risks: An investment in the Account is subject to the risks associated with real estate investing, including the risks of acquiring, owning and selling real property, valuation and appraisal risks, 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

4 Prospectus§ TIAA Real Estate Account

securities, liquid investments and foreign real estate investments. These risks, among others, are described in “Risks” beginning on page 13.You may lose money by investing in this Account.

PAST PERFORMANCE

          The bar chart and performance table below illustrate how investment performance during the accumulation period has varied. 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, 2008. These returns represent the total return during each such year and are calculated as a function of both the Account’s investment income and capital appreciation from the Account’s total investments during each such year. How the Account has performed in the past is not necessarily an indication of how it will perform in the future. Please see “Risks” beginning on page 13.

Best quarter: 4.69%, for the quarter ended June 30, 2006.

Worst quarter: -13.18%, for the quarter ended December 31, 2008.

AVERAGE ANNUAL TOTAL RETURN (AS OF DECEMBER 31, 2008)

	1 Year		3 Year		5 Year		10 Year
TIAA Real Estate Account	-14.15	%	3.67	%	7.41	%	7.29	%

SUMMARY OF ACCOUNT’S EXPENSE DEDUCTIONS

          Expense deductions are made each Valuation Day from the net assets of the Account for various services to manage investments, administer the Account and the contracts, distribute the contracts and to cover certain risks borne by TIAA. Services are provided “at cost” by TIAA and TIAA-CREF Individual & Institutional Services, LLC (“Services”), a registered broker-dealer and wholly owned subsidiary of TIAA. Currently, TIAA provides investment management services and administration services for the Account, and Services provides

TIAA Real Estate Account§Prospectus 5

distribution services for the Account. TIAA guarantees that in the aggregate, the expense charges will never be more than 2.50% of average net assets per year.

          The estimated annual expense deduction rate that appears in the expense table below reflects an estimate of the amount we currently expect to deduct to approximate the costs that the Account will incur from May 1, 2009 through April 30, 2010. Actual expenses may be higher or lower.

Type of Expense Deduction	Estimated Percent of Net Assets Annually	Services Performed
Investment Management	0.410%	For investment advisory, investment management, portfolio accounting, custodial and similar services, including independent fiduciary and appraisal fees
Administration	0.310%	For administration and operations of the Account and the contracts, including administrative services such as receiving and allocating premiums and calculating and making annuity payments
Distribution	0.090%	For services and expenses associated with distributing the annuity contracts
Mortality and Expense Risk	0.050%	For TIAA’s bearing certain mortality and expense risks
Liquidity Guarantee	0.150%	For TIAA’s liquidity guarantee
Total Annual Expense Deduction1,2,3	1.010%	For total services to the Account

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.
3	Property-level expenses, including property management fees and transfer taxes, are not reflected in the table above; instead these expenses are charged directly to the Account’s properties.

Please see “Selected Financial Data” on page 46 for additional information.

          TIAA performs administration functions for the Account (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 helping employers implement and manage retirement plans, are performed by Services. TIAA and Services provide administration and distribution services, 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 include certain costs associated with the provision by TIAA entities of recordkeeping and other services for retirement plans and other pension products in addition to the Account. A portion of these expenses are allocated to the Account in accordance with applicable allocation procedures. Any differences between actual and estimated expenses are adjusted quarterly, provided that material differences may be repaid in the current calendar quarter in accordance with generally accepted accounting principles (GAAP). The expenses identified in the table above do not include any fees which may be imposed by your employer

6 Prospectus§ TIAA Real Estate Account

under a plan maintained by your employer. For more information, see “Expense Deductions” on page 90.

          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 deduction equal to 1.01%. These figures do not represent actual expenses or investment performance, which may differ.

	1 Year	3 Year	5 Year	10 Year
TIAA Real Estate Account	$10	$32	$56	$124

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. The Account does not directly invest in single-family residential real estate, nor does it currently invest in residential mortgage-backed securities (although it may invest in such securities in the future).

          Purchase-Leaseback Transactions: Although it has not yet done so, the Account can enter into purchase-leaseback transactions (leasebacks) in which it would 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 could 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 would 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

TIAA Real Estate Account§Prospectus 7

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 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:

• renegotiating and restructuring the terms of a mortgage loan;

• extending the maturity of any mortgage loan made by the Account;

• consenting to a sale of the property subject to a mortgage loan;

• financing the purchase of a property by making a new mortgage loan in connection with the sale; and

• selling the mortgage loans, or portions of them, before maturity.

OTHER REAL ESTATE-RELATED INVESTMENTS

          Real Estate Investment Trusts:The Account may invest in real estate investment trusts (REITs), which are entities (usually publicly owned and traded) 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 general economic and market conditions (in particular as to publicly-traded REITs), 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.

8 Prospectus§TIAA Real Estate Account

          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 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. Many times, the Account will have limited voting and management rights in a commingled vehicle, including over the selection and disposition of the underlying real estate related assets owned by the vehicle.

NON-REAL ESTATE-RELATED INVESTMENTS

          The Account can also invest in:

• U.S. government or government agency securities;

• Money market instruments and other cash equivalents. These will usually be high-quality, short-term debt instruments, including U.S. government or government agency securities, commercial paper, certificates of deposit, bankers’ acceptances, repurchase agreements, interest-bearing time deposits, and corporate debt securities;

• Corporate debt or asset-backed securities of U.S. or foreign entities, or debt securities of foreign governments or multinational 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); and

• 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 from time to time will 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 from time to time, we expect that all such foreign investments will comprise no more than 25

TIAA Real Estate Account § Prospectus 9

percent of the Account’s total assets. As of the date of this prospectus, the Account holds interests in two foreign property investments (one in the United Kingdom and one in France).

          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.

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:

• the location, condition, and use of the underlying property;

• its operating history and its future income-producing capacity; and

• the quality, operating experience, and creditworthiness of the tenants or 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.

          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 (i) have either maximized in value, (ii) have underperformed or face deteriorating property-specific or market conditions, (iii) represent properties needing significant capital infusions in the future, and/or (iv) management deems are appropriate to dispose of in order to remain consistent with its intent to diversify the Account by property type and geographic location. 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).

10 Prospectus § TIAA Real Estate Account

OTHER REAL ESTATE-RELATED POLICIES

          Appraisals and Valuations:The Account will rely on TIAA’s own analysis, normally along 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 makes mortgage loans.

          Subsequently, each of the Account’s real properties are appraised, and mortgage loans are valued, at least once every calendar quarter. Effective with the second quarter of 2009, each of the Account’s real estate properties are appraised each quarter by an independent external state-certified (or its foreign equivalent) appraiser (which we refer to in this prospectus as an “independent appraiser”) who is a member of a professional appraisal organization. In addition, TIAA’s internal appraisal staff performs a review of each quarterly appraisal of each real estate property, in conjunction with the Account’s independent fiduciary, and TIAA’s internal appraisal staff or the independent fiduciary may request an additional appraisal or valuation outside of this quarterly cycle. Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).

          See “Valuing the Account’s Assets” on page 85 for more information on how each class of the Account’s investments are valued.

          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 that may be unsecured and/or contain terms that may require the Account secure a loan with one or more of its properties. Management expects the proceeds from any such short-term borrowing would be used to meet the cash flow needs of the Account’s properties and real estate related investments, but depending on the circumstances, proceeds could be used for Account-level funding needs (including the need to honor unexpected participant withdrawal activity). Under the Account’s investment guidelines, the Account’s total borrowings may not exceed 30% of the Account’s total net asset value at the time of incurrence. In 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. Also, at the time the Account (or a joint venture in which the Account is a partner) enters into a revolving line of credit, management deems the maximum amount which may be drawn under that line of credit as fully incurred, regardless of whether the maximum amount available has been drawn from time to time.

          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

TIAA Real Estate Account § Prospectus 11

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 on its properties 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 of Borrowing” on page 19.

          Joint Investments:The Account can hold property jointly through general or limited partnerships, joint ventures, leaseholds, tenancies-in-common, or other 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 national 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 property manager will also recommend changes in rent schedules and create marketing and advertising programs to attain and maintain high levels of occupancy 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 property management company, along with any leasing commissions and expenses, will reduce the Account’s cash flow from a property.

          Insurance:We intend to arrange for, or require proof of, comprehensive insurance, including liability, fire, and extended coverage, for the Account’s real properties and properties securing mortgage loans or subject to purchase-leaseback transactions. The Account currently participates in property, casualty and other related insurance programs as part of TIAA’s property insurance programs, and the Account only bears the cost of insuring only the properties it owns. The Account’s insurance policies on its properties currently include 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, at the time a policy expires.

12 Prospectus § TIAA Real Estate Account

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), including during times when 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, a lack of suitable real estate investments, immediately following a significant disposition or due to a need for greater liquidity.

          However, there will be periods of time (such as in the fourth quarter of 2008 and in early 2009) during which the Account’s liquid investments will comprise less than 15 percent of its total assets, especially during and immediately following periods of significant net participant outflows. See “Establishing and Managing the Account – The Role of TIAA – Liquidity Guarantee” on page 29. As referenced elsewhere in this prospectus, the Account’s investment strategy is to have between 15 and 25 percent of its assets invested in assets other than real estate and real estate related assets, including short term, higher quality liquid investments.

          Investment Company Act of 1940:The 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 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.

RISKS

          The value of your investment in the Account will fluctuate based on the value of the Account’s assets and the income the assets generate.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, the income the assets generate and the Account’s expenses. 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

TIAA Real Estate Account§Prospectus 13

below before investing in the Account. In particular, for a discussion of how forward-looking statements contained in this prospectus are subject to uncertainties that are difficult to predict, which may be beyond management’s control and which could cause actual results to differ materially from historical experience or management’s present expectations, please refer to the section entitled “Forward-Looking Statements,” which is contained in the section entitled “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations.”

RISKS ASSOCIATED WITH REAL ESTATE INVESTING

          General Risks of Acquiring and Owning Real Property:As referenced elsewhere in this prospectus, the substantial majority of the Account’s net assets are comprised of direct ownership interests in real estate. As such, the Account is particularly subject to the risks inherent in acquiring and owning real property, including in particular the following:

• Adverse Global and Domestic Economic Conditions. The economic conditions in the markets where the Account’s properties are located may be adversely impacted by factors which include:

• adverse domestic or global economic conditions, particularly in the event of a deep recession which results in significant employment losses across many sectors of the economy and reduced levels of consumer spending;

• a weak market for real estate generally and/or in specific locations where the Account may own property;

• the availability of financing;

• an oversupply of, or a reduced demand for, certain types of real estate properties;

• business closings, industry or sector 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, rental rates and the market value of the Account’s real properties or interests in investment vehicles (such as limited partnerships) which directly hold real properties.

• Concentration Risk. The Account may experience periods in which its investments are geographically concentrated, either regionally or in certain markets with similar demographics. Further, while the Account seeks diversification across its four primary property types: office, industrial, retail and multi-family residential properties, the Account may experience periods where it has concentration in one property type, increasing the potential exposure if there were to be an oversupply of, or a reduced demand for, certain types of real estate properties in the markets in which the Account operates. Also, the Account may experience periods in which its tenant base is concentrated within a particular industry sector. If any or all of these

14 Prospectus§ TIAA Real Estate Account

	events occur, 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. Also, the Account could experience a more rapid negative change in the value of its real estate investments than would be the case if its real estate investments were more diversified.
•	Leasing Risk. A number of factors could cause the Account’s rental income, a key source of the Account’s revenue and investment return, to decline, which would adversely impact the Account’s results and investment returns. These factors include:
	•	A property may be unable to attract new tenants or retain existing tenants. This situation could be exacerbated if a concentration of lease expirations occurred during any one time period or multiple tenants exercise early termination at the same time.
	•	The financial condition of our tenants may be adversely impacted, particularly in a prolonged economic downturn. The Account could lose revenue if tenants do not pay rent when contractually obligated, request some form of rent relief and/or default under a lease at one of the Account’s properties. Such a default could occur if a tenant declared bankruptcy, suffered from a lack of liquidity, failed to continue to operate its business or for other reasons. 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, particularly if that tenant filed for bankruptcy protection. Further, any disputes with tenants could involve costly and time consuming litigation.
	•	In the event a tenant vacates its space at one of the Account’s properties, whether as a result of a default, the expiration of the lease term, rejection of the lease in bankruptcy or otherwise, given current market conditions, we may not be able to re-lease the vacant space either (i) for as much as the rent payable under the previous lease or (ii) 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

TIAA Real Estate Account§Prospectus 15

		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. Many times, anchor tenants will be “big box” stores and other large retailers that can be particularly adversely impacted by a global recession and reduced consumer spending generally. Factors that can impact the level of consumer spending include increases in fuel and energy costs, residential and commercial real estate and mortgage conditions, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors. 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.
•	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 foreign investors and other entities engaged in real estate investment activities. Some of these competitors may have similar financial and other resources as the Account, and/or they may have investment strategies and policies (including the ability to incur significantly more leverage than the Account) that allow them to compete more aggressively for real estate investment opportunities, which could result in the Account paying higher prices for investments, experiencing delays in acquiring investments or failing to consummate such purchases. Any resulting delays in the acquisition of investments, or the failure to consummate acquisitions the Account deems desirable, may increase the Account’s costs or otherwise adversely affect the Account’s investment results.
	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, more suitable for tenants than our properties or have owners who may compete more aggressively for tenants, 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.
•	Operating Costs. A property’s cash flow could decrease if operating costs, such as property taxes, utilities, maintenance and insurance costs that are not reimbursed by tenants increase in relation to gross rental income, or if the property needs unanticipated repairs and renovations.

16 Prospectus§ TIAA Real Estate Account

• Terrorism and Acts of War and Violence. Terrorist attacks may harm our property investments. 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 directly or indirectly impact the value of the property we own or that secure our loans. Losses resulting from these types of events may be uninsurable or not insurable to the full extent of the loss suffered. Moreover, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States and worldwide financial markets and economy. Such events could also result in economic uncertainty in the United States or abroad. Adverse economic conditions resulting from terrorist activities could reduce demand for space in the Account’s properties and thereby reduce the value of the Account’s properties and therefore your investment return.

          General Risks of Selling Real Estate Investments:Among the risks of selling real estate investments are:

• The sale price of an Account property might differ, perhaps significantly, from its estimated or appraised value, leading to losses or reduced profits to the Account.

• Due to the cyclical nature of real estate, general economic conditions impacting the location of the property, disruption in the credit markets and the availability of financing on favorable terms or at all, and the supply of and demand for available tenant space, among other reasons, the Account might not be able to sell a property at a particular time for a price which management believes represents its fair or full value. This might make it difficult to raise cash quickly which could impair the Account’s liquidity position (particularly during any period of sustained significant net participant outflows) and also could lead to Account losses. Further, while the liquidity guarantee ensures that participants have the ability to redeem their accumulation units (thus, alleviating the need to dispose of properties solely to increase liquidity levels in what management deems a suboptimal sales environment), this guarantee does not serve as a working capital facility or credit line to enhance the Account’s liquidity levels generally.

• 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.

          Valuation and Appraisal Risks:Investments in the Account’s assets are stated at fair value which 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, particularly for real estate assets, involves significant judgment. Valuation of the Account’s real estate properties (which

TIAA Real Estate Account§Prospectus 17

comprise a substantial majority of the Account’s net assets) are based on real estate appraisals, which are 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 in which the property is located, which may change materially after the appraisal is conducted. Among other things, market prices for comparable real estate may be volatile, in particular if there has been a lack of recent transaction activity in such market. Recent disruptions in the macroeconomy, real estate markets and the credit markets have led to a significant decline in transaction activity in a number of markets and sectors and the lack of observable transaction data may have made it more difficult for an appraisal to determine the fair value of the Account’s real estate.

          Further, as the Account generally obtains appraisals on a quarterly basis, there may be circumstances in the interim period between the appraisals in which the true realizable value of a property is not reflected in the Account’s daily net asset value 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 (or increase) in property values in a relatively short period of time between appraisals.

          If the appraised values of the Account’s properties as a whole are too high, those participants who purchased accumulation units prior to (i) a downward valuation adjustment of a property or multiple properties or (ii) a property or properties being sold for a lower price than the appraised value will be credited with less of an interest than if the value had previously been adjusted downward. Also, those participants who redeem during any such period will have received more than their pro rata share of the value of the Account’s assets, to the detriment of other non-redeeming participants. In particular, appraised property values may prove to be too high (as a whole) in a rapidly declining commercial real estate market. Further, implicit in the Account’s definition of fair value is a principal assumption that there will be a reasonable time to market a given property and that the property will be exchanged between a willing buyer and willing seller in a non-distressed scenario. However, an appraised value may not reflect the actual realizable value that would be obtained in a rush sale where time was of the essence. Also, appraised values may lag actual realizable values to the extent there is significant and rapid economic deterioration in a particular geographic market or a particular sector within a geographic market.

          If the appraised values of the Account’s properties as a whole are too low, those participants who redeem prior to (i) an upward valuation adjustment of a property or multiple properties or (ii) a property or properties being sold for a higher price than the appraised value will have received less than their pro rata share of the value of the Account’s assets, and those participants who purchase units during any such period will have purchased more than their pro rata share of the value of the Account’s assets.

18 Prospectus§ TIAA Real Estate Account

          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 net participant transfers into or out of the Account as well as participant premiums into the Account. As noted elsewhere in this prospectus, the Account intends to hold between 15 and 25 percent of its assets in investments other than real estate, primarily comprised of liquid investments. These liquid assets are intended to be available to purchase real estate properties in accordance with the Account’s investment objective and strategy and to meet the Account’s expense needs and participant redemption requests. During 2008 (and in particular, the second half of 2008), the Account experienced significant net participant transfers out of the Account. Due in large part to this activity, the Account’s liquid assets as of December 31, 2008 declined to approximately 4.0% of the Account’s total investments and the TIAA general account’s liquidity guarantee was initially executed in December 2008. The Account’s liquid assets as of the date of this prospectus total approximately 4.3% of the Account’s total investments. See “Establishing and Managing the Account – The Role of TIAA – Liquidity Guarantee” on page 29.

          If the amount of net participant transfers out of the Account were to continue, particularly at a rate similar to 2008, we may not have enough available liquid assets to pursue, or consummate, new investment opportunities presented to us that are otherwise attractive to the Account. This, in turn, could harm the Account’s returns. Management cannot predict with precision whether the level of net participant transfers will stabilize in the near term. Additionally, even if net transfers out of the Account ceased for a period of time, there is no guarantee that redemption activity would not increase again, perhaps in a significant and rapid manner.

          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, increase the leverage already placed on, or refinance maturing debt on, existing properties the Account owns. The Account may incur indebtedness, in the aggregate, either directly or through its joint venture investments, an amount up to 30% of the Account’s total net assets (measured at the time of incurrence), 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:

• Regardless of the quality of the Account’s property for which financing or refinancing is sought, general economic conditions, dislocations in the capital or credit markets generally or the market conditions then in effect in the real estate finance industry, may hinder the Account’s ability to obtain financing or refinancing 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. Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives or failures of significant financial institutions could adversely affect our

TIAA Real Estate Account§Prospectus 19

	access to financing necessary to make profitable real estate investments. Our failure to obtain financing or refinancing on favorable terms due to the current state of the credit markets or otherwise could have an adverse impact on the returns of the Account.
•	The Account may be unable to make its loan payments, which could result in a default on its loan. The lender then could foreclose on the underlying property and the Account would lose the value of its investment in the foreclosed property.
•	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 refinancing on terms commercially acceptable to the Account or at all. The Account then may be forced to sell the property or other properties under unfavorable market conditions or default on its mortgage, resulting in the lender exercising its remedies, which may include repossession of the property and the Account could lose the value of its investment in that property.
•	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. Any hedging activities the Account engages in to mitigate this risk may not fully protect the Account from the impact of interest rate volatility.
•	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. For a discussion of the recent credit market disruptions, please see “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations.”

          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 adversely affects the Account and its properties. For example, these regulations could raise 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

20 Prospectus§ TIAA Real Estate Account

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. These 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 paying personal injury claims and performing under indemnification obligations to third parties, 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, and, depending on the insurance which the Account has on its properties, may be subject to aggregate caps on proceeds. If a disaster that we haven’t insured against occurs, if the insurance contains a high deductible, or if the aggregate insurance proceeds for a particular type of casualty are capped, the Account could lose some of its original investment and any future profits from the property. Further, the Account may not have sufficient access to external sources of funding to repair or reconstruct a damaged property to the extent insurance proceeds do not cover the full loss. In addition, some leases may permit a tenant to terminate its 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:

• 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.

• Because external factors may have changed from when the project was originally conceived (e.g., slower growth in the local economy, higher interest rates, or overbuilding in the area), the property may not operate at the income and expense levels first projected or may not be developed in the way originally planned or at all.

          Risks of Joint Ownership:Investing in joint venture partnerships or other forms of joint property ownership may involve special risks.

TIAA Real Estate Account§Prospectus 21

• The co-venturer may have interests or goals inconsistent with those of the Account, including during times when a co-venturer may be experiencing financial difficulty. For example, a co-venturer may desire a higher current income return on a particular investment than does the Account (which may be motivated by a longer-term horizon), or vise versa, which could cause difficulty in managing a particular asset. Also, a co-venturer may desire to maximize leverage in the venture, which may be at odds with the Account’s strategy. Further, for reasons related to its own business strategy, a co-venturer may have different concentration standards as to its investments (geographically, by sector, or by tenant), which might frustrate the execution of the business plan for the joint venture.

• The co-venturer may be unable to fulfill its obligations (such as to fund its pro rata share of committed capital, expenditures or guarantee obligations of the venture) during the term of such agreement or may become insolvent or bankrupt, any of which could expose the Account to greater liabilities than expected and frustrate the investment objective of the venture.

• 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.

• The Account may have limited rights with respect to the underlying property pursuant to the terms of the joint venture, including the right to operate, manage or dispose of a property, and a co-venturer could have approval rights over the sale of the underlying property.

• A co-venturer can make it harder for the Account to transfer its equity interest in the venture to a third party, which could adversely impact the valuation of the Account’s interest in the venture.

          Risks with Purchase-Leaseback Transactions:To the extent the Account invested in a purchase leaseback transaction, the major risk is that the third party lessee will be unable 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

          The Account’s investment strategy includes, to a limited extent, investments in mortgage loans (i.e., the Account serving as lender).

• General Risks of Mortgage Loans:The Account will be subject to the risks inherent in making mortgage loans, including:

• 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.

22 Prospectus§ TIAA Real Estate Account

• 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.

• 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.

• The borrower may be unable to make a lump sum principal payment due under a mortgage loan at the end of the loan term, unless it can refinance the mortgage loan with another lender.

• 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 than that which is then available in the market if interest rates rise generally.

• 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.

• 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 be unable to enforce payment of the loan.

• Risks of Participations:To the extent the Account invested in a participating mortgage, the following additional risks would apply:

• 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.

• In very limited circumstances, a court may characterize the Account’s participation interest as a partnership or joint venture with the borrower and the Account could lose the priority of its security interest or become liable for the borrower’s debts.

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 properties owned by the entity, 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

TIAA Real Estate Account §Prospectus 23

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, 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

          The Account from time to time has invested in mortgage-backed securities and may in the future invest in such 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. 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. 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 of geographic, social and other functions, including prevailing market interest rates and general economic factors.

          Importantly, the market value of these securities is also highly sensitive to changes in interest 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 or even no secondary market for these securities and they therefore 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 and a registered investment adviser) 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 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

24 Prospectus §TIAA Real Estate Account

provides lower returns to the Account 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 the Account is competing for, the Account 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, there is no assurance 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.

          In addition, as discussed elsewhere in this prospectus, the TIAA general account provides a liquidity guarantee to the Account. While an independent fiduciary is responsible for establishing a “trigger point” (a percentage of TIAA’s ownership of liquidity units beyond which TIAA’s ownership may be reduced at the fiduciary’s direction), there is no express cap on the amount TIAA may be obligated to fund under this guarantee. TIAA’s ownership of liquidity units (including the potential of higher levels of ownership in the future) could result in the perception that TIAA is taking into account its own economic interests while serving as investment manager for the Account. Any perception of a conflict of interest could cause participants to transfer accumulations out of the Account to another investment option, which could have an adverse impact on the Account’s ability to act most optimally upon its investment strategy. For a discussion of the relevant allocation policies and procedures TIAA has established as well as a summary of other conflicts of interest which may arise as a result of TIAA’s management of the Account, see “Establishing and Managing the Account – the Role of TIAA – Conflicts of Interest.”

RISKS OF U.S. GOVERNMENT AGENCY SECURITIES AND CORPORATE OBLIGATIONS

          The Account invests in securities issued by U.S. government agencies and U.S. government sponsored entities. Some of these issuers may not have their securities backed by the full faith and credit of the U.S. government, which could adversely affect the pricing and value of such securities. Also, the Account invests in corporate obligations (such as commercial paper) and while the Account seeks out such holdings in short-term, higher-quality liquid instruments, the ability of the Account to sell these securities may be uncertain, particularly when there are general dislocations in the finance or credit markets, such as has recently been the case. Any such volatility could have a negative impact on the value of these

TIAA Real Estate Account § Prospectus 25

securities. Further, transaction activity generally may fluctuate significantly from time to time, which could impair the Account’s ability to dispose of a security at a favorable time, regardless of the credit quality of the underlying issuer. Further, inherent with investing in any corporate obligation is the risk that the credit quality of the issuer will deteriorate, which could cause the obligations to be downgraded and hamper the value or the liquidity of these securities.

RISKS OF LIQUID INVESTMENTS

          The Account’s investments in cash equivalents, marketable securities (whether debt or equity) and mortgage loans receivable are subject to the following general risks:

• Financial / Credit Risk— The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as 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.

• Market Volatility Risk— The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets even regardless of the credit quality or financial condition of the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility over the past year. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.

• Interest Rate Volatility— The risk that interest rate volatility may affect the Account’s current income from an investment.

• Deposit / Money Market Risk— The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. In addition, there is some risk that investments held in money market accounts or funds can suffer losses.

          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 real estate related 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, possible expropriation or confiscatory taxation, political, social, and economic developments and foreign regulations. The Account translates into U.S. dollars purchases and sales of securities, income receipts and expense payments made in foreign currencies at the exchange rates prevailing on the

26 Prospectus § TIAA Real Estate Account

	respective dates of the transactions. The effect of any changes in currency exchange rates on investments and mortgage loans payable is included in the Account’s net realized and unrealized gains and losses. As such, fluctuations in currency exchange rates may impair the Account’s returns.
•	The Account may, but is not required to, seek to hedge its exposure to changes in currency rates, which could involve extra costs. Further, any hedging activities might not be successful.
•	Foreign real estate markets may have different liquidity and volatility attributes than U.S. markets.
•	It may be more difficult to obtain and collect a judgment on foreign investments than on domestic investments, and the costs associated with contesting claims relating to foreign investments may exceed those costs associated with a similar claim on domestic investments.
•	We may invest from time to time in securities issued by (1) entities domiciled in foreign countries, (2) domestic affiliates of such entities and/or (3) foreign domiciled affiliates of domestic entities. Such investments could be subject to the risks associated with investments subject to foreign regulation, including political unrest or the repatriation or nationalization of the issuer’s assets. These events could depress the value of such securities and/or make such securities harder to sell on favorable terms, if at all.

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 in accordance with any such amended investment objective without the consent of the Account’s investors.

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

TIAA Real Estate Account § Prospectus 27

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.

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, following investment management procedures TIAA adopted for the Account. The Account does not have officers, directors or employees. TIAA’s investment management responsibilities include:

• identifying, recommending and purchasing appropriate real estate-related and other investments;

• providing (including by arranging for others to provide) all portfolio accounting, custodial, and related services for the Account; and

• arranging for others to provide certain advisory or other management services to the Account’s joint ventures or other investments.

          TIAA and 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 90.

          You don’t have the right to vote for TIAA Trustees. See “General Matters —Voting Rights” on page 117. For information about the Trustees, certain executive officers of TIAA and the Account’s portfolio management team, see Appendix A of this prospectus on page 174.

28 Prospectus § TIAA Real Estate Account

          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.

          TIAA intends to rely on the exemptions provided by Rule 12h-7 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to the extent the requirement to file financial reports under the Exchange Act is determined to be applicable to depositors of variable contracts.

LIQUIDITY GUARANTEE

          The TIAA general account provides the Account with a liquidity guarantee —i.e., TIAA ensures that the Account has funds available to meet participant redemption, transfer or cash withdrawal requests. If the Account can’t fund participant requests from the Account’s own cash flow and liquid investments, the TIAA general account will fund them by purchasing Account accumulation units (accumulation units that are purchased by TIAA are generally referred to as “liquidity units”) issued by the Account. TIAA guarantees that you can redeem your accumulation units at their accumulation unit value next determined after your transfer or cash withdrawal request is received in good order. Whether the liquidity guarantee is exercised is based on the cash level of the Account from time to time, as well as recent participant withdrawal activity and the Account’s expected working capital, debt service and cash needs, all subject to the oversight of the independent fiduciary. While the proceeds from liquidity unit purchases are not placed in a segregated account solely to fund participant requests, the guarantee is in place to meet participant needs. Liquidity units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s participants. 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. Transfers from the Account to a CREF or TIAA account, or another investment option, are limited to once every calendar quarter (except for specifically prescribed systematic transfers or withdrawals established in accordance with the terms of the participant’s contract and employer’s plan), and cash withdrawals may be further restricted by the terms of your plan.

          TIAA’s obligation to provide Account participants liquidity through purchases of liquidity units is not subject to an express regulatory or contractual limitation, although as described below under “—Role of the Independent Fiduciary,” the independent fiduciary may (but is not obligated to) require the reduction of TIAA’s interest through sales of assets from the Account if TIAA’s interest exceeds the trigger point. Even if the independent fiduciary so requires, TIAA’s obligation to provide liquidity under the guarantee, which is required by the New York State Insurance Department, will continue. While the independent fiduciary is vested with oversight and approval over any redemption of TIAA’s liquidity units, it is expected that, unless the trigger point has been reached, redemptions would only occur once the Account has experienced net participant inflows for an extended

TIAA Real Estate Account §Prospectus 29

period of time and is otherwise predicted to maintain a cash level at or close to its long-term investment goal. Upon termination and liquidation of the Account (wind-up), any liquidity units held by TIAA will be the last units redeemed, unless the independent fiduciary directs otherwise.

          Finally, TIAA may redeem its liquidity units more frequently than once per calendar quarter, subject at all times to the oversight and approval of the Account’s independent fiduciary (discussed in more detail in the subsection entitled “—Role of the Independent Fiduciary” immediately below). The Account pays TIAA for the liquidity guarantee through a daily deduction from the Account’s net assets. See “Expense Deductions” on page 90.

          Primarily as a result of significant net participant transfers throughout 2008 (in particular, in the second half of 2008), pursuant to this liquidity guarantee obligation, the TIAA general account purchased an aggregate of $155.6 million of liquidity units issued by the Account on December 24, 2008. Subsequent to December 24, 2008 and through April 27, 2009, the TIAA general account has purchased an additional $932.6 million in the aggregate of liquidity units in a number of separate transactions. As of the date of this prospectus, no liquidity units have been redeemed by TIAA. Management cannot predict the extent to which future liquidity unit purchases will be required under this liquidity guarantee, nor can management predict when such liquidity units will be redeemed in part or in full.

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 in 1996 (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 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, was initially appointed as independent fiduciary effective March 1, 2006 and currently serves as the Account’s independent fiduciary. The independent fiduciary’s responsibilities include:

• reviewing and approving the Account’s investment guidelines and monitoring whether the Account’s investments comply with those guidelines;

• reviewing and approving valuation procedures for the Account’s properties;

• 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 appraisal;

• reviewing and approving how the Account values accumulation and annuity units;

• approving the appointment of all independent appraisers;

• reviewing the purchase and sale of units by TIAA to ensure that the Account uses the correct unit values; and

30 Prospectus §TIAA Real Estate Account

• 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 ensure the Account has correctly valued a property.

          In addition, Real Estate Research Corporation has certain responsibilities with respect to the Account that it had historically undertaken or is currently undertaking with respect to TIAA’s purchase and ownership of liquidity units, including among other things, reviewing the purchases and redemption of liquidity units by TIAA to ensure the Account uses the correct unit values. In addition, as set forth in PTE 96-76, the independent fiduciary’s responsibilities include:

• establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for changing the trigger point;

• approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of liquidity units reaches the trigger point; and

• once the trigger point has been reached, participating in a program, if any, to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. If the independent fiduciary were to determine that TIAA’s ownership should be reduced following the trigger point, its role in participating in any asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of liquidity units.

          As of the date of this prospectus, the independent fiduciary, which has the right to adjust the trigger point, has established the trigger point at 45% of the outstanding accumulation units and it will continue to monitor TIAA’s ownership interest in the Account and provide further recommendations as necessary. As of April 27, 2009, TIAA owned 10.2% of the outstanding accumulation units of the Account. In establishing the appropriate trigger point, including whether or not to require certain actions once the trigger point has been reached, the independent fiduciary will assess, among other things and to the extent consistent with PTE 96-76 and the independent fiduciary’s duties under ERISA, the risk that a conflict of interest could arise due to the level of TIAA’s ownership interest in the Account.

          A special subcommittee consisting of five (5) independent outside members of the Investment Committee of TIAA’s Board of Trustees renewed the appointment of Real Estate Research Corporation as the independent fiduciary for an additional three-year term, which appointment is effective as of January 1, 2009, and continues through February 29, 2012. 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 three (3) out of the five (5) subcommittee members and will not be reappointed if two (2) of the subcommittee members disapprove the reappointment. The independent fiduciary can resign after at least 180 days’ written notice.

TIAA Real Estate Account § Prospectus 31

          TIAA pays the independent fiduciary directly. The investment management charge paid to TIAA includes TIAA’s costs for retaining the independent fiduciary. Under PTE 96-76, the independent fiduciary must receive less than 5 percent of its annual gross revenues (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.

CONFLICTS OF INTEREST

          General.Employees of TIAA that provide advice with respect to the Real Estate Account may also provide investment advice with respect to investments managed by Teachers Advisors, Inc. (“Advisors”), an indirect, wholly owned subsidiary of TIAA and a registered investment adviser. In addition, TIAA and its affiliates offer (and may in the future offer) other accounts and investment products that are not managed under an “at cost” expense structure. Therefore, TIAA and its employees may at times face various conflicts of interest. For example, the TIAA General Account and a privately offered core property investment fund managed by Advisors (the “core property investment fund”) may sometimes compete with the Real Estate Account in the purchase of investments. (Each of the TIAA General Account, the Real Estate Account and the core property investment fund together with any other real estate accounts or funds that are established or may be established by TIAA or its affiliates in the future, are herein referred to as an “account.”)

          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, the core property investment fund and other accounts 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. TIAA does not accept acquisition or placement fees for the services it provides to the Account.

          Allocation Procedure.TIAA and its affiliates allocate new investments (including real property investments and discrete real estate related investment opportunities, but generally not limited partnership investments) among the accounts in accordance with a written allocation procedure as adopted by TIAA and modified from time to time. Generally, the portfolio 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,

32 Prospectus § TIAA Real Estate Account

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 market and such other factors deemed relevant by the Allocation 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.

          Leasing Conflicts.Conflicts could also arise because some properties in the TIAA General Account, the core property investment fund and other accounts may compete for tenants with the Real Estate Account’s properties. Management believes the potential for leasing conflicts are minimized by the unique characteristics of each property, including location, submarket, physical characteristics, amenities and lease rollover schedules. Management believes the differing business strategies of the accounts also reduce potential conflicts. If a conflict arises, as appropriate, the competing accounts will arrange that different property managers and leasing brokers are engaged, each charged with using their best efforts to support the property management and leasing activity for each particular property and an ethical screen will be placed between the internal asset managers for the respective properties. Any conflicts that arise will be reported to the next occurring TIAA Allocation Committee review meeting.

          Sales Conflicts.Conflicts could also 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 and/or if such purchaser has an ongoing business relationship with TIAA or one of its specific accounts.

          Liquidity Guarantee.TIAA’s ownership of liquidity units (including the potential of higher levels of ownership in the future) could result in the perception that TIAA is taking into account its own economic interests while serving as investment manager for the Account. In particular, there is the concern that TIAA could make investment decisions (and other management decisions) with respect to the Account which serve the interest of the TIAA General Account, at the expense of those participants that have chosen the Account as an investment option. This could manifest itself, among other ways, by the Account disposing

TIAA Real Estate Account § Prospectus 33

properties solely to raise liquidity in avoidance of having a need for the liquidity guarantee, or by foregoing otherwise attractive investment opportunities so as not to impair liquid asset levels.

          Management believes that any conflict (or potential conflict) is mitigated by, among other things, the detailed valuation procedure for the Account’s properties, which includes independent appraisals and the oversight of the independent fiduciary. Also, the independent fiduciary oversees the liquidity guarantee execution to ensure the proper unit values are applied, and the independent fiduciary will oversee liquidity unit redemptions. Further, the independent fiduciary is vested with the right to establish a trigger point, which is a level of ownership at which the fiduciary is empowered, but not required, to reduce TIAA’s ownership interest (with the goal to mitigate any potential conflict of interest) through the means described in the immediately preceding section.

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, including liabilities under the Securities Act of 1933. The Account may make such indemnification out of its assets.

DESCRIPTION OF PROPERTIES

THE PROPERTIES — IN GENERAL

          As of December 31, 2008, the Account owned a total of 108 real estate property investments (96 of which were wholly owned and 12 of which were held in real estate related joint ventures), representing 93.48% of the Account’s total investment portfolio. The real estate portfolio included:

• 45 office properties (five of which were held in joint ventures and one property located in London, United Kingdom);

• 26 industrial properties (including one held in a joint venture);

• 20 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 108 real estate property investments, 27 were subject to debt (including seven joint venture property investments). In the table immediately below you will find general information about each of the Account’s portfolio property investments as of December 31, 2008. The Account’s property investments include 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.

34 Prospectus § TIAA Real Estate Account

Property	Location	Year Built	(1)	Year Purchased	(2)	Rentable Area (Sq. ft.)	(3)	Percent Leased		Annual Avg. Base Rent Per Leased Sq. Ft.		(4)	Market Value		(5)
OFFICE PROPERTIES
1001 Pennsylvania Ave	Washington, DC	1987		2004		756,603		100	%	$	38.81		$	550,756,966	(6)
Four Oaks Place	Houston, TX	1983		2004		1,754,334		97	%		18.96		$	438,000,000	(6)
Fourth & Madison(7)	Seattle, WA	2002		2004		845,533		98	%		29.59		$	407,500,000	(6)
50 Fremont Street	San Francisco, CA	1983		2004		817,412		99	%		32.50		$	386,600,000	(6)
780 Third Avenue	New York, NY	1984		1999		487,566		90	%		51.70		$	341,000,000
99 High Street	Boston, MA	1971		2005		731,204		91	%		30.40		$	320,107,068	(6)
The Newbry	Boston, MA	1940-1961	(9)	2006		607,424		90	%		38.35		$	315,600,000
Lincoln Centre	Dallas, TX	1984		2005		1,638,132		86	%		17.21		$	269,000,000	(6)
701 Brickell	Miami, FL	1986	(11)	2002		675,424		98	%		32.85		$	255,000,000	(6)
1900 K Street	Washington, DC	1996		2004		339,060		100	%		44.44		$	245,000,000
Yahoo! Center(10)	Santa Monica, CA	1984		2004		1,087,954		86	%		39.18		$	239,747,953
1 & 7 Westferry Circus	London, UK	1992, 1993		2005		391,442		100	%		47.29		$	232,801,862	(6)(8)
275 Battery(12)	San Francisco, CA	1988		2005		472,261		92	%		36.69		$	220,025,358
Wilshire Rodeo Plaza	Beverly Hills, CA	1935, 1984		2006		264,287		98	%		44.69		$	213,783,319	(6)
Mellon Financial Center at One Boston Place(13)	Boston, MA	1970	(11)	2002		788,364		98	%		45.99		$	212,083,264
1401 H Street NW	Washington, D.C.	1992		2006		350,635		100	%		33.42		$	194,600,000	(6)
Ten & Twenty Westport Road	Wilton, CT	1974(11); 2001		2001		538,840		100	%		29.93		$	174,400,000
Millennium Corporate Park	Redmond, WA	1999, 2000		2006		536,884		97	%		14.81		$	162,192,911
980 9th Street and 1010 8th Street(14)	Sacramento, CA	1992		2005		455,606		92	%		26.37		$	151,600,000
Urban Centre	Tampa, FL	1984, 1987		2005		547,979		89	%		22.40		$	113,274,489
Treat Towers(15)	Walnut Creek, CA	1999		2003		367,313		83	%		23.78		$	105,074,348
Pacific Plaza	San Diego, CA	2000, 2002		2007		215,758		63	%		22.23		$	104,969,706	(6)
Inverness Center	Birmingham, AL	1980-1985		2005		903,857		99	%		12.09		$	102,891,256
88 Kearny Street	San Francisco, CA	1986		1999		228,358		83	%		40.40		$	99,815,000
Morris Corporate Center III	Parsippany, NJ	1990		2000		526,052		81	%		20.51		$	94,955,176
The Ellipse at Ballston	Arlington, VA	1989		2006		194,914		98	%		32.75		$	84,018,202
Prominence in Buckhead(15)	Atlanta, GA	1999		2003		423,916		95	%		28.69		$	78,209,416
Oak Brook Regency Towers	Oakbrook, IL	1977	(11)	2002		402,318		83	%		13.44		$	75,936,788
Parkview Plaza	Oakbrook, IL	1990		1997		264,461		100	%		16.63		$	65,846,414

TIAA Real Estate Account § Prospectus 35

The North 40 Office Complex	Boca Raton, FL	1983, 1984		2006	350,000	89	%	$	11.01	$	64,397,949
Camelback Center	Phoenix, AZ	2001		2007	231,345	94	%		22.94	$	58,000,000
8270 Greensboro Drive	McLean, VA	2000		2005	158,110	100	%		36.86	$	57,000,000
West Lake North Business Park	Westlake Village, CA	2000		2004	198,558	88	%		22.55	$	54,424,547
One Virginia Square	Arlington, VA	1999		2004	116,077	100	%		38.43	$	51,796,610
Capitol Place	Sacramento, CA	1988	(11)	2003	161,051	97	%		28.87	$	50,000,000
The Pointe on Tampa Bay	Tampa, FL	1982	(11)	2002	250,357	97	%		23.08	$	49,700,000
Centerside I	San Diego, CA	1982		2004	202,913	60	%		18.31	$	46,400,000
Wellpoint	Westlake Village, CA	1986, 1998		2006	181,000	100	%		16.04	$	46,000,000
3 Hutton Centre	Santa Ana, CA	1985	(11)	2003	197,819	52	%		13.89	$	45,709,764
4200 West Cypress Street	Tampa, FL	1989		2003	219,815	100	%		23.61	$	41,568,436
Park Place on Turtle Creek	Dallas, TX	1986		2006	177,169	87	%		21.06	$	40,094,406
Preston Sherry Plaza	Dallas, TX	1986		2007	147,008	89	%		22.43	$	38,400,000	(6)
Tysons Executive Plaza II(16)	McLean, VA	1988		2000	257,740	86	%		25.93	$	36,047,976
Needham Corporate Center	Needham, MA	1987		2001	138,259	89	%		21.04	$	32,493,814
Creeksides at Centerpoint	Kent, WA	1985		2006	218,712	67	%		10.41	$	27,200,000
Subtotal—Office Properties						92	%			$	6,994,022,998
INDUSTRIAL PROPERTIES
Ontario Industrial Portfolio(17)	Various, CA	1997-1998		1998, 2000, 2004	3,981,894	78	%	$	3.29	$	278,000,000	(6)
Dallas Industrial Portfolio(18)(19)	Dallas and Coppell, TX	1997-2001		2000-2002	3,684,941	91	%		2.68	$	141,328,444
Southern California RA Industrial Portfolio	Los Angeles, CA	1982		2004	920,078	91	%		5.67	$	107,218,320
Rancho Cucamonga Industrial Portfolio(20)	Rancho Cucamonga, CA	2000-2002		2000; 2001; 2002; 2004	1,490,235	62	%		2.13	$	102,300,000
Seneca Industrial Park	Pembroke Park, FL	1999-2001		2007	882,182	83	%		5.66	$	101,296,137
Great West Industrial Portfolio	Rancho Cucamonga and Fontana, CA	2004-2005		2008	1,369,645	100	%		2.63	$	93,600,000
Rainier Corporate Park	Fife, WA	1991-1997		2003	1,104,646	99	%		3.90	$	81,034,580
Chicago Industrial Portfolio(19)	Chicago and Joliet, IL	1997-2000		1998; 2000	1,427,699	97	%		4.07	$	78,022,333
Shawnee Ridge Industrial Portfolio	Atlanta, GA	2000-2005		2005	1,422,922	100	%		3.32	$	69,000,000
IDI National Portfolio(21)	Various, U.S.	1999-2004		2004	3,655,671	95	%		3.08	$	67,730,752
Regal Logistics Campus	Seattle, WA	1999-2004		2005	968,535	100	%		4.15	$	67,000,000
Chicago CALEast Industrial Portfolio(22)	Chicago, IL	1974-2005		2003	1,145,152	100	%		3.75	$	63,931,502
Northern California RA Industrial Portfolio(19)	Oakland, CA	1981		2004	657,602	78	%		3.70	$	63,456,497
Atlanta Industrial Portfolio(19)	Lawrenceville, GA	1996-1999		2000	1,295,440	97	%		2.73	$	54,001,468

36 Prospectus § TIAA Real Estate Account

Property	Location	Year Built	(1)	Year Purchased	(2)	Rentable Area (Sq. ft.	)(3)	Percent Leased		Annual Avg. Base Rent Per Leased Sq. Ft.		(4)	Market Value		(5)
New Jersey CALEast Industrial Portfolio	Cranbury, NJ	1982-1989		2003		807,773		100	%	$	4.05		$	49,000,000
South River Road Industrial	Cranbury, NJ	1999		2001		858,957		53	%		1.58		$	43,872,143
GE Appliance East Coast Distribution Facility	Perryville, MD	2003		2005		1,004,000		100	%		2.82		$	40,500,000
Pinnacle Industrial/DFW Trade Center	Grapevine. TX	2003, 2004, 2006		2006		899,200		100	%		3.04		$	38,732,826
Northeast RA Industrial Portfolio	Boston, MA	2000		2004		384,000		75	%		4.42		$	30,793,863
Centre Pointe and Valley View	Los Angeles County, CA	1965-1989		2004		307,685		88	%		5.08		$	29,000,000
Broadlands Business Park	Elkton, MD	2006		2006		756,600		100	%		2.85		$	27,519,795
Northwest RA Industrial Portfolio	Seattle, WA	1996		2004		312,321		100	%		4.65		$	24,100,000
Summit Distribution Center	Memphis, TN	2002		2003		708,532		100	%		2.60		$	22,700,000
Konica Photo Imaging Headquarters	Mahwah, NJ	1999		1999		168,000		0	%		—		$	18,300,000
Airways Distribution Center	Memphis, TN	2005		2006		556,600		100	%		2.42		$	17,400,000
UPS Distribution Facility	Fernley, NV	1998		1998		256,000		100	%		3.90		$	12,100,000
Subtotal—Industrial Properties								89	%				$	1,721,938,660
RETAIL PROPERTIES
DDR Joint Venture(23)	Various	Various		2007		16,183,158		92	%	$	10.99		$	712,773,185
The Florida Mall(25)	Orlando, FL	1986	(11)	2002		919,826	(25)	99	%		42.57		$	281,940,801
Printemps de l’Homme	Paris, FR	1930		2007		142,363		100	%		87.19		$	247,620,812	(8)
Florida Retail Portfolio(26)	Various, FL	1974-2005		2006		1,289,825		91	%		14.43		$	196,201,961
Miami International Mall(24)	Miami, FL	1982	(11)	2002		296,746	(25)	97	%		37.59		$	105,311,660
Westwood Marketplace	Los Angeles, CA	1950	(11)	2002		202,201		100	%		29.93		$	95,100,000
Marketfair	West Windsor, NJ	1987		2006		233,000		96	%		22.09		$	90,759,463
Mazza Gallerie	Washington, DC	1975		2004		293,935		99	%		16.90		$	83,000,375
West Town Mall(24)	Knoxville, TN	1972	(11)	2002		759,447	(25)	96	%		22.30		$	73,968,649
Publix at Weston Commons	Weston, FL	2005		2006		126,922		100	%		24.88		$	50,987,272	(6)
South Frisco Village	Frisco, TX	2002		2006		227,175		97	%		11.42		$	36,300,000	(6)
Plainsboro Plaza	Plainsboro, NJ	1987		2005		206,503		77	%		10.87		$	33,500,000
The Market at Southpark	Littleton, CO	1988		2004		190,104		93	%		10.93		$	29,000,000
Champlin Marketplace	Champlin, MN	1998-99, 2005		2007		88,577		98	%		12.87		$	17,100,540
Suncrest Village	Orlando, FL	1987		2005		93,358		88	%		10.54		$	15,800,000
Plantation Grove	Ocoee, FL	1995		1995		73,655		91	%		10.15		$	11,950,000
Subtotal—Retail Properties								90	%				$	2,081,314,718

TIAA Real Estate Account § Prospectus 37

RESIDENTIAL PROPERTIES(27)
Houston Apartment Portfolio(28)	Houston, TX	1984-2004	2006	NA	97	%		NA	$	267,468,206
Palomino Park Apartments	Denver, CO	1996-2001	2005	NA	91	%		NA	$	173,000,000
The Colorado	New York, NY	1987	1999	NA	98	%		NA	$	153,005,837	(6)
Kierland Apartment Portfolio(29)	Scottsdale, AZ	1996-2000	2006	NA	95	%		NA	$	146,829,953
Phoenix Apartment Portfolio(30)	Greater Phoenix Area, AZ	1995-1998	2006	NA	94	%		NA	$	129,244,134
The Legacy at Westwood Apartments	Los Angeles, CA	2001	2002	NA	91	%		NA	$	89,224,157	(6)
Ashford Meadows Apartments	Herndon, VA	1998	2000	NA	93	%		NA	$	79,318,923
Larkspur Courts	Larkspur, CA	1991	1999	NA	97	%		NA	$	71,500,000
South Florida Apartment Portfolio	Boca Raton and Plantation, FL	1986	2001	NA	96	%		NA	$	62,155,159
The Caruth	Dallas, TX	1999	2005	NA	93	%		NA	$	61,348,871	(6)
Regents Court Apartments	San Diego, CA	2001	2002	NA	94	%		NA	$	59,000,000	(6)
1050 Lenox Park	Atlanta, GA	2001	2005	NA	95	%		NA	$	57,550,000
The Reserve at Sugarloaf	Duluth, GA	2000	2005	NA	93	%		NA	$	44,900,000	(6)
The Lodge at Willow Creek	Denver, CO	1997	1997	NA	92	%		NA	$	40,000,000
The Maroneal	Houston, TX	1998	2005	NA	95	%		NA	$	38,455,941
Glenridge Walk	Atlanta, GA	1996, 2001	2005	NA	97	%		NA	$	37,575,000
Lincoln Woods Apartments	Lafayette Hill, PA	1991	1997	NA	94	%		NA	$	32,025,201
Westcreek Apartments	Westlake Village, CA	1988	1997	NA	92	%		NA	$	31,500,000
Quiet Water at Coquina Lakes	Deerfield Beach, FL	1995	2001	NA	98	%		NA	$	21,810,474
The Fairways of Carolina	Margate, FL	1993	2001	NA	96	%		NA	$	20,941,940
Subtotal—Residential Properties					95	%			$	1,616,853,796
OTHER COMMERCIAL PROPERTIES
Storage Portfolio I(31)	Various, U.S.	1972-1990	2003	2,295,410	83	%	$	12.82	$	67,620,954
Subtotal—Commercial Properties									$	10,864,897,330
Total—All Properties					93	%			$	12,481,751,126

38 Prospectus § TIAA Real Estate Account

(1)	Properties with multiple years built include multiple buildings that opened on different dates.
(2)	Properties with multiple years purchased include multiple buildings that were purchased on various dates.
(3)	The square footage is an approximate measure and is subject to periodic remeasurement.
(4)	Based on total contractual rent for leases existing as of December 31, 2008. The contractual rent can be either on a gross or net basis, depending on the terms of the leases.
(5)	Market value reflects the value determined in accordance with the procedures described in the Account’s prospectus and as stated in the Statement of Investments.
(6)	Market value shown represents the Account’s interest gross of debt.
(7)	Formerly known as “IDX Tower.”
(8)	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, 2008.
(9)	This property was renovated in 2004 and 2006.
(10)	Formerly known as “Colorado Center” this property held in 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.
(11)	Undergone extensive renovations since original construction.
(12)	Formerly known as “Embarcadero Center West.”
(13)	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 joint venture.
(14)	Formerly known as “U.S. Bank Plaza.”
(15)	This investment property is held in a 75%/25% joint venture with Equity Office Properties Trust. Market value shown reflects the value of the Account’s interest in the joint venture.
(16)	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.
(17)	The Ontario Industrial Portfolio contains six investment properties, including one portfolio which consists of 1.1 million square feet located in Mira Loma, California. As of 1/30/07, 1900 South Burgandy Place was added to the Ontario Industrial Portfolio.
(18)	The Dallas Industrial Portfolio contains ten warehouse distribution properties located in Dallas and Coppell, Texas.
(19)	A portion of this portfolio was sold on 6/27/07.
(20)	Formerly known as “Cabot Industrial Portfolio.” As of 1/31/07 the Weber Distribution property was consolidated into the existing Rancho Cucamonga Industrial Portfolio.
(21)	Property held in 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.
(22)	A portion of this portfolio was sold on 6/27/07 and 11/7/08.
(23)	This investment property consists of 65 properties located in 13 states are held in a 85%/15% joint venture with Developers Diversified Realty Corporation. Market Value shown reflects the value of the Account’s interest in the joint venture, net of debt.
(24)	This investment property is held in a 50%/50% joint venture with the Simon Property Group. Market value shown reflects the value of the Account’s interest in the joint venture, net of debt.
(25)	Reflects the square footage owned by the joint venture.
(26)	This investment property is held in a 80%/20% joint venture with Weingarten Realty Investors. Market value shown reflects the value of the Account’s interest in the joint venture. This portfolio contains seven neighborhood and/or community shopping centers located in Ft. Lauderdale, Miami, Orlando and Tampa, Florida areas.
(27)	For the average unit size and annual average rent per unit for each residential property, see “Residential Properties” below.
(28)	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.
(29)	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.
(30)	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.
(31)	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.

TIAA Real Estate Account § Prospectus 39

COMMERCIAL (NON-RESIDENTIAL) PROPERTIES

             At December 31, 2008, the Account held 87 commercial (non-residential) property investments in its portfolio, including a portfolio of storage facilities located throughout the United States. Twelve of these property investments were held through joint ventures, and 27 were subject to 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 diversified by both property type and geographic location. The portfolio consists of:

• 45 office properties containing approximately 21 million square feet located in 14 states, the District of Columbia and the United Kingdom;

• 26 industrial properties containing approximately 31 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 million square feet located in eight states, the District of Columbia and Paris, France.

             One of the retail property investments is an 85% interest in a portfolio containing 65 individual retail shopping centers located throughout the Eastern and Southeastern states. In addition, the Account has a 75% interest in a portfolio of storage facilities located throughout the United States containing approximately 2.3 million square feet.

             As of December 31, 2008, the weighted average overall occupancy rate of the Account’s commercial real estate portfolio was 91%. On a weighted average basis, the Account’s office properties were 92% leased, industrial properties were 89% leased, retail properties were 90% leased and the storage portfolio was 83% leased.

             Major Tenants:The following tables list the Account’s major commercial tenants based on the total space they occupied as of December 31, 2008 in the Account’s properties.

	Occupied Square Feet	Percentage of Total Rentable Area of Account’s
MAJOR OFFICE TENANTS		Office Properties		Non-Residential Properties
Deloitte & Touche	515,969	2.5	%	0.7	%
Mellon (Boston Co.)	476,078	2.3	%	0.7	%
BHP Petroleum	463,734	2.2	%	0.6	%
Southern Company Services, Inc.	456,235	2.2	%	0.6	%
Yahoo!	448,147	2.2	%	0.6	%
Microsoft	361,528	1.7	%	0.5	%
Crowell & Moring	320,539	1.5	%	0.4	%
ATMOS Energy	312,238	1.5	%	0.4	%
IDX Systems	309,278	1.5	%	0.4	%
Pearson	225,299	1.1	%	0.3	%

40 Prospectus § TIAA Real Estate Account

	Occupied Square Feet	Percentage of Total Rentable Area of Account’s
MAJOR INDUSTRIAL TENANTS		Industrial Properties		Non-Residential Properties
Walmart	1,099,112	3.5	%	1.5	%
General Electric	1,004,000	3.2	%	1.4	%
Priority Fulfillment	993,120	3.2	%	1.4	%
Regal West	968,535	3.1	%	1.3	%
Kumho Tire	841,325	2.7	%	1.1	%
First Quality	800,000	2.6	%	1.1	%
Michelin (TNT)	756,600	2.4	%	1.0	%
Hewlett-Packard	708,532	2.3	%	1.0	%
Del Monte	689,660	2.2	%	0.9	%
RR Donnelley	659,157	2.1	%	0.9	%
	Occupied Square Feet	Percentage of Total Rentable Area of Account’s
MAJOR RETAIL TENANTS		Retail Properties		Non-Residential Properties
Walmart	944,437	4.4	%	1.3	%
Kohl’s	609,529	2.9	%	0.8	%
Ross	565,509	2.7	%	0.8	%
Publix Super Markets	565,187	2.7	%	0.8	%
Dick’s Sporting Goods	522,486	2.4	%	0.7	%
PetSmart	496,595	2.3	%	0.7	%
Michael’s	474,759	2.2	%	0.6	%
Bed, Bath & Beyond	455,510	2.1	%	0.6	%
Old Navy	371,780	1.7	%	0.5	%
Best Buy	305,995	1.4	%	0.4	%

          The following tables list the rentable area subject to expiring leases during the next five years, and an aggregate figure for expirations in 2014 and thereafter, in the Account’s commercial (non-residential) properties. While many of these leases contain renewal options with varying terms, these charts assume that none of the tenants exercise their renewal options.

OFFICE PROPERTIES Year of Lease Expiration	Rentable Area Subject to Expiring Leases (sq. ft.)	Percentage of Total Rentable Area of Account’s Office Properties Represented by Expiring Leases
2009	1,839,941	8.8	%
2010	2,486,945	11.9	%
2011	2,650,295	12.7	%
2012	1,696,029	8.1	%
2013	2,107,345	10.1	%
2014 and thereafter	8,320,137	40.0	%
Total	19,100,692	91.6	%

TIAA Real Estate Account § Prospectus 41

INDUSTRIAL PROPERTIES Year of Lease Expiration	Rentable Area Subject to Expiring Leases (sq. ft.)	Percentage of Total Rentable Area of Account’s Industrial Properties Represented by Expiring Leases
2009	4,143,234	13.4	%
2010	4,458,557	14.4	%
2011	4,333,139	14.0	%
2012	1,755,195	5.7	%
2013	4,744,226	15.3	%
2014 and thereafter	8,164,865	26.3	%
Total	27,599,216	89.1	%
RETAIL PROPERTIES Year of Lease Expiration	Rentable Area Subject to Expiring Leases (sq. ft.)	Percentage of Total Rentable Area of Account’s Retail Properties Represented by Expiring Leases
2009	1,174,989	5.5	%
2010	1,828,509	8.6	%
2011	2,191,075	10.3	%
2012	2,361,586	11.1	%
2013	2,335,086	10.9	%
2014 and thereafter	9,304,020	43.6	%
Total	19,195,265	90.0	%

RESIDENTIAL PROPERTIES

          The Account’s residential property portfolio currently consists of 20 property investments comprised of first class or luxury multi-family, garden, midrise, and high-rise apartment buildings. The portfolio contains approximately 10,300 units located in nine states and has a 95% average occupancy rate as of December 31, 2008. 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.

42 Prospectus § TIAA Real Estate Account

          The table below contains detailed information regarding the apartment complexes in the Account’s portfolio as of December 31, 2008.

Property	Location	Number of Units	Average Unit Size (Square Feet)	Avg. Rent Per Unit/ Per Month
Houston Apartment Portfolio(1)	Houston, TX	2,295	1,063	$	1,304
Palomino Park	Highlands Ranch, CO	1,184	1,095	$	1,180
Phoenix Apartment Portfolio(1)	Greater Phoenix Area, AZ	1,176	995	$	1,101
Kierland Apartment Portfolio(1)	Scottsdale, AZ	1,000	1,047	$	1,272
South Florida Apartment Portfolio(1)	Boca Raton and Plantation, FL	550	906	$	1,147
Ashford Meadows	Herndon, VA	440	1,057	$	1,512
1050 Lenox Park	Atlanta, GA	407	1,030	$	1,355
The Caruth Apartments	Dallas, TX	338	1,168	$	1,715
The Reserve at Sugarloaf	Duluth, GA	333	1,220	$	1,182
The Lodge at Willow Creek	Denver, CO	316	996	$	1,067
Maroneal	Houston, TX	309	928	$	1,312
Glenridge Walk	Sandy Springs, GA	296	1,146	$	1,375
The Colorado	New York, NY	256	617	$	3,051
Regents Court	San Diego, CA	251	884	$	1,747
Larkspur Courts Apartments	Larkspur, CA	248	1,001	$	2,262
Lincoln Woods Apartments	Lafayette Hill, PA	216	774	$	1,272
The Fairways at Carolina	Margate, FL	208	1,026	$	1,124
Quiet Waters at Coquina	Deerfield Beach, FL	200	1,048	$	1,173
Legacy at Westwood	Los Angeles, CA	187	1,181	$	3,727
Westcreek Apartments	Westlake Village, CA	126	951	$	1,882

⁽¹⁾ Represents a portfolio containing multiple properties.

RECENT TRANSACTIONS

          The following describes property and financing transactions by the Account since May 1, 2008. 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.

SALES

Office Properties

          Columbus Office Portfolio – Columbus, OH

          On July 11, 2008, the Account sold an office portfolio investment comprised of three office buildings located in Columbus, Ohio for sales proceeds of approximately $22.0 million and realized a loss of approximately $14.3 million. The Account purchased the property investment on November 30, 1999. The original investment in this property was $30.2 million. At the time of sale, the property had a market value of $22.7 million and a cost to date of $36.3 million according to the records of the Account.

TIAA Real Estate Account § Prospectus 43

Industrial Properties

          FedEx Industrial Portfolio – Crofton, MD

          On November 7, 2008, the Account sold an industrial portfolio investment located in Crofton, Maryland for sales proceeds of approximately $10.4 million and realized a gain of approximately $1.9 million. The Account purchased the portfolio investment on December 18, 1998. The original investment in this property was $7.8 million. At the time of sale, the property had a market value of $10.4 million and a cost to date of $8.4 million.

          East North Central RA Industrial Portfolio – Chicago, IL

          On November 7, 2008, the Account sold an industrial portfolio investment located in Chicago, Illinois for sales proceeds of approximately $31.7 million and realized a loss of approximately $8.5 million. The Account purchased the portfolio investment on September 30, 2004. The original investment in this property was $38.6 million. At the time of sale, the property had a market value of $31.7 million and a cost to date of $40.3 million.

          Chicago CalEast Industrial Portfolio – Chicago, IL

          On November 7, 2008, the Account sold a portion of an industrial portfolio investment comprised of 2 properties (1055 Kingsland and 3950 Swenson) located in Chicago, Illinois for sales proceeds of approximately $5.4 million and a realized loss of approximately $1.9 million. The Account purchased the portfolio investment on December 22, 2003. At the time of sale, the properties had a market value of $5.4 million and a cost to date of $7.4 million.

Residential Properties

          Royal St. George Apartments – West Palm Beach, FL

          On June 26, 2008, the Account sold a residential property investment located in West Palm Beach, Florida for sales proceeds of approximately $23.2 million and a realized gain of approximately $4.4 million. The Account purchased the property investment on December 20, 1996. The original investment in this property was $16.1 million. At the time of sale, the property had a market value of $24.4 million and a cost to date of $18.8 million according to the records of the Account.

Multifamily Properties

          Phoenix Apartment Portfolio – Phoenix, AZ

          On January 13, 2009, the Account sold a portion of an apartment portfolio investment located in Phoenix, Arizona for approximately $20 million and realized a loss of approximately $11.7 million. The Account purchased the portfolio investment on June 23, 2006. The original investment in this property was $31.2 million. At the time of sale, the property had a market value of $20 million and a cost of $31.7 million.

          Houston Apartment Portfolio – Houston, TX

          On February 19, 2009, the Account sold a portion of an apartment portfolio investment located in Houston, Texas for approximately $8.9 million and realized a loss of approximately $5.2 million. The Account purchased the portfolio

44 Prospectus § TIAA Real Estate Account

investment on June 23, 2006. The original investment in this property was $13.8 million. At the time of sale, the property had a market value of $8.9 million and a cost of $14.1 million.

FINANCINGS

          Preston Sherry Plaza – Dallas, TX

          On August 28, 2008, the Account entered into a mortgage agreement in the principal amount of $23.5 million with a fixed interest rate of 5.85% for a period of 7 years. Payment under this loan is interest only for the first three years.

          701 Brickell Avenue – Miami, FL

          On September 16, 2008, the Account entered into a mortgage agreement in the principal amount of $126 million maturing October 2010. Interest is stated at LIBOR plus 200 basis points and, pursuant to the terms of the agreement, the interest rate is capped at 6.50%.

          Four Oaks Place – Houston, TX

          On September 16, 2008, the Account entered into a mortgage agreement in the principal amount of $200 million maturing October 2010. Interest is stated at LIBOR plus 200 basis points and, pursuant to the terms of the agreement, the interest rate is capped at 6.50%.

          The Colorado – New York, NY

          On October 16, 2008, the Account entered into a mortgage agreement in the principal amount of $87.9 million with a fixed interest rate of 5.65% for a period of 7 years.

          The Caruth – Dallas, TX

          On November 13, 2008, the Account entered into a mortgage agreement in the principal amount of $42 million with a fixed interest rate of 5.71% for a period of 7 years.

          Regents Court – San Diego, CA

          On November 18, 2008, the Account entered into a mortgage agreement in the principal amount of $35.9 million with a fixed interest rate of 5.76% for a period of 7 years.

          The Legacy at Westwood – Los Angeles, CA

          On November 18, 2008, the Account entered into a mortgage agreement in the principal amount of $42 million with a fixed interest rate of 5.95% for a period of 7 years.

LEGAL PROCEEDINGS

          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.

TIAA Real Estate Account § Prospectus 45

SELECTED FINANCIAL DATA

          The following selected financial data should be considered in conjunction with the Account’s financial statements and notes provided in this prospectus (amounts in thousands).

	Years Ended December 31,
	2008			2007		2006		2005		2004
Investment income:
Real estate income, net	$	500,434		$	529,412	$	444,783	$	340,090	$	239,430
Income from real estate joint ventures and limited partnerships		116,889			93,724		60,789		71,826		71,390
Dividends and interest		81,523			141,914		135,407		70,999		27,509
Total investment income		698,846			765,050		640,979		482,915		338,329
Expenses		153,040			140,294		83,449		56,100		36,728
Investment income, net		545,806			624,756		557,530		426,815		301,601
Net realized and unrealized (loss) gain on investments and mortgage loans payable		(2,513,024	)		1,438,435		1,056,671		765,970		414,580
Net (decrease) increase in net assets resulting from operations		(1,967,218	)		2,063,191		1,614,201		1,192,785		716,181
Participant transactions		(4,184,395	)		1,464,653		1,969,781		2,110,376		1,735,947
Net (decrease) increase in net assets	$	(6,151,613	)	$	3,527,844	$	3,583,982	$	3,303,161	$	2,452,128
	Years Ended December 31,
	2008			2007		2006		2005		2004
Total assets	$	13,576,954		$	19,232,767	$	15,759,961	$	11,685,426	$	7,843,980
Total liabilities		2,068,030			1,572,230		1,627,268		1,136,715		598,430
Total net assets	$	11,508,924		$	17,660,537	$	14,132,693	$	10,548,711	$	7,245,550
Number of accumulation units outstanding		41,542			55,106		50,146		42,623		33,338
Net asset value, per accumulation unit	$	267.35		$	311.41	$	273.65	$	239.95	$	210.44
Mortgage loans payable	$	1,830,040		$	1,392,093	$	1,437,149	$	973,502	$	499,479

46 Prospectus § TIAA Real Estate Account

QUARTERLY SELECTED FINANCIAL INFORMATION

          The following selected unaudited financial data for each full quarter of 2008 and 2007 are derived from the financial statements of the Account for the years ended December 31, 2008 and 2007. Certain amounts below have been reclassified in accordance with the reclassifications discussed in Note 1 of the Notes to the Financial Statements (amounts in thousands).

	2008
	For the Three Months Ended
													Year Ended December 31
	March 31			June 30			September 30			December 31
Investment income, net	$	150,587		$	147,564		$	129,345		$	118,310		$	545,806
Net realized and unrealized loss on investments and mortgage loans payable		(28,912	)		(101,069	)		(462,819	)		(1,920,224	)		(2,513,024	)
Net increase (decrease) in net assets resulting from operations	$	121,675		$	46,495		$	(333,474	)	$	(1,801,914	)	$	(1,967,218	)
Total return		0.69	%		0.27	%		-2.07	%		-13.18	%		-14.15	%
	2007
	For the Three Months Ended												Year Ended December 31
	March 31			June 30			September 30			December 31
Investment income, net	$	142,721		$	158,635		$	155,766		$	167,634		$	624,756
Net realized and unrealized gain on investments and mortgage loans payable		436,764			355,603			442,916			203,152			1,438,435
Net increase in net assets resulting from operations	$	579,485		$	514,238		$	598,682		$	370,786		$	2,063,191
Total return		4.02	%		3.31	%		3.66	%		2.15	%		13.8	%

TIAA Real Estate Account § Prospectus 47

MANAGEMENT’S DISCUSSION AND ANALYSIS OF THE ACCOUNT’S 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 “] Statements,” which begins below, and the section entitled “Risks,” which begins on page 13. The past performance of the Account is not indicative of future results.

FORWARD-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, domestic and global economic conditions, including conditions in the credit markets, the 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.

          Commercial real estate market statistics discussed in this section are obtained by the Account from sources that management considers reliable, but some of the data are preliminary for the year or quarter ended December 31, 2008 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.

2008 U.S. ECONOMIC AND COMMERCIAL REAL ESTATE 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

48 Prospectus § TIAA Real Estate Account

obtaining favorable long-term returns through rental income and the appreciation of its real estate holdings. The Account does not directly invest in single-family residential real estate, nor does it currently invest in residential mortgage-backed securities (although it may invest in such securities in the future).

          Economic and Capital Markets Overview and Outlook

          Global economic and financial market conditions, which weakened in the first half of 2008, deteriorated significantly during the second half of the year as events such as the failure or takeover of a number of major financial institutions and investment banks subsequently escalated into a global recession and credit crisis. Credit markets became so constrained that the Federal Reserve took several unprecedented steps to stimulate commercial bank lending, including reducing the federal funds rate to zero, and the U.S. Treasury established a $700 billion Troubled Asset Relief Program (“TARP”) initially to assist institutions holding significant illiquid securitized assets. By year-end, over $350 billion of the TARP had been funded, with the bulk going to large financial institutions like Citigroup, Wells Fargo and Bank of America, as well as a number of smaller U.S. banks. In addition to the large financial institutions, companies such as AIG, General Motors and Chrysler also received TARP funding. These actions were intended to loosen credit markets and bolster investor confidence, but were only marginally successful as credit markets remained largely constrained through the end of 2008. During the fourth quarter, the Federal Reserve also authorized the Open Market Desk of the Federal Reserve Bank of New York to purchase debt from Fannie Mae and Freddie Mac and to buy agency-backed mortgage-related securities in an effort to stimulate the U.S. housing market. While mortgage interest rates fell and helped stimulate a small increase in mortgage refinancings, home sales remain depressed and home values continued to decline. Events of the third and fourth quarters, coupled with growing concern about economic conditions, unsettled investors who fled the stock markets for the safety of U.S. government securities. As a result, interest rates on 10-year Treasuries dropped below 3.0% and settled at 2.25% as of year end, a level not seen since the early 1950s. Equity markets also declined sharply. The Dow Jones Industrial Average fell 4.7% during the third quarter and another 19.1% during the fourth quarter. The broader S&P 500 Index retreated even further, dropping 9.4% during the third quarter and 22.6% during the fourth quarter.

          The deterioration in the U.S. economy continued during the first quarter of 2009 as evidenced by the loss of 2.1 million jobs during the quarter. The efforts of the U.S. government and Federal Reserve to stimulate the economy, unfreeze credit markets and assist distressed homeowners similarly intensified, highlighted by the $787 billion fiscal stimulus plan signed into law by President Obama. Other programs include the Homeowner Affordability and Stability Plan, which is designed to assist struggling homeowners with payments and the refinancing of high rate mortgages. To stabilize the financial sector, the Treasury Department announced a program which would provide low-cost financing and limited

TIAA Real Estate Account § Prospectus 49

guarantees for private sector entities acquiring troubled assets from U.S. banks and financial institutions. To stimulate consumer and small business lending, the Federal Reserve’s Term Asset-Backed Securities Loan Facility will issue asset-backed securities collateralized by new consumer and small business loans. Underscoring the extent to which liquidity has been constrained, the Federal Reserve announced plans to pump roughly one trillion dollars into the economy through purchases of agency-backed and long-term government securities.

          Other indicators of the deterioration in economic conditions include U.S. Gross Domestic Product (“GDP”), a basic indicator of economic activity, which grew modestly in the first half of the year but fell 0.5% in the third quarter and declined 6.3% in the fourth quarter. The 6.3% decline in fourth quarter GDP was the largest drop in quarterly GDP since 1982. Like GDP, U.S. payroll employment declined in 2008 with job cuts accelerating over the course of the year. Late in 2008, the National Bureau of Economic Research (“NBER”) announced that economic activity had peaked in December 2007, and that the U.S. economy had entered a recession in December 2007. (Because of data revisions and lags in data availability, recessions are often announced retroactively by the NBER.) At the time of the NBER announcement, the recession was already a year old and already one of the longest recessions since World War II. Economic conditions, which are summarized in the table below, are generally expected to deteriorate further through the first half of 2009 and remain weak at best during the second half of the year. Most economists expect job losses to continue through the first half of 2009 as businesses seek to cut costs in response to weak consumer demand and the contraction of the global economy. Nearly three million jobs were lost in 2008, a total which has already surpassed the number of jobs lost during each of the last two recessions.

ECONOMIC INDICATORS*

	2008			2008Q1			2008Q2			2008Q3			2008Q4			2009Q1			2009F			2010F
Economy (% Growth)(1)
Gross Domestic Product (GDP)		1.1	%		0.9	%		2.8	%		–0.5	%		–6.3	%		N/A			–2.6	%		1.8	%
Inflation (Consumer Price Index)		0.1	%		3.7	%		6.5	%		3.1	%		–12.4	%		2.2	%		–0.7	%		1.6	%
Employment Growth (Thousands)		-3,078			–338			–458			–624			–1,658			–2,055			N/A			N/A
Interest Rates(2)
10 Year Treasury		3.66	%		3.66	%		3.89	%		3.86	%		3.25	%		2.74	%		2.90	%		3.50	%
Federal Funds Rate		0.0–0.25	%		2.25	%		2.00	%		2.00	%		0.0–0.25	%		0.0–0.25	%		N/A			N/A

Sources: BEA, BLS, Federal Reserve, Blue Chip Consensus Forecasts
*	Data subject to revision
(1)	GDP growth rates are annual rates; inflation rates are annualized rates; employment growth are monthly changes.
(2)	The Treasury rates are an average over the stated time period. The Federal Funds rates are as of the end of the stated time period.
N/A indicates data not available.

50 Prospectus § TIAA Real Estate Account

          One of the few bright spots is that inflation concerns have dissipated rapidly as oil prices declined from a peak of approximately $150 per barrel in mid-2008 to $50 per barrel at year end 2008 (which price has generally held to these levels through the first quarter 2009). While the price decline has eased the burden on U.S. households, the magnitude of the decline indicates how significantly the global economy has deteriorated. Other broad economic indicators, which are summarized in the table below, suggest that a particularly deep recession is underway. The 2008 holiday season was one of the weakest on record with retail sales falling by 1.5% in December. Households significantly curtailed spending due to concerns about job security and the declines in household wealth resulting from the downturn in the equity markets. Similarly, as seen in the table below, consumer confidence plummeted in December to a new record low of 38, underscoring the uncertainty felt by consumers in the face of rapidly deteriorating economic conditions. At the same time, the housing market showed no signs of improvement despite favorable mortgage interest rates.

BROAD ECONOMIC INDICATORS*

Index 1985=100	2007		2008		Oct-08		Nov-08		Dec-08
Consumer Confidence	103.4		57.9		38.8		44.7		38.0
% Change
Retail Sales(1)	5.2	%	1.8	%	–1.2	%	–0.2	%	–1.5	%
Housing Starts(2)	–25	%	–33	%	–40	%	–45	%	–45	%
New Home Sales	–26	%	–38	%	–44	%	–38	%	–45	%
Unemployment Rate	4.6	%	5.8	%	6.6	%	6.8	%	7.2	%

*	Data subject to revision
(1)	Retail sales are exclusive of autos, auto parts and gas, and indicate the monthly change from the preceding month.
(2)	Housing data represent the percentage change from the same month in the previous year.
Sources: Conference Board, Census Bureau, Bureau of Labor Statistics

          The Federal Reserve’s January 2009 Beige Book, which reports on regional economic activity to the end of November 2008, provides a synopsis of the difficulties experienced by consumers and businesses throughout the U.S. According to the report, retail sales were generally characterized as weak across all twelve Federal Reserve Districts (“Districts”) despite deep discounting by retailers that started much earlier than usual. Housing markets also remained weak, with most Districts experiencing further reductions in home sales, prices and/or homebuilding. Residential, commercial and industrial lending was reported to be constrained in most Districts due to tightening lending standards. Commercial real estate activity was affected by limited credit availability and had deteriorated in most Districts in conjunction with weakening labor market conditions. Layoffs continued in most Districts across virtually all industries.

          The rapid deterioration of the U.S. economy during the fourth quarter suggests that the economy will remain in recession through the first half of 2009 and probably into the second half of the year. Losses by financial institutions have continued and institutions which received sizeable amounts of the initial disbursements from the

TIAA Real Estate Account § Prospectus 51

TARP may receive additional funds during the first half of 2009. Further, other industries and sectors are now in need of aid. These include the U.S. auto industry, which received $17 billion in December 2008, but which has already indicated that these funds will not carry them through the necessary redesign of their product lines. Other industries that have been said to be seeking assistance include the steel industry and commercial real estate, as property owners face difficulties in refinancing maturing loans. Businesses are likely to remain under pressure during 2009 as economic conditions continue to deteriorate.

          Consequently, prospects for 2009 depend in large part on the success of unprecedented monetary and fiscal policy actions along with the fiscal stimulus package. The plan is designed to both shore up U.S. capital and financial markets and to create jobs through consumer spending and business investment. The extensive plan calls for approximately $500 billion of government spending and roughly $280 billion of tax cuts for individuals and businesses with funds targeting investment and job creation in health care, energy, education and highway construction. Financial aid to state governments under pressure from a shrinking revenue base is also included. Plans to bolster the U.S. housing market have also been announced with a proposal to provide $75 billion to assist homeowners facing foreclosure and another $200 billion for mortgage giants Fannie Mae and Freddie Mac. Finally, the remaining $350 billion of TARP funds will be disbursed to enhance the liquidity of the banking industry and assist various industries. However bold and aggressive, federal programs and monetary policy actions will require time to achieve their desired impact. Consequently, economic activity is likely to remain extremely weak at best during most of 2009, but it is hoped that the necessary preconditions for a recovery will be established.

          As economic data have indicated that the recession is becoming increasingly severe, members of the Federal Reserve Open Market Committee (“FOMC”) have repeatedly lowered expectations for GDP growth in 2009, and particularly for the first half of the year. While members caution that considerable downside risks to economic activity remain, most still expect the economy to start to expand modestly during the third or fourth quarter of 2009. Similarly, prominent private sector economists surveyed as part of the January 2009 Blue Chip Financial Forecasts (“Blue Chip”) publication have repeatedly lowered growth expectations but still expect a modest recovery in economic activity to start in the second half of 2009. On the whole, the Blue Chip consensus forecast calls for GDP to decline by 2.6% in 2009. However, the benefits of monetary and fiscal policy actions coupled with dramatically reduced energy costs should become fully evident in 2010 when GDP growth on the order of 1.8% is expected. FOMC members downgraded expectations for economic growth in the latter half of 2009 and in 2010 as the rapid deterioration in the job market and falling industrial production in the first quarter of 2009 were incorporated into their models. The revised forecast now calls for GDP growth to “…gradually flatten over the course of 2009, and then expand slowly during 2010 as the stresses in financial markets ease, the effects of fiscal stimulus take hold, and the correction in housing activity comes to an end.”

52 Prospectus § TIAA Real Estate Account

          Real Estate Market Conditions and Outlook

          With credit markets constrained and access to financing limited, commercial property sales activity fell sharply in 2008. Preliminary data from Real Capital Analytics (“RCA”), a frequently cited industry source of commercial real estate transactions data, indicate that commercial property sales totaled $130 billion in 2008, a decline of nearly 70% compared with 2007 totals. Transaction activity, which had been depressed all year, fell sharply during the fourth quarter when just $17 billion of property traded hands compared to $33 billion during the third quarter of 2008. Both buyers and sellers struggled with property pricing in an environment where few properties have sold. In addition, transactions are taking much longer to complete, as buyers undertake extensive due diligence and then press for price reductions prior to closing. RCA notes that bid-ask spreads between buyers and sellers appeared to have narrowed largely because sellers were forced to become more realistic with their asking prices in order to consummate a sale. Distressed sellers were under particular pressure to lower prices, and though the number of distressed sales was limited, those sales are expected to increase in 2009 as economic conditions are expected to weaken further. While most government policy has been focused on residential real estate, policy makers have begun to take note of possible distress in the commercial real estate sector as well. As part of the Public-Private Investment Program, the Treasury Department would purchase AAA-rated commercial mortgage-backed securities (“CMBS”) from major banks in the expectation that these purchases would bring liquidity back to the CMBS and commercial real estate markets. In the interim, bankruptcy filings such as that by General Growth Properties, the nation’s second largest mall operator, may occur more frequently until access to credit has been restored and companies are able to refinance maturing debt.

          As with other types of lending, commercial mortgage lending was limited throughout the year and fell precipitously in the second half of 2008. Traditional whole-loan lenders such as life insurance companies tightened standards, and the activity in the CMBS market decelerated sharply and was virtually shut down as of year-end 2008. With limited capital available, buyers who relied on mortgage funds to purchase properties dropped out of the market leaving only a handful of “all-cash” buyers who could use their newfound negotiating leverage to drive down prices. As a result, commercial property prices declined in the third quarter and even more sharply in the fourth quarter. According to Moody’s Investors Services, commercial property prices declined 14.9% on average in 2008. Data in the table below indicate that price declines in top markets have been relatively less severe but still significant.

	2008 Sales Price Change
	National			Top 10 MSAs*
Apartments		–13.6	%		–12.3	%
Office		–13.5	%		–7.8	%
Retail		–8.5	%		–4.1	%
Industrial		–13.9	%		–7.1	%

* Based on total value of property sold in Metropolitan Statistical Area (“MSA”).

Source: Moody’s/REAL CPPI and Real Capital Analytics.

TIAA Real Estate Account § Prospectus 53

          The lack of property sales has made real property valuations difficult. Appraisers rely in large part on sales of “comparables” — buildings of similar quality and characteristics — as a part of the valuation process, but with few sales and frequently no truly comparable sales, real time indicators of market pricing are not available. The recession and weakening property market fundamentals have also forced appraisers to dramatically adjust the assumptions that are used in property valuations. As noted by the Account’s independent fiduciary in its annual report to the trustees, “virtually all previous investor assumptions regarding net absorption, tenant retention, rent growth, credit loss, and exit cap rates that were utilized to develop peak property valuations have been revised, as the credit crisis, uncertainty regarding the severity of the U.S. recession, and growing fears of a major global recession have intensified.” As a result, valuation write-downs have occurred throughout the industry. As reported by the National Council of Real Estate Investment Fiduciaries (“NCREIF”), the appreciation component of the NCREIF Property Index (“NPI”) declined 9.5% in the fourth quarter of 2008. Looking ahead, additional declines in commercial property values appear likely to occur given the ongoing deterioration of the U.S. economy. Preliminary reports from NCREIF indicate that the appraised values of properties owned by 13 participating open-end core funds in the Open End Diversified Core Equity index declined by 15.1% during the first quarter of 2009.

          The national recession contributed to rising vacancy rates across commercial real estate property markets during the fourth quarter of 2008. The table below summarizes the top five markets in which the Account had exposure as of December 31, 2008. The top five markets account for more than one-third of the Account’s total real estate portfolio in terms of value. Despite rising vacancy rates nationally, occupancy in each of the top five markets has held up well.

Metropolitan Statistical Area (MSA)	Percent Leased (Weighted)			# of Property Investments		MSA as a % of Total Real Estate Portfolio			MSA as a % of Total Investments
Washington-Arlington-Alexandria
DC-VA-MD-WV		99.1	%		9		11.07	%		10.35	%
Boston-Quincy MA		91.7	%		5		7.30	%		6.82	%
Los Angeles-Long Beach-Glendale CA		92.5	%		8		7.01	%		6.55	%
San Francisco-San Mateo-
Redwood City CA		94.8	%		4		6.23	%		5.83	%
Houston-Bay Town-Sugar Land TX		96.9	%		3		5.96	%		5.57	%

         Office

          In the office sector, employment growth in key office-users such as finance, professional and business services tends to drive the demand for office space, though typically with a lag due to the longer term nature of leasing cycles. Persistent labor market weakness, particularly in the finance and professional fields, caused the national office vacancy rate to rise to 13.9% in the fourth quarter of 2008 from 13.5% in the third quarter of 2008 as both finance and professional

54 Prospectus § TIAA Real Estate Account

and business services job losses intensified in the fourth quarter. By comparison, the vacancy rate of the Account’s office portfolio was 6.4% in the fourth quarter of 2008. Though metropolitan area vacancies in the Account’s top office markets drifted up or remained steady, vacancies in each remained below the national average. The only significant change was in the Account’s Boston properties where the average vacancy increased to 7.8% as a result of two large lease expirations. While vacancy data for the Account’s properties in top markets were in balance as of year-end 2008, both market conditions and occupancies in the Account’s portfolio will be challenged in 2009 as job losses, slumping demand for office space, and corporate cost cutting are likely to push vacancies higher in most metropolitan markets. The table below compares the average vacancy rate of properties in the Account’s top office markets with their respective metropolitan area averages.

							Account						Metropolitan
		Total Sector by MSA ($M)		% of Total Investments**
							Weighted Average Vacancy						Statistical Area Vacancy*
Sector	Metropolitan Statistical Area (MSA)						2008Q3			2008Q4			2008Q3			2008Q4
Office	National							5.5	%		6.4	%		13.5	%		13.9	%
1	Washington-Arlington-Alexandria
	DC-VA-MD-WV	$	1,219.2		9.1	%		0.7	%		0.6	%		11.7	%		12.0	%
2	Boston-Quincy MA	$	880.3		6.6	%		2.0	%		7.8	%		11.0	%		11.0	%
3	San Francisco-San Mateo-
	Redwood City CA	$	706.4		5.3	%		6.0	%		5.4	%		9.7	%		10.6	%
4	Seattle-Bellevue-Everett WA	$	596.9		4.5	%		3.2	%		3.7	%		9.9	%		11.5	%
5	Los Angeles-Long Beach-Glendale CA	$	554.0		4.2	%		8.4	%		8.0	%		11.7	%		12.8	%

*	Source: Torto Wheaton Research
**	As of December 31, 2008

         Industrial

          Industrial market fundamentals are influenced by macroeconomic factors such as industrial production, international trade flows and employment growth in the manufacturing, wholesale trade, transportation and warehousing industries. Weakened global consumer demand caused a drop in both import and export activity, which in turn contributed to weaker industrial market conditions as indicated in the table below. The national vacancy rate increased to 11.3% in the fourth quarter from 10.7% in the third quarter of 2008. In comparison, the vacancy rate for the Account’s industrial portfolio was higher at 12.3%. This differential is attributable to an above-average vacancy rate in the Account’s investments in the Riverside-San Bernardino metropolitan area, and specifically to the loss of two large tenants. The Riverside-San Bernardino market was also affected by the downturn in global trade as cargo volumes at the ports of Los Angeles and Long Beach, which are the nation’s two largest ports, declined by 15% and 10%, respectively, in 2008. Though the vacancy rate in the Los Angeles industrial market was little changed and remained the lowest in the nation at 5.5%, vacancies in the Riverside-San Bernardino market jumped sharply as new supply hit the market at a time of weakening demand. New construction has since ceased in all practical respects, but a rebound in trade flows will be necessary to revive tenant

TIAA Real Estate Account § Prospectus 55

demand. The table below compares the average vacancy rate of properties in the Account’s top industrial markets to their respective metropolitan area averages.

							Account						Metropolitan
		Total Sector by MSA ($M)		% of Total Investments**
							Weighted Average Vacancy						Statistical Area Vacancy*
Sector	Metropolitan Statistical Area (MSA)						2008Q3			2008Q4			2008Q3			2008Q4
Industrial	National						12.3		%	12.3		%	10.7		%	11.3		%
1	Riverside-San Bernardino-Ontario CA	$	473.9		3.6	%		21.1	%		21.1	%		13.6	%		14.7	%
2	Dallas-Plano-Irving TX	$	180.1		1.4	%		5.5	%		7.1	%		12.9	%		13.6	%
3	Chicago-Naperville-Joliet IL	$	142.0		1.1	%		2.9	%		1.7	%		12.0	%		12.6	%
4	Los Angeles-Long Beach-Glendale CA	$	136.2		1.0	%		9.7	%		9.6	%		5.4	%		5.5	%
5	Atlanta-Sandy Springs-Marietta GA	$	123.0		0.9	%		1.3	%		1.3	%		13.5	%		14.6	%

*	Source: Torto Wheaton Research
**	As of December 31, 2008

         Multi-Family

          Apartment market conditions weakened considerably during the fourth quarter of 2008, as the apartment vacancy rate jumped to 6.9%, as compared to 5.8% in the third quarter. A year-over-year comparison, which accounts for the seasonality inherent in apartment leasing, shows an even bigger jump as vacancy rates increased from 4.8% during the fourth quarter of 2007 to 6.9% at the end of 2008. Vacancies rose due to a combination of weak demand and increased supply, often in the form of unsold single-family homes and condominiums being offered for rent. Competition from unsold single-family homes and condominiums has increased as housing market conditions have continued to weaken, and pressure has been most intense in markets like Phoenix and South Florida where the housing market bust has been most severe. The average vacancy rate for the Account’s apartment portfolio was 5.3% during the fourth quarter of 2008, considerably below the national average. The table below compares the average vacancy rate of properties in the Account’s top apartment markets with their respective metropolitan area averages.

							Account						Metropolitan
		Total Sector by MSA ($M)		% of Total Investments**
							Weighted Average Vacancy						Statistical Area Vacancy*
Sector	Metropolitan Statistical Area (MSA)						2008Q3			2008Q4			2008Q3			2008Q4
Apartment	National							4.3	%		5.3	%		5.8	%		6.9	%
1	Houston-Bay Town-Sugar Land TX	$	305.9		2.3	%		3.4	%		3.3	%		7.5	%		7.1	%
2	Phoenix-Mesa-Scottsdale AZ	$	276.1		2.1	%		5.5	%		5.5	%		9.8	%		10.2	%
3	Denver-Aurora CO	$	213.0		1.6	%		6.8	%		8.8	%		5.2	%		7.2	%
4	New York-Wayne-White Plains NY-NJ	$	153.0		1.2	%		2.0	%		2.0	%		6.0	%		6.2	%
5	Atlanta-Sandy Springs-Marietta GA	$	140.0		1.1	%		3.0	%		5.1	%		8.5	%		10.0	%

*	Source: Torto Wheaton Research
**	As of December 31, 2008

56 Prospectus § TIAA Real Estate Account

         Retail

          Vacancies in neighborhood and community centers throughout the U.S. increased to 10.7% during the fourth quarter of 2008, up from 10.1% during the third quarter. In comparison, the average vacancy rate for the Account’s retail portfolio stood at 5.3% as of the end of 2008. Retail market conditions are dictated by trends in consumer spending. The 2008 holiday season was one of the worst on record for retailers as households drastically reduced their spending. Even with the significant decline in energy costs, household spending is expected to remain low until the job market and consumer confidence improves. The fourth quarter of 2008 saw several retailers file for bankruptcy protection, and the trend continued into the first month of 2009, with retailers such as Mervyn’s, Circuit City, KB Toys and Boscov’s filing for bankruptcy protection. Not only are more bankruptcy filings expected in the coming months, but store closings are also likely to increase as retailers close unproductive or less productive stores. As a result, retail vacancies are generally expected to increase further during 2009. In addition, retailers that remain could seek rent relief or terminate leases if a center’s occupancy falls below a specified level or if co-tenancy clauses are triggered by the loss of an anchor tenant or several major tenants.

          2008 Summary and 2009 Outlook

          Real estate market conditions have been adversely affected by the economic slowdown, which has reduced the tenant demand for all types of space. Going forward, there is little evidence that market conditions will improve in the near term as economic and capital markets conditions remain unsettled, and the monetary and fiscal policy actions that have been implemented will require time to have an effect. Economic conditions are likely to remain weak well into 2009. Fortunately, as the table below indicates, supply resulting from new construction will be relatively modest in comparison to the economic and real estate downturns in 1989 through 1991 and 1999 through 2001. While construction will be modest, space will also be returned to the market due to corporate bankruptcies, consolidation and cost-cutting. Competition for available tenants is likely to intensify as vacancies rise and put downward pressure on rents.

HISTORIC AND PROJECTED CONSTRUCTION⁽¹⁾⁽²⁾

	Forecasted				Average
	2008		2009		1989–1991		1999–2001
Office		76		61		83		92
Industrial		169		67		183		255
Apartment		220		140		257		212
Retail		29		12		45		32

(1)	Data subject to change.
(2)	In millions of sq. ft. except for apartments which are in thousands of units.
Source: Torto Wheaton Research

          Commercial real estate fundamentals are likely to decline over the coming quarters, along with commercial real estate returns. Returns are likely to suffer as companies reduce space usage in order to cut costs and realign space

TIAA Real Estate Account § Prospectus 57

requirements with current employment levels. Investors have raised their return requirements which have caused real estate capitalization rates to rise. In combination, rising vacancy rates, lower net operating income and higher capitalization rates would cause property prices to decline, and probably significantly. Notwithstanding the challenges facing the commercial real estate industry, management believes that the Account’s roster of credit-worthy tenants and high quality assets in historically sound markets may provide a buffer against economic and capital markets conditions. The Account has a tradition of conservative management, utilizing a “core” investment strategy, which includes stabilized assets with high occupancy, minimal near term lease rollover, institutional quality properties, markets and locations. With 108 real estate property investments and a mix of office, industrial, retail and apartment properties located across the U.S. and Europe (two properties), the Account’s property portfolio is highly diversified and not overly exposed to a particular region of the country or property type. In combination, these attributes are expected to provide a measure of stability in the face of extremely challenging conditions.

          Despite significant economic challenges, the Account’s properties are over 90% leased (as of December 31, 2008), with existing leases in place to generate cash flow for debt service payments and income returns. As shown below, the income return has historically been a major component of the Account’s total return, and management believes that it is likely to offset a portion of the negative capital return that is expected to occur as a result of property valuation adjustments in 2009. Nonetheless, maintaining historic income returns will be challenging as rising market vacancies, declining rents and slumping space demand are likely to affect the performance of the Account’s markets and properties in 2009. During market downturns, property cash flow typically declines as landlords are required to offer more generous rental packages in order attract new tenants and retain existing tenants. Concessions to tenants could be required until economic and real estate market conditions improve markedly.

ACCOUNT RETURNS

58 Prospectus § TIAA Real Estate Account

          Investments as of December 31, 2008

          As of December 31, 2008, the Account had total net assets of $11.5 billion, a 25% decrease from the end of the third quarter of 2008 and a 35% decrease from December 31, 2007. The decrease in net assets was due to net participant transfers out of the Account, combined with capital depreciation on the Account’s investment portfolio and a 13% decrease in net investment income during the year ended December 31, 2008 as compared to the year ended December 31, 2007.

          As of December 31, 2008, the Account owned a total of 108 real estate property investments (96 of which were wholly-owned, 12 of which were held in joint ventures). The real estate portfolio included 45 office properties (5 of which were held in joint ventures and one located in London, England), 26 industrial properties (including one held in a joint venture), 20 apartment complexes, 16 retail properties (including five held in joint ventures and one located in Paris, France), and a 75% joint venture interest in a portfolio of storage facilities. Of the 108 real estate property investments, 27 are subject to debt (including seven joint venture property investments). Total debt on the Account’s wholly-owned real estate portfolio as of December 31, 2008 was $1.8 billion representing 15.9% 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, 2008 was $3.7 billion, representing 32.3% of Total Net Assets. The Account currently has no account-level debt.

           During 2008, the Account purchased one property investment and one tenant’s leasehold interest at an existing property investment for a combined total net equity investment of $163.1 million as displayed in the chart below (amounts in thousands):

PROPERTY INVESTMENTS ACQUIRED IN 2008

Property Name	Property Type	City	State	Net Acquisition Cost		Joint Venture/% Interest	Third Party Debt		Gross Acquisition Cost
The Colorado(1)	Apartments	New York	NY	$	45,228	No		—	$	45,228
Great West Industrial Portfolio	Industrial	Rancho Cucamonga	CA		117,854	No		—		117,864
Total				$	163,082		$	—	$	163,092

⁽¹⁾ The Account purchased a leasehold interest at The Colorado in February of 2008, which is an addition to the existing investment.

           The Account also sold four property investments and one partial property investment for a net sales price (less selling expenses) of approximately $91.4 million. The properties sold recognized a realized loss of approximately $18.1 million. The properties are listed below (amounts in thousands):

TIAA Real Estate Account § Prospectus 59

PROPERTY INVESTMENTS SOLD IN 2008

Property Name	Property Type	City	State	Net Sales Price (less selling expense)
Royal St. George	Apartment	West Palm Beach	FL	$	22,783
Columbus Office Portfolio	Office	Columbus	OH		21,643
FedEx Industrial Portfolio	Industrial	Crofton	MD		10,153
Chicago CalEast Industrial Portfolio(1)	Industrial	Bolingbrook	IL		5,393
Eastern Northern Central RA	Industrial	Chicago	IL		31,426
Total				$	91,398

⁽¹⁾ Partial sale of an industrial portfolio which was part of an existing portfolio

           The following charts reflect the diversification of the Account��s real estate investments by region and property type and list its ten largest holdings. All information is based on the values of the Account’s properties at December 31, 2008.

DIVERSIFICATION BY MARKET VALUE⁽¹⁾

	East		West		South		Midwest		Foreign(2)		Total
Office		21.7%		19.4%		11.9%		1.2%		1.9%		56.1%
Apartment		2.1%		5.9%		4.9%		0.0%		0.0%		12.9%
Industrial		1.7%		6.9%		3.9%		1.3%		0.0%		13.8%
Retail		4.2%		1.0%		9.0%		0.5%		2.0%		16.7%
Storage(3)		0.2%		0.2%		0.1%		0.0%		0.0%		0.5%
Total		29.9%		33.4%		29.8%		3.0%		3.9%		100%

(1)	Market values for properties held in joint venture investments are net of debt.
(2)	Represents real estate investments in the United Kingdom and France.
(3)	Represents a portfolio of storage facilities.

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

TOP TEN LARGEST REAL ESTATE PROPERTY INVESTMENTS

Property or Joint Venture Name	City	State	Type	Value ($M)		(a)	Property as a % of Total Real Estate Portfolio		(b)	Property as a % of Total Investments
DDR Joint Venture	Various	USA	Retail	$	712.8	(c)		5.71	%		5.34	%
1001 Pennsylvania Avenue	Washington	DC	Office	$	550.8	(d)		4.41	%		4.12	%
Four Oaks Place	Houston	TX	Office	$	438.0	(e)		3.51	%		3.28	%
Fourth and Madison	Seattle	WA	Office	$	407.5	(f)		3.26	%		3.05	%
50 Fremont	San Francisco	CA	Office	$	386.6	(g)		3.10	%		2.90	%
780 Third Avenue	New York City	NY	Office	$	341.0			2.73	%		2.55	%
99 High Street	Boston	MA	Office	$	320.1	(h)		2.56	%		2.40	%
The Newbry	Boston	MA	Office	$	315.6			2.53	%		2.36	%
The Florida Mall	Orlando	FL	Retail	$	281.9			2.26	%		2.11	%
Ontario Industrial Portfolio	Ontario	CA	Industrial	$	278.0	(i)		2.23	%		2.08	%

60 Prospectus § TIAA Real Estate Account

(a)	Value as reported in the December 31, 2008 Statement of Investments. Investments owned 100% by TIAA are reported based on fair value. Investments in joint ventures are reported at fair value and are based on the equity method of accounting and are presented at the Accounts ownership interest.
(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 and is shown net of debt.
(d)	This property is shown gross of debt. The value of the Account’s interest less leverage is $348.1 Million.
(e)	This property is shown gross of debt. The value of the Account’s interest less leverage is $239.7 Million.
(f)	This property is shown gross of debt. The value of the Account’s interest less leverage is $264.7 Million.
(g)	This property is shown gross of debt. The value of the Account’s interest less leverage is $253.6 Million.
(h)	This property is shown gross of debt. The value of the Account’s interest less leverage is $152.4 Million.
(i)	This property is shown gross of debt. The value of the Account’s interest less leverage is $269.0 Million.

           As of December 31, 2008, the Account’s net assets totaled $11.5 billion. At December 31, 2008, the Account held a total of 108 real estate property investments (including its interests in 12 real estate-related joint ventures). As of that date, the Account also held investments in real estate limited partnerships, representing 2.15% of Total Investments, government agency notes, representing 1.99% of Total Investments, commercial paper, representing 1.84% of Total Investments, and a mortgage loan receivable, representing 0.54% of Total Investments.

           TIAA-CREF has employed sustainable practices at its real estate investments (including those owned by the Account) for many years. It was one of the first institutional owners to sign on as an EPA ENERGY STAR Partner, utilizing the Portfolio Manager benchmarking tool to measure and track the energy performance of its office portfolio.

RESULTS OF OPERATIONS

Year Ended December 31, 2008 Compared to Year Ended December 31, 2007

         Performance

          The Account’s total return was negative 14.2% for the year ended December 31, 2008. This was a significant decline compared to the positive return of 13.8% for the year ended December 31, 2007. The Account’s performance during the year ended December 31, 2008 reflects a decline in the aggregate net asset value of the Account’s real estate property investments, including investments owned in joint ventures and limited partnerships, as well as lower income from marketable securities.

          After several years of increasing investor demand for commercial real estate and historic capital appreciation, the weakened economy and faltering financial and credit markets have brought transaction activity to historically low levels, bringing a halt to capital appreciation in many markets. The number of individual property investments with valuation decreases has increased significantly as evidenced by the Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable. Management believes that real estate is an investment that should be considered from a long term perspective. The Account’s annualized total returns (after expenses) over the past one, three, five, and 10-year

TIAA Real Estate Account § Prospectus 61

periods ended December 31, 2008 were -14.15%, 3.67%, 7.41%, and 7.29%, respectively. As of December 31, 2008, the Account’s annualized total return since inception was 7.60%.

          The Account’s total net assets decreased from $17.7 billion at December 31, 2007 to $11.5 billion at December 31, 2008. The primary drivers of this 34.8% decrease were the net participant transfers out of the Account ($4.6 billion) and depreciation in value of the Account’s wholly owned, joint venture, and limited partnership real estate investments ($2.5 billion in unrealized depreciation on investments and mortgage loans payable).

         Income and Expenses

          The Account’s net investment income, after deduction of all expenses, was 12.6% lower for the year ended December 31, 2008, as compared to the same period in 2007.

          The Account’s real estate holdings, including real estate joint ventures and limited partnerships, generated approximately 88.3% and 81.5% of the Account’s total investment income (before deducting Account level expenses) during the years ended December 31, 2008 and 2007, respectively. The 12.6% decrease in the Account’s total investment income was due to a 59.2% decrease in the Account’s dividend income and a 41.0% decrease in interest income generated from fewer investments in marketable securities, including real estate equity securities, commercial paper, government notes, and an investment in a commercial mortgage loan receivable.

          Gross real estate rental income decreased approximately 0.8% for the year ended December 31, 2008, as compared to the same period in 2007. This decrease is primarily due to a decrease in the number of wholly-owned real estate investment property investments held by the Account. The number of wholly-owned properties decreased from 99 as of December 31, 2007 to 96 as of December 31, 2008.

          Income from real estate joint ventures and limited partnerships was $116.9 million for the year ended December 31, 2008, as compared to $93.7 million for the year ended December 31, 2007. This 24.7% increase was due to an increase in gross rental income from properties owned in joint ventures, which increased substantially with the acquisition of the joint venture interest in the DDR Retail Portfolio in the first quarter of 2007, but was somewhat offset by a decrease in income from the disposition of the 161 North Clark joint venture during 2007.

          Investment income on the Account’s investments in marketable securities decreased by 42.6%, from $141.9 million for the year ended December 31, 2007 to $81.5 million for the comparable period in 2008. The variance was due to the decrease of the Account’s investments in marketable securities from $3.8 billion as of December 31, 2007 to $0.5 billion as of December 31, 2008, coupled with a decrease in the rates of return on the marketable securities.

          Total real estate property level expenses and taxes for wholly-owned property investments for the year ended December 31, 2008 increased to $478.9 million as

62 Prospectus § TIAA Real Estate Account

compared to $458.0 million for the year ended December 31, 2007. The overall change in expenses was primarily due to a 4.0% increase in operating expenses, a 4.8% increase in real estate taxes and a 5.9% increase in interest expense. Operating expenses increased during 2008 primarily due to increased bad debts and insurance costs. Real estate taxes increased due to higher tax assessments in 2008 as compared to 2007. The increase in interest expense is due to $557 million of new debt financing that was obtained during the third and fourth quarters of 2008.

          The Account incurred overall Account level expenses of $153.0 million for the year ended December 31, 2008, which represents a 9.1% increase from $140.3 million for the same period in 2007. The increase is primarily due to an increase in actual administrative and distribution expenses associated with managing and distributing the Account. Total administrative and distribution expenses increased to $77.6 million for the year ended December 31, 2008, as compared to $63.6 million for the year ended December 31, 2007. This increase in expenses primarily resulted from larger allocated operational expenses including costs associated with new technology investments. The increase in overall expenses (due primarily to increased administrative and distribution expenses) was somewhat offset by a $1.6 million decrease in investment advisory charges. This decline was due to a decrease of overall costs that are allocated to the Account.

          Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable

          The Account had net realized and unrealized losses on investments and mortgage loans payable of $2.5 billion for the year ended December 31, 2008, a 274.7% decrease compared to a net realized and unrealized gain of $1.4 billion for the year ended December 31, 2007. The overall variance was driven by two factors. First, the decrease in net realized and unrealized gains and losses on investments and mortgage loans payable was primarily driven by a net realized and unrealized loss on the Account’s wholly-owned real estate property investments of $1.9 billion for the year ended December 31, 2008 compared to a gain of $1.0 billion during the same period in 2007. Second, the Account’s interests in joint ventures and limited partnerships posted a net realized and unrealized loss of $702.8 million for the year ended December 31, 2008 as compared to a substantial net realized and unrealized gain of $462.1 million for the year ended December 31, 2007. The variance in the net realized and unrealized gains and losses on wholly-owned real estate property investments and those held in joint ventures was due to the decline in value of the Account’s existing real estate assets, which reflected the net effects of a weaker overall economy and continued shortage of liquidity in the commercial real estate markets during 2008. Approximately $1.9 billion or 76% of the 2008 net realized and unrealized loss on investments and mortgage loans payable occurred in the fourth quarter of 2008. This significant increase in the net realized and unrealized loss, in comparison to the 2007 net realized and unrealized gain, was the direct result of increases in rates which are used in appraisal valuations (discount rates, overall and implied capitalization rates and

TIAA Real Estate Account § Prospectus 63

terminal rates) which are key components of the determination of the investments’ fair value. In general, weighted average appraisal rates increased between 65 and 89 basis points in 2008 when compared to 2007. This increase in weighted average appraisal rates was one of the key drivers causing the increase of net realized and unrealized loss in 2008. Additional factors causing the increase in the net realized and unrealized net loss in 2008 include decreases in rental growth estimates, decreases in rental rates, tenant bankruptcies and decreases in occupancy. During 2008, the Account’s property fundamentals such as occupancy and overall property net operating income remained stable when compared to 2007.

          The Account also posted a net realized and unrealized gain on its marketable securities of $4.8 million for the year ended December 31, 2008, as compared to a net realized and unrealized loss of $101.5 million in the same period of 2007. The net gains on the Account’s marketable securities for the year ended December 31, 2008 were primarily due to the reversal of the unrealized loss as a result of the sale of the Account’s investments in publicly-traded marketable real estate equity securities (“REIT stocks”) in June 2008. The sale of these securities was executed over several days for total proceeds of $477.4 million, and the Account realized a loss of $11.2 million. The disposition of these REIT stocks was a decision by the Account’s management to reduce risk within its marketable securities investment portfolio. As circumstances warrant and in continued furtherance of its investment objective and strategy, the Account may invest in REIT stocks in the future. The losses in the Account’s marketable securities during the year ended December 31, 2007 were primarily due to unrealized losses due to the Account’s investments in REIT stocks. The U.S. REIT market struggled through a volatile 2007 and ended the year down by more than 17%.

          The Account had unrealized gains on its mortgage loans payable in the amount of $109.8 million and unrealized losses on its mortgage loan receivable of approximately $0.8 million for the year ended December 31, 2008, as compared to net unrealized gains of $53.9 million and an unrealized loss of $2.1 million, respectively, for the same period in 2007. The net unrealized gain or loss on mortgage loans payable and mortgage loans receivable for the period reflected the fluctuations in the U.S. Treasury rates and commercial real estate mortgage loan spreads during the year ended December 31, 2008, which are used as a basis to value the commercial mortgage loans on the wholly-owned real estate property investments. For a mortgage loan payable, a negative fair value adjustment decreases the value of the payable and therefore results in an unrealized gain to the Account. Conversely, for a mortgage loan receivable, a negative fair value adjustment decreases the value of the receivable and results in an unrealized loss.

          During 2008, the Account sold one apartment property investment, one office portfolio investment, two industrial property investments and one partial industrial portfolio investment for total net proceeds of $91.4 million and recognized a net loss of $18.4 million.

64 Prospectus§ TIAA Real Estate Account

Year Ended December 31, 2007 Compared to Year Ended December 31, 2006

          Performance

          The Account’s total return was 13.80% for the year ended December 31, 2007, 24 basis points lower than the 2006 annual return of 14.04%. The Account’s overall performance on a year-to-year basis reflected the strong performance of the Account’s real estate property investments, including investments owned in joint ventures. This strong performance was offset by the substantial decrease in performance of its marketable securities (described in Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable).

          Commercial real estate experienced historically high pricing in 2007 as capital flowed into the asset class. While this increase in property pricing 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. As of December 31, 2007 the Account’s total return (after expenses) over the prior three, five and 10 years 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 the growth were significant increases in the Account’s net realized and unrealized gains on its real estate investments including joint ventures and limited partnerships, net positive participant transactions, and an increase in the Account’s net investment income from its investment portfolio over the prior twelve months ended December 31, 2007.

          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.

          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 notes, and an investment in a commercial mortgage loan receivable.

TIAA Real Estate Account§Prospectus 65

          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 $93.7 million for the year ended December 31, 2007, as compared with $60.8 million 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 $135.4 million for the year ended December 31, 2006 to $141.8 million 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 $458.0 million and $389.7 million 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 $140.3 million, which was a 68% increase from expenses of $83.4 million 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 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 $49.2 million for the year ended December 31, 2007 as compared to $26.9 million 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,

66 Prospectus§ TIAA Real Estate Account

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 $63.6 million for the year ended December 31, 2007 as compared to $45.7 million 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 $19.4 million for the year ended December 31, 2007 as compared to $3.9 million 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 $1.4 billion for the year ended December 31, 2007, as compared to net realized and unrealized gains on investments and mortgage loans payable of $1.1 billion 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 $462.1 million for 2007 from $217.4 million 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 $1.0 billion for the year ended December 31, 2007 from $735.5 million 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 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 $898.2 million and the realized gains on the sales of real estate properties of $127.8 million. 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

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realized and unrealized loss on its marketable securities of $101.5 million for the year ended December 31, 2007, as compared to a net realized and unrealized gain of $130.7 million 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. 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%.

LIQUIDITY AND CAPITAL RESOURCES

          As of December 31, 2008 and 2007, the Account’s liquid assets (i.e.,cash, marketable securities, and receivables for short-term securities sold) had a value of $534 million and $3.8 billion, respectively (approximately 4.0% and 20.0% of the Account’s total investments at such dates, respectively). As of September 30, 2008, the Account’s liquid assets had a value of $1.9 billion (approximately 11.7% of the Account’s total investments). The decrease in the Account’s liquid assets as of December 31, 2008 compared to both December 31, 2007 and September 30, 2008 was due primarily to sustained significant net participant transfers out of the Account and in particular, during the three months ended December 31, 2008. As of April 27, 2009, the Account’s liquid assets had a value of $0.5 billion (approximately 4.3% of the Account’s total investments).

          During the year ended December 31, 2008, the Account received $1.0 billion in premiums and had outflows of $4.6 billion in net participant transfers to TIAA, the CREF accounts and TIAA-CREF affiliated mutual funds, while, during the year ended December 31, 2007, the Account received $1.2 billion in premiums and had inflows of $934 million in net participant transfers from TIAA, the CREF accounts, and TIAA-CREF affiliated mutual funds.

          In the three months ended December 31, 2008, the Account received $215.2 million in premiums and had an outflow of $2.1 billion in net participant transfers to TIAA, the CREF accounts and TIAA-CREF affiliated mutual funds. During the three months ended March 31, 2009, the Account received $190 million in premiums and had an outflow of $983 million in net participant transfers to TIAA, the CREF accounts and TIAA-CREF affiliated mutual funds.

          Primarily as a result of these significant net participant transfers, on December 24, 2008, pursuant to TIAA’s existing liquidity guarantee obligation, the TIAA general account purchased $155.6 million of accumulation units (accumulation units purchased by TIAA are generally referred to as “liquidity units”) issued by the Account. Subsequent to December 24, 2008 and through April 27, 2009, the TIAA general account has purchased an additional $932.6 million in the aggregate of accumulation units in a number of separate transactions. As disclosed under “Establishing and Managing the Account—The Role of TIAA—Liquidity Guarantee” in this prospectus, in accordance with this liquidity guarantee obligation, TIAA guarantees that all participants in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is received in

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good order. Management cannot predict the extent to which future TIAA liquidity unit purchases, if any, will be required under this liquidity guarantee, nor can management predict when such liquidity units will be redeemed by the Account in part, or in full. As of December 31, 2008, the TIAA general account had assets equal to approximately $195.2 billion. Management believes that TIAA has the ability to meet its obligations under this liquidity guarantee.

          In addition, for so long as TIAA owns liquidity units, the Account’s independent fiduciary will monitor the Account, including reviewing the purchase and redemption of liquidity units by TIAA to ensure the Account uses the correct accumulation unit values. In addition, the independent fiduciary’s responsibilities include:

• establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for reviewing the trigger point;

• approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of liquidity units reaches the trigger point; and

• once the trigger point has been reached, participating in a program, if any, to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. If the independent fiduciary were to determine that TIAA’s ownership should be reduced following the trigger point, its role in participating in any asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of liquidity units.

          As of the date of this prospectus, the independent fiduciary, which has the right to adjust the trigger point, has established the trigger point at 45% of the outstanding accumulation units and it will continue to monitor TIAA’s ownership interest in the Account and provide further recommendations as necessary.

          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, benefit payments, or transfers). While the Account’s liquid investments have dropped below 15% of its total investments during this recent period of significant net participant outflows, the Account’s investment strategy remains to invest between 75% and 85% of its assets directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. In the near term, the Account’s cash and marketable securities will likely comprise less than 10% of the Account’s investments, but management intends to increase the Account’s holdings in cash and short-term marketable securities to the extent practicable, consistent with its investment strategy and objective.

          Management continues to believe that the significant recent net negative outflow may be a reflection of participant concerns with the downturn in the U.S. and global economy, the turmoil in the capital and credit markets and their

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current and potential future net effect on commercial real estate in particular. Management cannot predict whether the net outflows will continue at the same rate, a higher rate, or at all in the future. If net outflows were to continue at the same or at a higher rate, it could have a negative impact on the Account’s operations and returns. Additionally, continued net outflow activity could require TIAA to purchase additional liquidity units, perhaps to a significant degree. See “Risks” on page 13 of this prospectus.

          The Account’s net investment income continues to be an additional source of liquidity for the Account and it decreased from $167.6 million for the three months ended December 31, 2007 to $118.3 million for the three months ended December 31, 2008. It also decreased from $624.8 million for the year ended December 31, 2007 to $545.8 million for the year ended December 31, 2008.

          As discussed above in the “Results of Operations” subsection, the Account liquidated its publicly-traded REIT stock portfolio during 2008, which represented 2.28% of the Account’s investments as of March 31, 2008, for approximately $477.4 million and the Account recognized a cumulative net loss of $11.2 million. The disposition of these REIT stocks was a decision by the Account’s management to reduce risk within its marketable securities investment portfolio. The sale of these REIT stocks resulted in an increased position in less volatile, high quality marketable securities, which can be readily converted to cash to honor redemptions and transfers, purchase or improve properties or cover other Account expenses. As circumstances warrant and in continued furtherance of its investment objective and strategy, the Account may invest in REIT stocks in the future.

          Under the Account’s investment guidelines, the Account’s total borrowings may not exceed 30% of the Account’s Total Net Assets at the time of incurrence. At the time the Account (or a joint venture in which the Account is a partner) enters into a revolving line of credit, management deems the maximum amount which may be drawn under that line of credit as fully incurred, regardless of whether the maximum amount available has been drawn from time to time. As the Account’s Total Net Assets fluctuate from time to time (whether due to valuation adjustments on the underlying assets or otherwise), the Account’s total borrowings may exceed 30% of Total Net Assets, even without the incurrence of additional leverage at such time. At any time when the Account has total borrowings in excess of 30% of Total Net Assets, it may not incur additional debt. In calculating this limit, only the Account’s actual percentage interest in any borrowings is included, and not that of any joint venture 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. As of December 31, 2008 the Account did not have any construction loans.

          The Account, under certain conditions more fully described on page 11 of this prospectus under “General Investment and Operating Policies—Borrowing,” 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 that may be unsecured and/or contain terms that may require the Account to secure the loan

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with one or more of its properties. Management expects the proceeds from any such short-term borrowing would be used to meet the cash flow needs of the Account’s properties and real estate related investments, but depending on the circumstances, proceeds could be used for Account-level funding needs (including the need to honor unexpected participant withdrawal activity).

          As of December 31, 2008, the Account’s total borrowings, including the debt on investments in joint ventures, represented 32.3% of the Account’s Total Net Assets. As referenced in Note 8 to the Account’s financial statements, the Account obtained mortgages on three office properties and four apartment buildings (Preston Sherry Plaza in Texas, Four Oaks Place in Texas, 701 Brickell Avenue in Florida, Regents Court in California, The Legacy at Westwood in California, The Colorado in New York, and The Caruth in Texas) during the third and fourth quarters of 2008 in the aggregate principal amount of $557.3 million. The new debt that was obtained in the third and fourth quarters of 2008 described above was incurred prior to the Account exceeding the 30% limit. As of April 27, 2009, the Account’s total borrowings, including the debt on investments in joint ventures, represented 35.7% of the Account’s Total Net Assets.

RECENT TRANSACTIONS

          The following describes property transactions by the Account in the fourth quarter of 2008. 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.

PURCHASES

          None.

SALES

          FedEx Industrial Portfolio – Crofton, MD

          On November 7, 2008, the Account sold an industrial portfolio investment located in Crofton, Maryland for sales proceeds of approximately $10.4 million and realized a gain of approximately $1.9 million. The Account purchased the portfolio investment on December 18, 1998. The original investment in this property was $7.8 million. At the time of sale, the property had a market value of $10.4 million and a cost of $8.4 million.

          East North Central RA Industrial Portfolio – Chicago, IL

          On November 7, 2008, the Account sold an industrial portfolio investment located in Chicago, Illinois for sales proceeds of approximately $31.7 million and realized a loss of approximately $8.5 million. The Account purchased the portfolio investment on September 30, 2004. The original investment in this property was $38.6 million. At the time of sale, the property had a market value of $31.7 million and a cost of $40.3 million.

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          Chicago CalEast Industrial Portfolio – Chicago, IL

          On November 7, 2008, the Account sold a portion of an industrial portfolio investment comprised of 2 properties (1055 Kingsland and 3950 Swenson) located in Chicago, Illinois for sales proceeds of approximately $5.4 million and a realized loss of approximately $1.9 million. The Account purchased the portfolio investment on December 22, 2003. At the time of sale, the properties had a market value of $5.4 million and a cost of $7.4 million.

FINANCINGS

          The Colorado – New York, NY

          On October 16, 2008, the Account entered into a mortgage agreement in the principal amount of $87.9 million with a fixed interest rate of 5.65% for a period of 7 years.

          The Caruth – Dallas, TX

          On November 13, 2008, the Account entered into a mortgage agreement in the principal amount of $42 million with a fixed interest rate of 5.71% for a period of 7 years.

          Regents Court – San Diego, CA

          On November 18, 2008, the Account entered into a mortgage agreement in the principal amount of $35.9 million with a fixed interest rate of 5.76% for a period of 7 years.

          The Legacy at Westwood – Los Angeles, CA

          On November 18, 2008, the Account entered into a mortgage agreement in the principal amount of $42 million with a fixed interest rate of 5.95% for a period of 7 years.

CONTRACTUAL OBLIGATIONS

          The following table sets forth a summary regarding the Account’s known contractual obligations, including required interest payments for those items that are interest bearing, at December 31, 2008 (amounts in thousands):

	Amounts Due During Years Ending December 31,
	2009		2010		2011		2012		2013		Thereafter		Total
Mortgage Loans Payable:
Principal Payments	$	3,303	$	330,827	$	13,139	$	198,368	$	553,189	$	811,295	$	1,910,121
Interest Payments(1)		109,605		106,565		91,946		90,038		69,131		95,346		562,631
Total Mortgage Loans Payable		112,908		437,392		105,085		288,406		622,320		906,641		2,472,752
Joint Venture Funding Commitment		6,598		—		—		—		—		—		6,598
Other Commitments(2)		79,260		—		—		—		—		—		79,260
Total Contractual Obligations	$	198,766	$	437,392	$	105,085	$	288,406	$	622,320	$	906,641	$	2,558,610

(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, 2008. See Note 8 of the Account’s consolidated financial statements.
(2)	This amount represents the Account’s aggregate commitment to purchase interests in five limited partnerships and to purchase shares in a private real estate equity investment trust. The timing of contributions made pursuant to these commitments will depend on when the sponsor of the investment vehicle calls for such contribution.

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          Note that the Contractual Obligations table above does not include payments on debt held in Investments in Joint Ventures as it is the obligation of the individual joint venture entities. See Note 7-Investments in Joint Ventures and Limited Partnerships.

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. Any such 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 Policies

          The financial statements of the Account are prepared in conformity with accounting principles generally accepted in the United States of America.

          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.

          Accounting For Investments at Fair Value

          In September 2006, the Financial Accounting Standards Board (“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. This Statement was effective as of January 1, 2008 for the Account. The adoption of Statement No. 157 did not have a material impact on the Account’s financial position or results of operations.

          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 adopted Statement 159 on January 1, 2008 and reports all existing and plans to report all future mortgage loans payable at fair value. Historically, the Account recorded mortgage loans payable at fair value. The adoption of Statement No. 159 did not have a material impact on the Account’s financial position or results of operations.

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          In April 2009, FASB issued FASB Staff Position FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly”. This FSP provides additional guidance for estimating fair value in accordance with FASB Statement No. 157, “Fair Value Measurements”, when the volume of activity for an asset or liability have significantly decreased. This FSP also includes guidance on identifying circumstances that indicate a transaction is not orderly. This FSP is effective for periods ending after June 15, 2009 with early adoption permitted. Management of the Account plans to adopt the provisions of FSP FAS 157-4 for the second quarter of 2009 and does not expect that the adoption of FSP FAS 157-4 will have a material impact on the Account’s financial position or results of operations.

          Valuation Hierarchy

          In accordance with FASB Statement No. 157, “Fair Value Measurements,” the Account groups financial assets and financial liabilities measured at fair value into three levels, based on the markets in which the assets and liabilities are traded, if any, and the observability of the assumptions used to determine fair value. These levels are:

          Level 1 — Valuations using unadjusted quoted prices for assets traded in active markets, such as stocks listed on the New York Stock Exchange. Active markets are defined as having the following characteristics for the measured asset or liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information regarding the issuer is publicly available. Level 1 assets include real estate related marketable securities.

          Level 2 — Valuations for assets and liabilities traded in less active, dealer or broker markets. Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities. Level 2 inputs for fair value measurements are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include:

a.	Quoted prices for similar assets or liabilities in active markets;
b.	Quoted prices for identical or similar assets or liabilities in markets that are not active (that is, markets in which there are few transactions for the asset (or liability), the prices are not current, price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly);
c.	Inputs other than quoted prices that are observable within the market for the asset (or liability) (for example, interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates that are observable at commonly quoted intervals); and
d.	Inputs that are derived principally from or corroborated by observable market data by correlation or other means (for example, market-corroborated inputs).

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          Examples of securities which may be held by the Account and included in Level 2 include Certificates of Deposit, Commercial Paper, Government Agency Notes and Variable Notes.

          Level 3 — Valuations for assets and liabilities that are derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market, and require significant professional judgment in determining the fair value assigned to such assets or liabilities. Level 3 assets and liabilities include investments in real estate, investments in joint ventures and limited partnerships, mortgage loan receivable, and mortgage loans payable.

          An investment’s categorization within the valuation hierarchy described above is based upon the lowest level of input that is significant to the fair value measurement.

          The Account’s investments and mortgage loans payable are stated at fair value. 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 will be made to reflect changes in 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 fair values that represent a good faith estimate of what an unaffiliated buyer in the marketplace would pay to purchase the asset or would receive to transfer 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 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. As discussed below in more detail, as the Account generally obtains appraisals on a quarterly basis, there may be circumstances in the interim in which the true realizable value of a property is not reflected in the Account’s daily net asset value 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 (or increase) in property values in a relatively short period of time between appraisals.

          The following is a description of the valuation methodologies used for investments measured at fair value.

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          Valuation of Real Estate Properties

          Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the TIAA Board of Trustees (“Board”) and in accordance with the responsibilities of the Board as a whole. Accordingly, the Account does not record depreciation. The Account’s real estate properties are generally classified within Level 3 of the valuation hierarchy. 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 significant judgment because the actual market value of real estate can be determined only by negotiation between the parties in a sales transaction. The Account’s primary objective when valuing its real estate investments will be to produce a valuation that represents a fair and accurate estimate of the fair value of its investments. Implicit in the Account’s 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.

          Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Amounts ultimately realized from each investment may vary significantly from the market value presented. Actual results could differ from those estimates.

          Real estate properties owned by the Account are initially valued based on an independent appraisal 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, each property is valued each quarter, with an independent external appraisal completed for each real estate property at least once a year. In general, the Account obtains appraisals for each real estate property throughout the quarter, which is intended to result in appraisal adjustments (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day in each period.

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          Starting with the second quarter of 2009, Account management intends to have each real property owned by the Account appraised by independent appraisers once per calendar quarter. TIAA’s internal appraisal staff will continue to oversee the entire appraisal process, in conjunction with the Account’s independent fiduciary. Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal). Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when bids are obtained for properties held for sale by the Account. In addition, adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant).

          An independent fiduciary, Real Estate Research Corporation, has been appointed by a special subcommittee of the Investment Committee of the Board to, among other things, oversee the appraisal process. The independent fiduciary must approve all independent appraisers used by the Account. All 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. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. These independent appraisers are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent, RICS) and state certified appraisers from national or regional firms with relevant property type experience and market knowledge.

          Management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. Also, the independent fiduciary can 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 of real estate related assets 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 calendar month. When 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 all mortgage valuation adjustments 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.

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          Valuation of Real Estate Joint Ventures and Limited Partnerships

          Real estate joint ventures and certain limited partnerships are stated at the fair value of the Account’s ownership interests of the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related mortgage loans payable and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. 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. The Account’s real estate joint ventures and limited partnerships are generally classified within level 3 of the valuation hierarchy.

          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 Board and in accordance with the responsibilities of the Board as a whole. These investments are generally classified within level 3 of the valuation hierarchy.

          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, exclusive of transaction costs. Such marketable securities are classified within level 1 of the valuation hierarchy.

          Debt securities, other than money market instruments, are generally 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. Debt securities are generally classified within level 2 of the valuation hierarchy.

          Valuation of Mortgage Loan Receivable

          The mortgage loan receivable is stated at fair value. The mortgage loan receivable is valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, the performance of the underlying collateral and the credit quality of the counterparty. The Account’s mortgage loan receivable is classified within level 3 of the valuation hierarchy.

          Valuation of 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 transferred exclusive of transaction costs. Mortgage loans payable are valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, the performance of the underlying collateral (such as the loan-

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to-value ratio and the cash flow of the underlying collateral), the maturity date of the loan, the return demands of the market and the credit quality of the Account. The Account’s mortgage loans payable are generally classified within level 3 of the valuation hierarchy. Interest expense for mortgage loans payable is recorded on the accrual basis taking into account the outstanding principal and contractual interest rates.

          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 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 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, 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 Funds

          The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment (“Accumulation Fund”). The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments (“Annuity Fund”). 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 for all Account level expenses 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 realized 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 realized loss occurs when the cost-to-date exceeds the sales price. Any accumulated unrealized gains and losses are reversed in the calculation of realized gains and losses.

TIAA Real Estate Account § Prospectus 79

          Rental Income

          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 when 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 real estate investment trust (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 when the financial statements of the limited partnerships are received by the Account. As circumstances warrant, prior to the receipt of financial statements of the limited partnership, the Account will estimate the value of its interests in good faith and will from time to time seek input from the issuer or the sponsor of the investment vehicle.

          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.

          Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. 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.

          The Account’s assets as of the close of each valuation day are valued by taking the sum of:

• the value of the Account’s cash, cash equivalents, and short-term and other debt instruments,

• the value of the Account’s other securities and other assets,

• the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account,

• an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non real estate-related investments (including short-term marketable securities); and

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• actual net operating income received from the Account’s properties, other real estate-related investments and non real estate-related investments (only to the extent any such item of income differs from the estimated income accrued for on such 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.

          After the end of every quarter, the Account reconciles the amount deducted from the Account (which is established in order to approximate the costs that the Account will incur) with the expenses the Account actually incurred. If there is a difference, the Account adds it to or deducts it from the Account in equal daily installments over the remaining days of the quarter, provided that material differences may be repaid in the current calendar quarter in accordance with generally accepted accounting principles. The Account’s 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 the difference between management’s projections and the Account’s actual assets or expenses.

          New Accounting Pronouncements

          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. In February 2008, FASB issued Staff Position (“FSP”) SOP 07-1 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.

          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. It is expected that more transactions will constitute a business under FASB Statement No. 141(R). 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 reports all investments in real estate at fair value and therefore does not account for the acquisition of real estate investments as a business combination under this statement.

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          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 adoption of Statement No. 160 will not impact on the financial position or results of operations of the Account.

          In May 2008, the FASB issued Statement No. 162, “The Hierarchy of Generally Accepted Accounting Principles” (“GAAP Hierarchy”), which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. This statement is effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411, “The Meaning of Presented Fairly in Conformity with Generally Accepted Accounting Principles” (the approval occurred on September 16, 2008). This amendment removes the GAAP Hierarchy from auditing literature and places it in the accounting literature and appropriately directs the requirement to comply with the GAAP Hierarchy to the reporting entity. The application of the GAAP Hierarchy did not impact the Account.

          In October 2008, FASB issued FSP FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active.” This FSP clarifies the application of Statement No. 157 in a market that is not active and applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with Statement No. 157. The FSP is effective upon issuance, including prior periods for which financial statements have not been issued. Accordingly, the Account adopted this guidance effective September 30, 2008. The adoption of this guidance did not have a material effect on the financial position or results of operations of the Account.

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, 2008, represented 95.63% of the Account’s total investments, expose the Account to a variety of risks. These risks include, but are not limited to:

• 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, disruptions in the credit and/or capital markets, or changing supply and demand for certain types of properties;

• 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)

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	might differ substantially from its estimated or appraised value, leading to losses or reduced profits to the Account upon sale;
•	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;
•	Risks of Borrowing — The risk that interest rate changes may impact Account returns if the Account takes out a mortgage on a property, buys a property subject to a mortgage or holds a property subject to a mortgage; and
•	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.

          Given the significant concentration (over 95% as of December 31, 2008) of the Account’s total investments being held in real estate and real estate related assets, the Account’s net asset value will experience a more pronounced impact from valuation adjustments to its real properties than it would during periods in which the Account held between 75% and 85% of its investments in real estate and real estate related assets.

          Other risks inherent to, and associated with, the acquisition, ownership and sale of real estate related investments are detailed elsewhere in this prospectus, including in “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations” and the risk factors discussed in “Risks”.

          As of December 31, 2008, 4.37% of the Account’s total investments were in market risk sensitive instruments, comprised of marketable securities and an adjustable rate mortgage loan receivable. As of December 31, 2008, marketable securities include high-quality short-term debt instruments (i.e.,commercial paper and government agency notes). The Statement of Investments for the Account sets forth the general financial terms of these instruments, along with their fair values, as determined in accordance with procedures described in Note 1 to the Account’s financial statements. The Account believes the diversification of its real estate portfolio, both geographically and by sector, along with its quarterly valuation procedure, helps manage the real estate and appraisal risks described above. Currently, the Account does not invest in derivative financial instruments, nor does the Account engage in any hedging activity other than the interest rate cap agreements contained in two mortgage loans payable the Account entered into during the third quarter of 2008. These interest rate cap agreements (which cap the interest rate on each mortgage loan payable at 6.50%) are discussed in more detail in Note 8 to the Account’s financial statements contained herein.

          The Account’s investments in cash equivalents, marketable securities (whether debt or equity) and mortgage loans receivable are subject to the following general risks:

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• Financial / Credit Risk — The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as 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.

• Market Volatility Risk — The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets even regardless of the credit quality or financial condition of the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility over the past year. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.

• Interest Rate Volatility — The risk that interest rate volatility may affect the Account’s current income from an investment.

• Deposit/Money Market — The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. The Account does not believe it has exposure to significant concentration of deposit risk. In addition, there is some risk that investments held in money market accounts can suffer losses.

          In addition, to the extent the Account were to hold mortgage-backed securities (including commercial mortgage-backed securities (“CMBS”)) these 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 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 (such as REIT stocks) and mortgage-backed securities would be 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 “Risks” on page 13 of this prospectus.

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VALUING THE ACCOUNT’S ASSETS

          We value the Account’s assets as of the close of each valuation day by taking the sum of:

• the value of the Account’s cash, cash equivalents, and short-term and other debt instruments;

• the value of the Account’s other securities and other assets;

• the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;

• an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non real estate-related investments (including short-term marketable securities); and

• actual net operating income received from the Account’s properties, other real estate-related investments and non real estate-related investments (only to the extent any such item of income differs from the estimated income accrued for on such 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 90.

          Fair value for the Account’s assets is based upon quoted market prices in active exchange markets, where available. If listed prices or quotes in such markets 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, a counterparty’s creditworthiness, 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 an unaffiliated buyer in the market place would pay to purchase the asset or receive to transfer 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 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:Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the TIAA Board of Trustees (the “Board”) and in accordance with the responsibilities of the Board as a whole. Accordingly, the

TIAA Real Estate Account §Prospectus 85

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 significant judgment because the actual market value of real estate can be determined only by negotiation between the parties in a sales transaction. Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Amounts ultimately realized from each investment may vary significantly from the market value presented. Actual results could differ from those estimates.

          In accordance with the Account’s procedures designed to implement FAS 157 (“Fair Value Measurements”) which became effective on January 1, 2008, the Account values real estate properties purchased by the Account initially based on an independent appraisal 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, each property will be valued each quarter by an independent appraiser and the property value is updated as appropriate. In general, the Account obtains appraisals for each real estate property throughout the quarter, which is intended to result in appraisal adjustments (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day in each period. Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change (for example, under certain circumstances a valuation adjustment could be made when bids are obtained for properties held for sale). The Account’s independent fiduciary, Real Estate Research Corporation, oversees the Account’s entire appraisal process and, among other things, must approve all independent appraisers used by the Account. TIAA’s internal appraisal staff oversees the entire appraisal process and reviews each independent quarterly appraisal in conjunction with the Account’s independent fiduciary. Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).

          Real estate appraisals are estimates of property values based on a professional’s opinion. All appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices (USPAP), the real estate appraisal industry standards created by The Appraisal Foundation. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. Further, these independent appraisers (as well as TIAA’s internal appraisal staff) are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent,

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RICS) and state certified appraisers from national or regional firms with relevant property type experience and market knowledge.

          We intend that the overarching principle and primary objective 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.

          The Account’s net asset value will include the 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 will be carried 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, whichever is earlier, the property will be appraised by an independent external 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 one portfolio. The value assigned to the portfolio as a whole may be more or less than the valuation of each property individually.

          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 net realizable value of its real estate assets (i.e.,what the Account would receive if it sold them). See “—Valuation Adjustments” below.

          Valuing Real Property Encumbered by Debt:When 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 all mortgage valuation adjustments 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.

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          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, the performance of the underlying collateral and the credit quality of the counterparty.

          Valuing Mortgage Loans Payable:Mortgage loans payable are stated at fair value. The estimated fair value of mortgage loans payable is generally based on the amount at which the liability could be transferred in a current transaction, exclusive of transaction costs. Fair values are estimated based on market factors, such as market interest rates and spreads on comparable loans, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral), the maturity date of the loan, the return demands of the market, and the credit quality of the Account. 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 ownership interests in the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related mortgages payable, and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. In addition, any restrictions on the right of the Account to transfer its ownership interest to third parties could adversely affect the value of the Account’s interest. 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. 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 Board and in accordance with the responsibilities of the Board as a whole. As circumstances warrant, prior to the receipt of financial statements of the limited partnership, the Account will estimate the value of its interests in good faith and will from time to time seek input from the issuer or the sponsor of the investment vehicle.

          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’s net assets 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.

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          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 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.

          Valuation Adjustments:Management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. Also, the independent fiduciary can 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. For example, under certain circumstances a valuation adjustment could be made when bids are obtained for properties held for sale by the Account. In addition, adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant). We may not always be aware of each event that might require a valuation adjustment, and because our evaluation is based on subjective factors and we give different weight to different factors, we may not in all cases make a valuation adjustment where changing conditions could potentially affect the value of an investment.

          The independent fiduciary will need to approve adjustments to any valuation of one or more properties or real estate related assets that:

• is made within three months of the annual independent appraisal, or

• results in an increase or decrease of:

• more than 6 percent of the value of any of the Account’s properties since the last independent annual appraisal;

• more than 2 percent in the value of the Account since the prior calendar month; and/or

• more than 4 percent in the value of the Account within any calendar 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

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instruments with maturities of one year or less in the same manner as debt securities, or by 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 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 last bid and asked prices, exclusive of transaction costs. 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 Market at the Nasdaq Official Closing Price on the valuation day. If no sale is reported that day, we use the mean of the last bid and asked prices, exclusive of transaction costs. Other U.S. over-the-counter equity securities are valued at the mean of the last 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 equity and fixed income securities 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. Under certain circumstances (for example, if there are significant movements in the United States markets and there is an expectation the securities traded on foreign markets will adjust based on such movements when the foreign markets open the next day), the Account may adjust the value of equity or fixed income securities that trade on a foreign exchange or market after the foreign exchange or market has closed.

          Investments Lacking Current Market Quotations:We value securities or other assets for which current market quotations are not readily available at fair 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.

EXPENSE DEDUCTIONS

          Expense deductions are made each Valuation Day from the net assets of the Account for various services to manage investments, administer the Account and the contracts, distribute the contracts and to cover certain risks borne by TIAA.

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Services are provided “at cost” by TIAA and Services. Currently, TIAA provides investment management services and administration services for the Account, and Services provides distribution services for the Account. TIAA guarantees that in the aggregate, the expense charges will never be more than 2.50% of average net assets per year.

          The estimated annual expense deduction rate that appears in the expense table below reflects an estimate of the amount we currently expect to deduct to approximate the costs that the Account will incur from May 1, 2009 through April 30, 2010. Actual expenses may be higher or lower.

	Estimated
	Percent of Net
Type of Expense Deduction	Assets Annually	Services Performed
Investment Management	0.410%	For investment advisory, investment management, portfolio accounting, custodial and similar services, including independent fiduciary and appraisal fees
Administration	0.310%	For administration and operations of the Account and the contracts, including administrative services such as receiving and allocating premiums and calculating and making annuity payments
Distribution	0.090%	For services and expenses associated with distributing the annuity contracts
Mortality and Expense Risk	0.050%	For TIAA’s bearing certain mortality and expense risks
Liquidity Guarantee	0.150%	For TIAA’s liquidity guarantee
Total Annual Expense Deduction1,2,3	1.010%	For total services to the Account

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.
3	Property-level expenses, including property management fees and transfer taxes, are not reflected in the table above; instead these expenses are charged directly to the Account’s properties.

          Please 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 the amount deducted from the Account 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 remaining days in the quarter, provided that material differences may be repaid in the current calendar quarter, in accordance with generally accepted accounting principles (GAAP). Our 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.

          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.

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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 estimated expense rates (the daily deduction rate before the quarterly adjustment) 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.

EMPLOYER PLAN FEE WITHDRAWALS

          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, GRA 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 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.

CERTAIN RELATIONSHIPS WITH TIAA

          As noted elsewhere in this prospectus, the TIAA 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, Services, a wholly owned subsidiary of TIAA, provides 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 assets and its cash flow from operating activities and participant transactions are insufficient to fund redemption requests, the TIAA general account has agreed to purchase liquidity units. TIAA thereby guarantees that a participant can redeem accumulation units at their net asset value next determined.

          In the year ended December 31, 2008, TIAA purchased liquidity units in an amount equal to $155.6 million. During 2008 and through April 27, 2009, the TIAA general account has purchased liquidity units in an aggregate amount equal to approximately $1.1 billion in a number of separate transactions. These liquidity units are valued in the same manner as are accumulation units held by the Account’s participants.

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          For the years ended December 31, 2008, December 31, 2007 and December 31, 2006, the Account expensed $19.7 million, $19.4 million and $3.9 million, respectively, for this liquidity guarantee from TIAA through a daily deduction from the net assets of the Account.

          Investment Advisory, Administrative, and Distribution Services/Certain Risks Borne by TIAA.As noted above under “Expense Deductions” on page 90, 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, 2008, December 31, 2007 and December 31, 2006, the Account expensed $47.6 million, $49.2 million and $26.9 million, respectively, for investment advisory services and $8.1 million, $8.1 million and $6.9 million, respectively, for mortality and expense risks provided/borne by TIAA. For the same period, the Account expensed $77.6 million, $63.6 million and $45.7 million, respectively, for administrative and distribution services provided by TIAA and Services, as applicable. Through December 31, 2007, administrative and distribution services were provided to the Account by Services. Effective January 1, 2008, administrative services have been provided to the Account by TIAA, while distribution services have continued to be provided to the Account by Services.

THE CONTRACTS

          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, GA, GRA, GSRA, Retirement Choice, Retirement Choice Plus, or Keogh contracts. 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.

          Depending on the terms of your employer’s plan, RA premiums can be paid by your employer, you, or both. GRA premiums can only be paid by your employer (though some such premiums may be paid by your employer pursuant to a salary

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reduction agreement). If you’re paying some or all of 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 IRA-style contributions, though you won’t be able to take tax deductions for these contributions. You can also transfer accumulations 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 generally 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 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 $5,000 or by rolling over funds from another IRA or eligible retirement plan, if you meet the Account’s eligibility requirements. If you are age 50 or older, you may contribute up to $6,000. The combined limit for your contributions to a Classic IRA and a Roth IRA for a single year is $5,000, or $6,000 if you are age 50 or older, excluding rollovers. (The dollar limits listed are for 2009; 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 $5,000 or with a rollover from another IRA or a Classic IRA issued by TIAA if you meet the Account’s eligibility requirements, subject to rules applicable to Roth IRA conversions. If you are age 50 or older you may contribute up to $6,000. The combined limit for your contributions to a Classic IRA and a Roth IRA for a single year is $5,000, or $6,000 if you are age 50 or older, excluding rollovers. (The dollar limits listed are for 2009; 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 employer 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.

KEOGH CONTRACTS

          TIAA also offers contracts under Keogh plans. If you are a self-employed individual who owns an unincorporated business, you can use the Account’s Keogh contracts for a Keogh plan, and cover common law employees, subject to the 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 111 for more information.

ELIGIBILITY FOR IRA AND KEOGH CONTRACTS

          Each of you and your spouse can open a Classic or Roth IRA or a Keogh if you’re a current or retired employee or trustee of an 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. 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 when we receive a completed application or enrollment form in good order. “Good order” means actual receipt of the order along with all information and supporting legal documentation necessary to effect the transaction. This information and documentation generally includes your complete application and any other information or supporting documentation we may require. 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 either in general or with respect to a particular plan, contract or transaction.

          If your application is incomplete and we do not receive the necessary information and signed application in good order within five business days of our receipt of the initial premium, we will return the initial premium at that time. See also “—Determining the Value of Your Interest in the Account—Accumulation Units” below.

          If we receive premiums from your employer and, where applicable, a completed application from you before we receive your specific allocation instructions (or if your allocation instructions violate employer plan restrictions or do not total 100%), we will invest all premiums remitted on your behalf in the default option your employer has designated. We consider your employer’s designation of a default option to be an instruction to us to allocate your premiums to that option as described above. You should consult your plan documents or sales representative to determine your employer’s designated default option and to obtain information about that option. Further, to the extent you hold an IRA contract, the default option will be that fund or account specified in your IRA forms. When we receive complete allocation instructions from you, we’ll follow your instructions for future premiums. However, if you want the premiums previously allocated to the default option (and earnings and losses on them) to be transferred to the options identified in your instructions, you must specifically request that we transfer these amounts from the default option to your investment option choices.

          Amounts may be invested in an account other than the Real Estate Account (absent a participant’s specific instructions) only in the limited circumstances identified in the paragraph immediately above and the circumstance outlined below under “How to Transfer and Withdraw Your Money—Possible Restrictions on Premiums and Transfers to the Account,” namely: (1) we receive premiums before we receive your completed application or allocation instructions, (2) a participant’s allocations violate employer plan restrictions or do not total 100%, or (3) we stop accepting premiums for and/or transfers into the Account.

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          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. 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 accepts premiums to a contract 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 the Real Estate Account at any time.

          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 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 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 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 and driver’s license or certain other identifying documents. Until you provide us with the

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information 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

          After 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 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:

• writing to our home office at 730 Third Avenue, New York, NY 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

          Generally, you may cancel any RA, SRA, GSRA, Classic IRA Roth IRA, ATRA or Keogh contract in accordance with the contract’s Right to Examine provision (unless we have begun making annuity payments from it) and subject to the time period regulated by the state in which the contract is issued. Although the contract terms and state law provisions differ, you will generally have between 10 and 60 days to exercise this cancellation right. To cancel a contract, mail or deliver the contract with your cancellation instructions (or signed Notice of Cancellation when such has been provided with your contract) to our home office. We’ll cancel the contract, then send either the current accumulation or the premium, depending on the state in which your contract was issued, to whomever originally submitted the premiums. Unless we are returning premiums paid as required by state law, you will bear the investment risk during this period.

DETERMINING THE VALUE OF YOUR INTEREST IN THE ACCOUNT —ACCUMULATION UNITS

          Each payment to the Real Estate Account buys a number of accumulation units. Similarly, any withdrawal from the Account results in the redemption of a number of accumulation units. The price you pay for accumulation units, and the price you receive for accumulation units when you redeem accumulation units, is the value of the accumulation units calculated for the business day on which we receive your purchase, redemption or transfer request in good order (unless you ask for a later date for a redemption or transfer). This date is called the “effective date.” Therefore, if we receive your purchase, redemption or transfer request in good

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order before the NYSE closes, that business day will 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 (or adjustments thereto) may be processed after the effective date. “Processed” means when amounts are credited or debited to you in the Account. In the event there are market fluctuations between the effective date and the processing date and the price of accumulation units on the 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 and the amount of interest, if any, paid by Services to participants in connection with certain delayed payments, is apportioned to the Account pursuant to an agreement with Services, under which the Account reimburses Services for the services it has provided to the Account.

          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:

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:

• from the Real Estate Account to a CREF investment account, a TIAA Access variable account (if available) or TIAA’s traditional annuity;

• 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);

• from the Real Estate Account to a TIAA-CREF affiliated mutual fund;

• to the Real Estate Account from a TIAA-CREF affiliated mutual fund;

• from the Real Estate Account to other companies;

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• to the Real Estate Account from other companies/plans;

• by withdrawing cash; and

• 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.

          These transactions generally must be for at least $1,000 at a time (except for systematic transfers or withdrawals which must be for at least $100) or your entire Account accumulation, if less. These options may be limited by the terms of your 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.

          As indicated, transfers and cash withdrawals are effective at the end of the business day we receive your request and all required 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:

• write to TIAA’s home office at 730 Third Avenue, New York, NY 10017-3206;

• call us at 800 842-2252; or

• 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 limit, 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 111.

TRANSFERS TO AND FROM OTHER TIAA-CREF ACCOUNTS AND FUNDS

          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 (which may include TIAA-CREF affiliated 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, 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 10 annual

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installments) 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.

          Because excessive transfer activity can hurt Account performance and other participants, subject to applicable state law, we may seek to 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 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 the Account and apply it to another account 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 roll over money from another 403(b), 401(a)/403(a) or governmental 457(b) retirement plan to your qualified TIAA contract. You may also roll 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 roll over funds from 401(a), 403(a), 403(b) and governmental 457(b) plans to a TIAA Classic 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 are limited to once per calendar quarter and may also be limited by the terms of your employer’s plan and federal tax law. Normally, you can’t withdraw money from a

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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 salary reduction agreements. Withdrawals are generally available only if you reach age 59¹/₂, leave your job, become disabled, die, or 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 59¹/₂, 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 70¹/₂, 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 59¹/₂). 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.

          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. Further, a systematic plan of this type may allow pre-specified transfers or withdrawals to be made more often than quarterly, depending on the terms of your employer’s plan.

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. 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

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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 (subject to the terms of some contracts) to stop accepting premiums and/or transfers at any time without prior notice.

          If we decide to stop accepting premiums into the Account, amounts that would otherwise be allocated to the Account will be allocated to the default option designated by your employer instead (or the default option specified on your IRA forms), unless you give us other allocation instructions. We will not transfer these amounts out of the default option designated by your employer 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.

MARKET TIMING / EXCESSIVE TRADING POLICY

          There are participants who may try to profit from making 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 or for other reasons. 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 these costs. In addition, excessive trading can interfere with efficient portfolio management and cause dilution if traders are able to take advantage of pricing inefficiencies. Consequently, the Account is not appropriate for market timing or frequent trading and you should not invest in the Account if you want to engage in such activity.

          To discourage this activity, transfers from the Real Estate Account to a CREF or TIAA account, or another investment option, are limited to once every calendar quarter (the exception being described on page 102 above in “—Systematic Withdrawals and Transfers”).

          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

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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. Notwithstanding such discretion, TIAA seeks to apply its excessive trading policies and procedures uniformly to all Account participants. As circumstances warrant, TIAA may request 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 have violated the Account’s policies. TIAA has the right to modify these policies and procedures at any time without advance notice.

          The Account is not appropriate for excessive trading. You should not invest in the Account if you want to engage in excessive trading or market timing activity.

          Participants seeking to engage in excessive trading may deploy a variety of strategies to avoid detection, and, despite TIAA’s efforts to discourage excessive trading, 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.

RECEIVING ANNUITY INCOME

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 59¹/₂to 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 70¹/₂or you retire. Certain minimum distribution requirements for 2009 have been waived, although there is still uncertainty regarding whether this applies to certain plans and how it will be implemented. Please consult your tax advisor. For more information, see “Taxes—Minimum Distribution Requirements,” on page 112. 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

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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.

          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 108. 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 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 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. After your annuity starting date, you cannot change your income option.

          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:

• One-Life Annuity with or without Guaranteed Period:Pays income as long as you live. If you opt for a guaranteed period (10, 15 or 20 years) and you die before it’s over, income payments will continue to your beneficiary until the end of the period. If you don’t opt for a guaranteed period, all payments end

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	at your death — so that it’s possible for you to receive only one payment if you die less than a month after payments start. (The 15-year guaranteed period is not available under all contracts.)
•	Annuity for a Fixed Period:Pays income for any period you choose from 5 to 30 years (2 to 30 years for RAs, SRAs and GRAs). (This option is not available under all contracts.)
•	Two-Life Annuities:Pays income to you as long as you live, then continues at either the same or a reduced level for the life of your annuity partner. There are four types of two-life annuity options, all available with or without a guaranteed period — Full Benefit to Survivor, Two-Thirds Benefit to Survivor, 75% Benefit to Annuity Partner and a Half-Benefit to Annuity Partner. Under the Two-Thirds Benefit to Survivor option, payments to you will be reduced upon the death of your annuity partner.
•	Minimum Distribution Option (MDO) Annuity:Generally available only if you must begin annuity payments under the Internal Revenue Code minimum distribution requirements. (Some employer plans allow you to elect this option earlier — contact TIAA for more information.) The option pays an amount designed to fulfill the distribution requirements under federal tax law. Participants should note that, under tax law in effect as of the date of this prospectus, required minimum distributions for the 2009 calendar year may be waived (including distributions under the MDO annuity) and participants may contact TIAA if they are interested in implementing this waiver. (The option is not available under all contracts.)

          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 elect a distribution option other than the MDO option and 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 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 provides 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 waives 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

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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 111.

          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 you asurvivor annuity with half-benefit to annuity partner with a 10-Year guaranteed period,with your 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 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 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

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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 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.

          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.

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          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. No such modification will reduce any participant’s benefit once the participant’s annuitization period has commenced.

DEATH BENEFITS

AVAILABILITY; CHOOSING BENEFICIARIES

          Subject to the terms of your employer’s plan, TIAA may pay death benefits if you or your annuity partner 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.

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 present value, based on interest at the effective annual rate of 4%, of the unit annuity payments due for the remainder of the period.

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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 prevent your beneficiaries from changing it. Most people leave the choice to their beneficiaries. We can prevent 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:

• Single-Sum Payment,in which the entire death benefit is paid to your beneficiary at once;

• 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;

• Annuity for a Fixed Period of 5 to 30 years (not available underRetirement Choice or Retirement Choice Plus),in which the death benefit is paid for a fixed period;

• 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

• 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 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

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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.

TAXES

          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.

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, contributions you can make under an employer’s plan are limited by federal tax law. Employee voluntary salary reduction contributions and Roth after-tax contributions to 403(b) and 401(k) plans are limited in the aggregate to $16,500 per year ($22,000 per year if you are age 50 or older). Certain long-term employees may be able to defer up to $19,500 per year in a 403(b) plan ($25,000 per year if you are age 50 or older). Contributions to Classic and Roth IRAs, other than rollover contributions, cannot generally exceed $5,000 per year ($6,000 per year for taxpayers age 50 or older).

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          The maximum contribution limit to a 457(b) non-qualified deferred compensation plan for employees of state and local governments is $16,500 ($22,000 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 2009; 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 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. Note that for 2009 the minimum distribution requirement under the Internal Revenue Code is temporarily suspended for Internal Revenue Code section 401(a), 403(a), 403(b), governmental 457(b) plans and IRAs under the Worker, Retiree and Employer Recovery Act of 2008. Please consult your tax advisor.

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

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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 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:

• 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).

• 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 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.

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          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 59½. 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).

          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 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.

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GENERATION-SKIPPING TRANSFER TAX

          Under certain circumstances, the Internal Revenue 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 federal 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 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:

• the payment is for expenses that are ordinary and necessary;

• the payment is made from a Section 401 or 403 retirement plan or an IRA;

• 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

• 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.

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

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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 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.

GENERAL MATTERS

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.

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. 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

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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 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 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 the 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.

          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.

TIAA Real Estate Account § Prospectus 117

          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.

          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.

DISTRIBUTION

          The annuity contracts are offered continuously by Services, which is registered with the SEC as a broker-dealer and a registered investment adviser and is a member of the Financial Industry Regulatory Authority (“FINRA”). Teachers Personal Investors Services, Inc. (TPIS), which is also registered with the SEC and is a member of FINRA, may participate in the distribution of the contracts on 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.

STATE REGULATION

          TIAA, the Real Estate Account, and the contracts are subject to regulation by the 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.

118 Prospectus § TIAA Real Estate Account

LEGAL MATTERS

          All matters involving state law and relating to the contracts, including TIAA’s right to issue the contracts, have been passed upon by Jonathan Feigelson, Senior Vice President and General Counsel of TIAA. Dechert LLP has provided legal advice to the Account related to certain matters under the federal securities laws.

EXPERTS

          The financial statements as of December 31, 2008 and December 31, 2007 and for each of the three years in the period ended December 31, 2008 included in this Prospectus have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

          The statutory statements of admitted assets, liabilities and capital and contingency reserves of TIAA as of December 31, 2008 and December 31, 2007 and for each of the three years in the period ended December 31, 2008 included in this registration statement of which this Prospectus forms a part have been so included in reliance on the report of PricewaterhouseCoopers LLP, an independent registered public accounting firm, given on the authority of said firm as experts in auditing and accounting.

          Aarons Grant & Habif, LLC, an independent registered public accounting firm, has audited the statement of revenues and certain expenses of Calabash I, Fontana, California and Haven Distribution Center, Rancho Cucamonga, California, for the year ended December 31, 2007.

          After reasonable inquiry, the Account is not aware of any material factors relating to the specific properties audited by 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.

ADDITIONAL INFORMATION

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 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 (www.sec.gov). The public may obtain information on the operation of the SEC’s Public Reference Room by calling the SEC at 800 SEC-0330.

TIAA Real Estate Account § Prospectus 119

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, NY 10017-3206.

CUSTOMER COMPLAINTS

          Customer complaints may be directed to our Participant Relations Unit, P. O. Box 1259, Charlotte, NC 28201-1259, telephone 800 842-2776.

FINANCIAL STATEMENTS

          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 within this prospectus. 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.

INDEX TO FINANCIAL STATEMENTS
TIAA REAL ESTATE ACCOUNT
Audited Financial Statements:
121	Report of Management Responsibility
122	Report of the Audit Committee
124	Statements of Assets and Liabilities
125	Statements of Operations
126	Statements of Changes in Net Assets
127	Statements of Cash Flows
128	Notes to Financial Statements
148	Statement of Investments
159	Report of Independent Registered Public Accounting Firm
Property Financial Statements:
160	Calabash I, Fontana, California and Haven Distribution Center, Rancho Cucamonga, California
TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
163	Condensed Statutory-Basis Financial Statements Information
164	Basis of Presentation

120 Prospectus § TIAA Real Estate Account

REPORT 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 an effective system of internal controls over financial reporting designed to provide reasonable assurance that assets are properly safeguarded, that 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 regular reviews and assessments of the internal controls and operations of the Account, and the Vice President of Internal Audit regularly reports to the Audit Committee of the TIAA Board of Trustees.

          The independent registered public accounting firm of PricewaterhouseCoopers LLP has audited the accompanying financial statements for the years ended December 31, 2008, 2007 and 2006. To maintain auditor independence and avoid even 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 accounting firm. The independent auditors’ report expresses an independent opinion on the fairness of presentation of the Account’s financial statements.

          The Audit Committee of the TIAA Board of Trustees, comprised entirely of independent, non-management trustees, meets regularly with management, representatives of the independent registered public accounting firm and internal audit group personnel to review matters relating to financial reporting, internal controls and auditing. In addition to the annual independent audit of the Account’s financial statements, the New York State Insurance Department and other state insurance departments regularly examine the operations and financial statements of the Account as part of their periodic corporate examinations.

March 20, 2009

/s/ Roger W. Ferguson, Jr.	/s/ Georganne C. Proctor
Roger W. Ferguson, Jr.	Georganne C. Proctor
President and Chief Financial Officer	Executive Vice President and Chief Executive Officer

TIAA Real Estate Account §Prospectus 121

REPORT 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.

122 Prospectus§ TIAA Real Estate Account

          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 Member
David L. Shedlarz, Audit Committee Member

March 20, 2009

TIAA Real Estate Account§Prospectus 123

STATEMENTS OF ASSETS AND LIABILITIES

TIAA REAL ESTATE ACCOUNT

	December 31,
(In thousands, except per accumulation units)	2008		2007
ASSETS
Investments, at fair value:
Real estate properties (cost: $10,031,744 and $9,804,489)	$	10,305,040	$	11,983,715
Real estate joint ventures and limited partnerships (cost: $2,329,850 and $2,260,919)		2,463,196		3,158,870
Marketable securities:
Real estate related (cost: $0 and $439,154)		—		426,630
Other (cost: $511,703 and $3,371,896)		511,711		3,371,866
Mortgage loan receivable (cost: $75,000 and $75,000)		71,767		72,520
Total investments (cost: $12,948,297 and $15,951,458)		13,351,714		19,013,601
Cash		22,127		6,144
Due from investment advisor		—		11,196
Other		203,113		201,826
TOTAL ASSETS		13,576,954		19,232,767
LIABILITIES
Mortgage loans payable—Note 8 (principal outstanding: $1,910,121 and $1,427,857)		1,830,040		1,392,093
Payable for securities transactions		108		866
Due to investment advisor		9,892		—
Accrued real estate property level expenses		203,874		154,639
Security deposits held		24,116		24,632
TOTAL LIABILITIES		2,068,030		1,572,230
NET ASSETS
Accumulation Fund		11,106,246		17,160,703
Annuity Fund		402,678		499,834
TOTAL NET ASSETS	$	11,508,924	$	17,660,537
NUMBER OF ACCUMULATION UNITS OUTSTANDING—Notes 9 and 10		41,542		55,106
NET ASSET VALUE, PER ACCUMULATION UNIT—Note 9	$	267.35	$	311.41

124 Prospectus§ TIAA Real Estate Account

STATEMENTS OF OPERATIONS

TIAA REAL ESTATE ACCOUNT

	Years Ended December 31,
(In thousands)	2008			2007			2006
INVESTMENT INCOME
Real estate income, net:
Rental income	$	979,295		$	987,434		$	834,456
Real estate property level expenses and taxes:
Operating expenses		257,351			247,473			207,453
Real estate taxes		132,979			126,926			110,060
Interest expense		88,531			83,623			72,160
Total real estate property level expenses and taxes		478,861			458,022			389,673
Real estate income, net		500,434			529,412			444,783
Income from real estate joint ventures and limited partnerships		116,889			93,724			60,789
Interest		76,444			129,474			118,621
Dividends		5,079			12,440			16,786
TOTAL INVESTMENT INCOME		698,846			765,050			640,979
EXPENSES—NOTE 2:
Investment advisory charges		47,622			49,239			26,899
Administrative and distribution charges		77,577			63,593			45,713
Mortality and expense risk charges		8,116			8,052			6,932
Liquidity guarantee charges		19,725			19,410			3,905
TOTAL EXPENSES		153,040			140,294			83,449
INVESTMENT INCOME—NET		545,806			624,756			557,530
REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS AND MORTGAGE LOANS PAYABLE
Net realized (loss) gain on investments:
Real estate properties		(18,097	)		127,835			76,137
Real estate joint ventures and limited partnerships		(17	)		70,765			—
Marketable securities		(11,041	)		47,180			10,257
Total realized (loss) gain on investments		(29,155	)		245,780			86,394
Net change in unrealized (depreciation) appreciation on:
Real estate properties		(1,905,930	)		898,173			659,371
Real estate joint ventures and limited partnerships		(702,797	)		391,333			217,360
Marketable securities		15,820			(148,659	)		120,454
Mortgage loan receivable		(753	)		(2,141	)		(339	)
Mortgage loans payable		109,791			53,949			(26,569	)
Net change in unrealized (depreciation) appreciation on investments and mortgage loans payable		(2,483,869	)		1,192,655			970,277
NET REALIZED AND UNREALIZED (LOSS) GAIN ON INVESTMENTS AND MORTGAGE LOANS PAYABLE		(2,513,024	)		1,438,435			1,056,671
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS	$	(1,967,218	)	$	2,063,191		$	1,614,201

TIAA Real Estate Account§Prospectus 125

STATEMENTS OF CHANGES IN NET ASSETS

TIAA REAL ESTATE ACCOUNT

	Years Ended December 31,
(In thousands)	2008			2007			2006
FROM OPERATIONS
Investment income, net	$	545,806		$	624,756		$	557,530
Net realized (loss) gain on investments		(29,155	)		245,780			86,394
Net change in unrealized (depreciation) appreciation on investments and mortgage loans payable		(2,483,869	)		1,192,655			970,277
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM OPERATIONS		(1,967,218	)		2,063,191			1,614,201
FROM PARTICIPANT TRANSACTIONS
Premiums		1,008,233			1,186,870			1,085,058
Purchase of Liquidity Units by TIAA		155,600			—			—
Net transfers (to) from TIAA		(1,912,937	)		153,137			215,894
Net transfers (to) from CREF Accounts		(2,519,837	)		832,782			1,154,123
Net transfers to TIAA-CREF Institutional Mutual Funds		(207,547	)		(51,612	)		(15,319	)
Annuity and other periodic payments		(99,518	)		(95,776	)		(65,192	)
Withdrawals and death benefits		(608,389	)		(560,748	)		(404,783	)
NET (DECREASE) INCREASE IN NET ASSETS RESULTING FROM PARTICIPANT TRANSACTIONS		(4,184,395	)		1,464,653			1,969,781
NET (DECREASE) INCREASE IN NET ASSETS		(6,151,613	)		3,527,844			3,583,982
NET ASSETS
Beginning of period		17,660,537			14,132,693			10,548,711
End of period	$	11,508,924		$	17,660,537		$	14,132,693

126 Prospectus§ TIAA Real Estate Account

STATEMENTS OF CASH FLOWS

TIAA REAL ESTATE ACCOUNT

	Years Ended December 31,
(In thousands)	2008			2007			2006
CASH FLOWS FROM OPERATING ACTIVITIES
Net (decrease) increase in net assets resulting from operations	$	(1,967,218	)	$	2,063,191		$	1,614,201
Adjustments to reconcile net increase in net assets resulting from operations to net cash used in operating activities:
Purchase of real estate properties		(164,104	)		(639,704	)		(2,016,229	)
Amortization of discount on debt		—			531			462
Capital improvements on real estate properties		(174,360	)		(133,714	)		(117,041	)
Proceeds from sale of real estate properties		93,113			568,120			387,290
Decrease (increase) in other investments		3,284,427			(1,904,859	)		(836,478	)
Funding of mortgage loan receivable		—			—			(74,661	)
(Increase) decrease in other assets		(1,290	)		36,052			(47,121	)
(Decrease) increase in payable for securities transactions		(758	)		(353	)		226
Change in due to (from) investment advisor		21,088			(2,734	)		(745	)
Increase (decrease) in accrued real estate property level expenses and taxes		49,235			(15,018	)		23,868
(Decrease) increase in security deposits held		(516	)		5,389			2,813
Net realized loss (gain) on total investments		29,155			(245,780	)		(86,394	)
Unrealized loss (gain) on total investments and mortgage loans payable		2,483,869			(1,192,655	)		(970,277	)
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES		3,652,641			(1,461,534	)		(2,120,086	)
CASH FLOWS FROM FINANCING ACTIVITIES
Mortgage loans proceeds received		548,567			—			153,000
Principal payments of mortgage loans payable		(830	)		(560	)		(321	)
Premiums		1,008,233			1,186,870			1,085,058
Purchase of Liquidity Units by TIAA		155,600			—			—
Net transfers (to) from TIAA		(1,912,937	)		153,137			215,894
Net transfers (to) from CREF Accounts		(2,519,837	)		832,782			1,154,123
Net transfers to TIAA-CREF Institutional
Mutual Funds		(207,547	)		(51,612	)		(15,319	)
Annuity and other periodic payments		(99,518	)		(95,776	)		(65,192	)
Withdrawals and death benefits		(608,389	)		(560,748	)		(404,783	)
NET CASH (USED IN) PROVIDED BY FINANCING ACTIVITIES		(3,636,658	)		1,464,093			2,122,460
NET INCREASE IN CASH		15,983			2,559			2,374
CASH
Beginning of period		6,144			3,585			1,211
End of period	$	22,127		$	6,144		$	3,585
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	88,723		$	83,063		$	68,034
Debt assumed in acquisition of properties	$	—		$	8,922		$	288,951

TIAA Real Estate Account§Prospectus 127

NOTES TO FINANCIAL STATEMENTS

TIAA REAL ESTATE ACCOUNT

Note 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 (the “Board”) 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 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 on a daily basis 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.

          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 real estate joint ventures and limited partnerships in which the Account does not hold a controlling interest; as such, such interests 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 levels for operating expenses, capital expenditures and to fund benefit payments (withdrawals, transfers and related transactions).

          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.

          Accounting For Investments at Fair Value: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. This Statement was effective as of January 1, 2008 for the Account. The adoption of Statement No. 157 did not have a material impact on the Account’s financial position or results of operations.

128 Prospectus§ TIAA Real Estate Account

NOTES TO FINANCIAL STATEMENTS continued

          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 adopted Statement No. 159 on January 1, 2008 and reports all existing and plans to report all future mortgage loans payable at fair value using this Statement. Historically, the Account recorded mortgage loans payable at fair value. The adoption of Statement No. 159 did not have a material impact on the Account’s financial position or results of operations.

          Valuation Hierarchy:In accordance with FASB Statement No. 157,“Fair Value Measurements”, the Account groups financial assets and certain financial liabilities measured at fair value into three levels, based on the markets in which the assets and liabilities are traded, if any, and the observability of the assumptions used to determine fair value. These levels are:

          Level 1—Valuations using unadjusted quoted prices for assets traded in active markets, such as stocks listed on the New York Stock Exchange. Active markets are defined as having the following characteristics for the measured asset or liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information regarding the issuer is publicly available. Level 1 assets and liabilities include real estate related marketable securities.

          Level 2—Valuations for assets and liabilities traded in less active, dealer or broker markets. Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities. Level 2 inputs for fair value measurements are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include:

a.	Quoted prices for similar assets or liabilities in active markets;
b.	Quoted prices for identical or similar assets or liabilities in markets that are not active (that is, markets in which there are few transactions for the asset (or liability), the prices are not current, price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly);
c.	Inputs other than quoted prices that are observable within the market for the asset (or liability) (for example, interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates that are observable at commonly quoted intervals); and
d.	Inputs that are derived principally from or corroborated by observable market data by correlation or other means (for example, market-corroborated inputs).

TIAA Real Estate Account§Prospectus 129

NOTES TO FINANCIAL STATEMENTS continued

          Examples of securities which may be held by the Account and included in Level 2 include Certificates of Deposit, Commercial Paper, Government Agency Notes and Variable Notes.

          Level 3—Valuations for assets and liabilities that are derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market, and require significant professional judgment in determining the fair value assigned to such assets or liabilities. Level 3 assets and liabilities include investments in real estate, investments in joint ventures and limited partnerships, mortgage loan receivable, and mortgage loans payable.

          An investment’s categorization within the valuation hierarchy described above is based upon the lowest level of input that is significant to the fair value measurement.

          The Account’s investments and mortgage loans payable are stated at fair value. 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 will be made to reflect changes in 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 fair values that represent a good faith estimate of what an unaffiliated buyer in the marketplace would pay to purchase the asset or would receive to transfer 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 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. As discussed below in more detail, as the Account generally obtains appraisals on a quarterly basis, there may be circumstances in the interim in which the true realizable value of a property is not reflected in the Account’s daily net asset value 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 (or increase) in property values in a relatively short period of time between appraisals.

          The following is a description of the valuation methodologies used for investments measured at fair value.

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          Valuation of Real Estate Properties:Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. Accordingly, the Account does not record depreciation. The Account’s real estate properties are generally classified within Level 3 of the valuation hierarchy. 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. The Account’s primary objective when valuing its real estate investments will be to produce a valuation that represents a fair and accurate estimate of the fair value of its investments. Implicit in the Account’s 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.

Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Amounts ultimately realized from each investment may vary significantly from the market value presented. Actual results could differ from those estimates.

          Real estate properties owned by the Account are initially valued based on an independent appraisal 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, each property is valued each quarter with an independent external appraisal completed for each real estate property at least once a year. In general, the Account obtains appraisals for each real estate property throughout the quarter, which is intended to result in appraisal adjustments (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day in each period.

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          Starting with the second quarter of 2009, Account management intends to have each real property owned by the Account appraised by independent appraisers once per calendar quarter. TIAA’s internal appraisal staff will continue to oversee the entire appraisal process, in conjunction with the Account’s independent fiduciary. Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when bids are obtained for properties held for sale by the Account. In addition, adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant).

          An independent fiduciary, Real Estate Research Corporation, has been appointed by a special subcommittee of the Investment Committee of the Board to, among other things, oversee the appraisal process. The independent fiduciary must approve all independent appraisers used by the Account. All 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. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. These independent appraisers are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent, RICS) and state certified appraisers from national or regional firms with relevant property type experience and market knowledge.

          Management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. Also, the independent fiduciary can 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 of real estate related assets 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 calendar month. When 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 the prescribed limits discussed above 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.

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          Valuation of Real Estate Joint Ventures and Limited Partnerships: Real estate joint ventures and certain limited partnerships are stated at the fair value of the Account’s ownership interests of the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related mortgage loans payable, and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. 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. The Account’s real estate joint ventures and limited partnerships are generally classified within level 3 of the valuation hierarchy.

          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 Board and in accordance with the responsibilities of the Board as a whole. These investments are generally classified within level 3 of the valuation hierarchy.

          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, exclusive of transaction costs. Such marketable securities are classified within level 1 of the valuation hierarchy.

          Debt securities, other than money market instruments, are generally 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. Debt securities are generally classified within level 2 of the valuation hierarchy.

          Valuation of Mortgage Loan Receivable: The mortgage loan receivable is stated at fair value. The mortgage loan receivable is valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, the performance of the underlying collateral and the credit quality of the counterparty. The Account’s mortgage loan receivable is classified within level 3 of the valuation hierarchy.

          Valuation of 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 transferred exclusive of transaction costs. Mortgage loans payable are valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral), the maturity date of the loan, the return demands of the

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market, and the credit quality of the Account. The Account’s mortgage loans payable are generally classified within level 3 of the valuation hierarchy. Interest expense for mortgage loans payable is recorded on the accrual basis taking into account the outstanding principal and contractual interest rates.

          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 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 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, 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 Funds: The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment (“Accumulation Fund”). The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments (“Annuity Fund”). 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 for all Account level expenses 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 realized 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 realized loss occurs when the cost-to-date exceeds the sales price. Any 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

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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 when 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 real estate investment trust (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 when the financial statements of the limited partnerships are received by the Account. As circumstances warrant, prior to the receipt of financial statements of the limited partnership, the Account will estimate the value of its interests in good faith and will from time to time seek input from the issuer or the sponsor of the investment vehicle.

          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.

          Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. 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.

          The Account’s assets as of the close of each valuation day are valued by taking the sum of:

• the value of the Account’s cash, cash equivalents, and short-term and other debt instruments;

• the value of the Account’s other securities and other assets;

• the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;

• an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non real estate-related investments (including short-term marketable securities); and

• actual net operating income received from the Account’s properties, other real estate-related investments and non real estate-related investments (only to the extent any such item of income differs from the estimated income accrued for on such 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.

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          After the end of every quarter, the Account reconciles the amount deducted from the Account (which is established in order to approximate the costs that the Account will incur) with the expenses the Account actually incurred. If there is a difference, the Account adds it to or deducts it from the Account in equal daily installments over the remaining days of the quarter, provided that material differences may be repaid in the current calendar quarter. The Account’s at-cost deductions are based on projections of Account assets and overall expenses, and the size of any adjusting payments will be directly affected the difference between management’s projections and the Account’s actual assets or expenses.

          Cash: The Account maintains cash in bank deposit accounts which, at times, exceeds federally insured limits. The Account’s management monitors these balances to mitigate the exposure of risk due to concentration and has not experienced any losses from such concentration.

          Federal Income Taxes: Based on provisions of the Internal Revenue Code, Section 817, the Account is taxed as a segregated asset account of TIAA and as such, the Account should incur no material federal income tax attributable to the net investment activity of the Account.

          Due to/from Related Party: Due to/from investment advisor represents amounts that were paid or received by TIAA on behalf of the Account. Amounts generally are paid or received by the Account within one or two business days and no interest is charged on these amounts.

          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 and certain quarters of 2007 have 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.

Note 2—Management Agreements and Arrangements

          Investment advisory services for the Account are provided by TIAA employees, under the direction of the Board and its Investment Committee, pursuant to investment management procedures adopted by TIAA for the Account. TIAA’s

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investment management decisions for the Account are subject to review by the Account’s independent fiduciary. TIAA also provides all portfolio accounting and related services for the Account.

          Through December 31, 2007, administrative and distribution services for the Account were provided by TIAA-CREF Individual & Institutional Services, LLC (“Services”) pursuant to a combined 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 Financial Industry Regulatory Authority. Effective January 1, 2008, the Account entered into the Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account (the “New Distribution Agreement”), dated January 1, 2008, by and among TIAA, for itself and on behalf of the Account, and Services. Pursuant to the New Distribution Agreement, Services performs 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) helping employers implement and manage retirement plans. Also effective January 1, 2008, TIAA performs 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. Both distribution services (pursuant to the New Distribution Agreement) and administrative services continue to be provided to the Account by Services and TIAA, as applicable, on an at cost basis.

          The New Distribution Agreement is terminable by either party upon 60 days written notice and terminates automatically upon any assignment thereof.

          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 and adjusted periodically and with the objective of keeping the payments as close as possible to the Account’s 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 funds any such transfer and withdrawal requests by purchasing accumulation units of the Account. See Note 3 below.

          To the extent TIAA has purchased and owns accumulation units issued pursuant to the liquidity guarantee, the independent fiduciary would monitor and

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oversee, among other things, TIAA’s ownership interest in the Account and may require TIAA to eventually redeem some of its liquidity units, particularly when the Account has uninvested cash or liquid investments available. 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 Services are identified in the accompanying Statements of Operations and are reflected in the Condensed Financial Information disclosed in Note 9.

Note 3—Related Party Transactions

          Pursuant to its existing liquidity guarantee obligation, as of December 31, 2008, the TIAA General Account owned 576,868 accumulation units (which are generally referred to as “Liquidity Units”) issued by the Account. TIAA purchased an aggregate of $155.6 million of Liquidity Units on December 24, 2008.

          In accordance with this liquidity guarantee obligation, TIAA guarantees that all participants in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. Liquidity units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s participants. As of December 31, 2008, the TIAA General Account had assets equal to approximately $195.2 billion. Management believes that TIAA has the ability to meet its obligations under the liquidity guarantee.

          As discussed in the Account’s prospectus and in accordance with a prohibited transaction exemption from the U.S. Department of Labor (PTE 96-76), the Account’s independent fiduciary, Real Estate Research Corporation, has certain responsibilities with respect to the Account that it has undertaken or is currently undertaking with respect to TIAA’s purchase of Liquidity Units, including among other things, reviewing the purchase and redemption of Liquidity Units by TIAA to ensure the Account uses the correct unit values. In addition, as set forth in PTE 96-76, the independent fiduciary’s responsibilities include:

• establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for changing the trigger point; approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of Liquidity Units reaches the trigger point; and

• approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of Liquidity Units reaches the trigger point; and

• once the trigger point has been reached, participating in any program to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. The independent fiduciary’s role in participating in any asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales

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guidelines and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of Liquidity Units.

          The independent fiduciary, which has the right to adjust the trigger point, has established the trigger point at 45% of the outstanding accumulation units and it will continue to monitor TIAA’s ownership interest in the Account and provide further recommendations as necessary. As of December 31, 2008, TIAA owned 1.4% of the outstanding accumulation units of the Account.

          During 2009, pursuant to this liquidity guarantee obligation, TIAA has made additional purchases of Liquidity Units in multiple transactions. As of March 18, 2009, TIAA owned an aggregate of 3.6 million Liquidity Units (representing a total investment of $942.6 million). As of such date, TIAA owned 8.7% of the outstanding accumulation units of the Account.

          As discussed in more detail in Note 2, TIAA and Services provide services to the Account on an at cost basis. See Note 7 for details of the expense charge and expense ratio.

Note 4—Credit Risk Concentrations

          Concentrations of credit risk arise when a number of properties or tenants are located in a similar geographic region such that the economic conditions of that region could impact tenants’ obligations to meet their contractual obligations or the values of individual properties to decline. The Account has no significant concentrations of tenants as no single tenant has annual contract rent that makes up more than 2% of the Rental Income of the Account.

          The majority of our wholly-owned real estate investments and investments in joint ventures are located in the United States. The following table represents the diversification of the Account’s portfolio by region and property type:

DIVERSIFICATION BY MARKET VALUE(1)
	East		West		South		Midwest		Foreign(2)		Total
Office	21.7	%	19.4	%	11.9	%	1.2	%	1.9	%	56.1	%
Apartment	2.1	%	5.9	%	4.9	%	0.0	%	0.0	%	12.9	%
Industrial	1.7	%	6.9	%	3.9	%	1.3	%	0.0	%	13.8	%
Retail	4.2	%	1.0	%	9.0	%	0.5	%	2.0	%	16.7	%
Storage(3)	0.2	%	0.2	%	0.1	%	0.0	%	0.0	%	0.5	%
Total	29.9	%	33.4	%	29.8	%	3.0	%	3.9	%	100	%

(1)	Market values for properties held in joint venture investments are net of debt.
(2)	Represents real estate investments in the United Kingdom and France.
(3)	Represents a portfolio of storage facilities.
	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

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Note 5—Leases

          The Account’s real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2058. Contractual minimum annual rental income for the properties owned by the Account, excluding short-term residential and storage facility leases, are as follows (in thousands):

	Years Ending December 31,
2009	$	1,009,291
2010		906,198
2011		765,252
2012		655,990
2013		541,180
2014—2058		1,672,107
Total	$	5,550,018

          Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts.

Note 6—Assets and Liabilities Measured at Fair Value on a Recurring Basis

          The following are the major categories of assets and liabilities measured at fair value on a recurring basis as of December 31, 2008, using unadjusted quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3) (in thousands):

Description	Level 1: Quoted Prices in Active Markets for Identical Assets		Level 2: Significant Other Observable Inputs		Level 3: Significant Unobservable Inputs		Total at December 31, 2008
Real estate properties	$	—	$	—	$	10,305,040	$	10,305,040
Real Estate joint ventures and limited partnerships		—		—		2,463,196		2,463,196
Marketable securities-other		—		511,711		—		511,711
Mortgage loan receivable		—		—		71,767		71,767
Total Investments	$	—	$	511,711	$	12,840,003	$	13,351,714
Mortgage loans payable	$	—	$	—	$	1,830,040	$	1,830,040

          The following is a reconciliation of the beginning and ending balances for assets measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three months and year ended December 31, 2008 (in thousands):

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	Real Estate Properties			Real Estate Joint Ventures and Limited Partnerships			Mortgage Loan Receivable			Total Level 3 Investments			Mortgage Loans Payable
For the three months ended December 31, 2008:
Beginning balance October 1, 2008	$	11,783,941		$	2,960,646		$	71,428		$	14,816,015		$	(1,697,506	)
Total realized and unrealized (loss) gain included in changes in net assets		(1,483,673	)		(509,417	)		339			(1,992,751	)		71,167
Purchases, issuances, and settlements(1)		4,772			11,967			—			16,739			(203,701	)
Ending balance December 31, 2008	$	10,305,040		$	2,463,196		$	71,767		$	12,840,003		$	(1,830,040	)
For the year ended December 31, 2008:
Beginning balance January 1, 2008	$	11,983,715		$	3,158,870		$	72,520		$	15,215,105		$	(1,392,093	)
Total realized and unrealized (loss) gain included in changes in net assets		(1,924,027	)		(702,814	)		(753	)		(2,627,594	)		109,791
Purchases, issuances, and settlements(1)		245,352			7,140			—			252,492			(547,738	)
Ending balance December 31, 2008	$	10,305,040		$	2,463,196		$	71,767		$	12,840,003		$	(1,830,040	)

⁽¹⁾ This line includes the net of contributions, distributions and accrued operating income for real estate joint ventures and limited partnerships as well as principal payments on mortgage loans payable.

          The amount of total gains (losses) included in changes in net assets attributable to the change in unrealized gains (losses) relating to investments and mortgage loans payable using significant unobservable inputs still held as of the reporting date is as follows (in thousands):

	Real Estate Properties			Real Estate Joint Ventures and Limited Partnership			Mortgage Loan Receivable			Total Level 3 Investments			Mortgage Loans Payable
For the three months ended December 31, 2008	$	(1,483,045	)	$	(509,417	)	$	339		$	(1,992,123	)	$	(71,167	)
The amount of total gains or losses for the year ended December 31, 2008 included in earnings (or changes in net assets) attributable to the change in unrealized gain or (loss) relating to assets still held at the reporting date	$	(1,921,932	)	$	(702,797	)	$	(753	)	$	(2,625,482	)	$	(109,791	)

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Note 7—Investments 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 loans payable on the properties owned. At December 31, 2008, the Account held 12 investments in joint ventures with non-controlling ownership interest percentages that ranged from 50% to 85%. Certain joint ventures and limited partnerships are subject to adjusted distribution percentages when earnings in the investment reach a pre-determined threshold. The Account’s allocated portion of the mortgage loans payable was $1.9 billion and $2.0 billion at December 31, 2008 and December 31, 2007, respectively. The Account’s equity in the joint ventures at December 31, 2008 and December 31, 2007 was $2.2 billion and $2.8 billion, respectively. A condensed summary of the financial position and results of operations of the joint ventures is shown below (in thousands).

			December 31, 2008		December 31, 2007
Assets
Real estate properties, at value			$	5,947,028	$	7,001,687
Other assets				95,411		99,799
Total assets			$	6,042,439	$	7,101,486
Liabilities and Equity
Mortgage loans payable, at value			$	2,571,843	$	2,707,161
Other liabilities				58,378		64,738
Total liabilities				2,630,221		2,771,899
Equity				3,412,218		4,329,587
Total liabilities and equity			$	6,042,439	$	7,101,486
	Year Ended December 31, 2008		Year Ended December 31, 2007		Year Ended December 31, 2006
Operating Revenues and Expenses
Revenues	$	562,031	$	534,469	$	299,079
Expenses		333,700		315,077		157,807
Excess of revenues over expenses	$	228,331	$	219,392	$	141,272

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          Principal on mortgage loans payable on joint ventures is as follows (in thousands):

	Amount
2009	$	54,660
2010		511,525
2011		119,905
2012		721,565
2013		90,578
Thereafter		1,227,497
Total maturities	$	2,725,730

          Management of the Account monitors the financial position of the Account’s joint venture partners. To the extent that Management of the Account determines that a joint venture partner has financial or liquidity concerns, Management will evaluate all actions and remedies available to the Account under the applicable joint venture agreement to minimize any potential adverse implications to the Account.

          The Account invests in limited partnerships that own real estate properties and other real estate related assets and receives distributions from the limited partnerships based on the Account’s ownership interest percentages. At December 31, 2008, the Account held five limited partnership investments and one private real estate equity investment trust (all of which featured non-controlling ownership interests) with ownership interest percentages that ranged from 5.27% to 18.46%. The Account’s investment in limited partnerships was $286.5 million and $331.4 million at December 31, 2008 and December 31, 2007, respectively.

Note 8—Mortgage Loans Payable

          At December 31, 2008, the Account had outstanding mortgage loans payable secured by the following properties (in thousands):

TIAA Real Estate Account§Prospectus 143

NOTES TO FINANCIAL STATEMENTS continued

Property	Interest Rate and Payment Frequency			Amounts as of December 31, 2008			Maturity
701 Brickell(a)		3.91% paid monthly	(f)	$	126,000			October 1, 2010
Four Oaks Place(b)		3.91% paid monthly	(f)		200,000			October 1, 2010
Ontario Industrial Portfolio(c)		7.42% paid monthly			8,702			May 1, 2011
1 & 7 Westferry Circus(d)		5.40% paid quarterly			192,982			November 15, 2012
Reserve at Sugarloaf(c)		5.49% paid monthly			25,531			June 1, 2013
South Frisco Village		5.85% paid monthly			26,251			June 1, 2013
Fourth & Madison		6.40% paid monthly			145,000			August 21, 2013
1001 Pennsylvania Avenue		6.40% paid monthly			210,000			August 21, 2013
50 Fremont		6.40% paid monthly			135,000			August 21, 2013
Pacific Plaza(c)		5.55% paid monthly			8,749			September 1, 2013
Wilshire Rodeo Plaza		5.28% paid monthly			112,700			April 11, 2014
1401 H Street		5.97% paid monthly			115,000			December 7, 2014
Preston Sherry Plaza		5.85% paid monthly			23,500			September 1, 2015
The Colorado(c)		5.65% paid monthly			87,806			November 1, 2015
99 High Street		5.52% paid monthly			185,000			November 11, 2015
The Legacy at Westwood		5.95% paid monthly			42,000			December 1, 2015
Regents Court		5.76% paid monthly			35,900			December 1, 2015
The Caruth		5.71% paid monthly			42,000			December 1, 2015
Lincoln Centre		5.51% paid monthly			153,000			February 1, 2016
Publix at Weston Commons		5.08% paid monthly			35,000			January 1, 2036
Total Principal Outstanding					1,910,121
Fair value adjustment		��			(80,081	)
Total mortgage loans payable at fair value				$	1,830,040

(a)	The Account entered into a debt agreement that included an interest rate cap with its lender to reduce its exposure to the variability of changes in interest rates until maturity of the underlying debt. The interest rate on the entire $126 million mortgage is capped at 6.50%.
(b)	The Account entered into a debt agreement that included an interest rate cap with its lender to reduce its exposure to the variability of changes in interest rates until maturity of the underlying debt. The interest rate on the entire $200 million mortgage is capped at 6.50%.
(c)	The mortgage is adjusted monthly for principal payments.
(d)	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, 2008. The quarterly payments are interest only, with a balloon payment at maturity. The interest rate is fixed. The cumulative foreign currency translation adjustment was an unrealized gain of $39.6 million.
(e)	Interest rates are taxed, unless stated otherwise.
(f)	The interest rate for these mortgages is a variable rate at the one month London Interbank Offered Rate (“LIBOR”) plus 200 basis points and is reset monthly.

          Principal on mortgage loans payable is due as follows (in thousands):

	Amount
2009	$	3,303
2010		330,827
2011		13,139
2012		198,368
2013		553,189
Thereafter		811,295
Total maturities	$	1,910,121

144 Prospectus§ TIAA Real Estate Account

NOTES TO FINANCIAL STATEMENTS continued

Note 9—Condensed Financial Information

          Selected condensed financial information for an Accumulation Unit of the Account is presented below.

	Years Ended December 31,
	2008			2007			2006			2005			2004
PER ACCUMULATION UNIT DATA:
Rental income	$	18.794		$	17.975		$	16.717		$	15.604		$	13.422
Real estate property level expenses and taxes		9.190			8.338			7.807			7.026			5.331
Real estate income, net		9.604			9.637			8.910			8.578			8.091
Other income		3.808			4.289			3.931			3.602			3.341
Total income		13.412			13.926			12.841			12.180			11.432
Expense charges(1)		2.937			2.554			1.671			1.415			1.241
Investment income, net		10.475			11.372			11.170			10.765			10.191
Net realized and unrealized gain (loss) on investments and mortgage loans payable		(54.541	)		26.389			22.530			18.744			13.314
Net (decrease) increase in Accumulation Unit Value		(44.066	)		37.761			33.700			29.509			23.505
Accumulation Unit Value:
Beginning of period		311.414			273.653			239.953			210.444			186.939
End of period	$	267.348		$	311.414		$	273.653		$	239.953		$	210.444
TOTAL RETURN		(14.15	)%		13.8	%		14.04	%		14.02	%		12.57	%
RATIOS TO AVERAGE NET ASSETS:
Expenses(1)		0.95	%		0.87	%		0.67	%		0.63	%		0.63	%
Investment income, net		3.38	%		3.88	%		4.49	%		4.82	%		5.17	%
Portfolio turnover rate:
Real estate properties		0.64	%		5.59	%		3.62	%		6.72	%		2.32	%
Marketable securities		25.67	%		13.03	%		51.05	%		77.63	%		143.47	%
Accumulation Units outstanding at end of period (in thousands)		41,542			55,106			50,146			42,623			33,338
Net assets end of period (in thousands)	$	11,508,924		$	17,660,537		$	14,132,693		$	10,548,711		$	7,245,550

⁽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, 2008 would be $12.127 ($10.892, $9.478, $8.441, and $6.572, for the years ended December 31, 2007, 2006, 2005 and 2004, respectively), and the Ratio of Expenses to Average Net Assets for the Year ended December 31, 2008 would be 3.91% (3.71%, 3.81%, 3.78% and 3.33% for the years ended December 31, 2007, 2006, 2005, and 2004, respectively).

TIAA Real Estate Account§Prospectus 145

NOTES TO FINANCIAL STATEMENTS continued

Note 10—Accumulation Units

          Changes in the number of Accumulation Units outstanding were as follows (in thousands):

	For the Years Ended,
	2008			2007		2006
Outstanding:
Beginning of period		55,106			50,146		42,623
Credited for premiums		3,271			3,795		4,056
Credited for purchase of liquidity units by TIAA (see Note 3)		577			—		—
Net units (cancelled) credited for transfers, net disbursements, and amounts applied to the Annuity Fund		(17,412	)		1,165		3,467
End of period		41,542			55,106		50,146

Note 11—Commitments and Subsequent Events

          During the normal course of business, the Account enters into discussions and agreements to purchase or sell real estate properties. On January 13, 2009, the Account sold a residential apartment complex in Phoenix, Arizona for sales proceeds of approximately $20.0 million and realized a loss of approximately $11.7 million. On February 19, 2009, the Account sold a residential apartment complex in Houston, TX for sales proceeds of approximately $8.9 million and realized a loss of approximately $5.2 million.

          As of December 31, 2008, the Account had outstanding commitments to purchase interests in five limited partnerships and shares in a private real estate equity investment trust. Approximately $79.3 million remains to be funded under these commitments.

          The Account is party to various claims and routine litigation arising in the ordinary course of business. 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.

          During 2009, pursuant to the liquidity guarantee obligation, TIAA has made additional purchases of Liquidity Units in multiple transactions. As of March 18, 2009, TIAA owned an aggregate of 3.6 million accumulation units (representing a total investment of $942.6 million). As of such date, TIAA owned 8.7% of the outstanding accumulation units of the Account.

Note 12—New Accounting Pronouncements

          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

146 Prospectus§ TIAA Real Estate Account

NOTES TO FINANCIAL STATEMENTS continued

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. 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.

          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. It is expected that more transactions will constitute a business under FASB Statement No. 141(R). 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 reports all investments in real estate at fair value and therefore does not account for the acquisition of real estate investments as a business combination under this statement.

          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 adoption of Statement No. 160 will not impact the financial position or results of operations of the Account.

          In May 2008, FASB issued Statement No. 162,“The Hierarchy of Generally Accepted Accounting Principles”(“GAAP Hierarchy”), which identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements of nongovernmental entities that are presented in conformity with generally accepted accounting principles in the United States. This statement is effective 60 days following the Securities and Exchange Commission’s approval of the Public Company Accounting Oversight Board amendments to AU Section 411,“The Meaning of Presented Fairly in Conformity with Generally Accepted Accounting Principles”(the approval occurred on September 16, 2008). This amendment removes the GAAP Hierarchy from auditing literature and places it in the accounting literature and appropriately directs the requirement to comply with the GAAP Hierarchy to the reporting entity. The application of the GAAP Hierarchy did not impact the Account.

TIAA Real Estate Account§Prospectus 147

NOTES TO FINANCIAL STATEMENTS concluded

          In October 2008, FASB issued FSP FAS 157-3,“Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active.”This FSP clarifies the application of Statement No. 157 in a market that is not active and applies to financial assets within the scope of accounting pronouncements that require or permit fair value measurements in accordance with Statement No. 157. The FSP is effective upon issuance, including prior periods for which financial statements have not been issued. Accordingly, the Account adopted this guidance effective September 30, 2008. The adoption of this guidance did not have a material effect on the financial position or results of operations of the Account.

STATEMENT OF INVESTMENTS

TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007
(Dollar values shown in thousands)

	Value
Location/Description—Type	2008			2007
REAL ESTATE PROPERTIES—77.18% AND 63.04%
ALABAMA:
Inverness Center—Office	$	102,891		$	125,522
ARIZONA:
Camelback Center—Office		58,000			80,000
Kierland Apartment Portfolio—Apartments		146,830			170,084
Phoenix Apartment Portfolio—Apartments		129,244			156,110
CALIFORNIA:
3 Hutton Centre Drive—Office		45,710			64,200
50 Fremont—Office		386,600	(1)		478,000	(1)
88 Kearny Street—Office		99,815			123,822
275 Battery—Office		220,025			271,917
980 9th Street and 1010 8th Street—Office		151,600			178,000
Rancho Cucamonga Industrial Portfolio—Industrial		102,300			133,000
Capitol Place—Office		50,000			53,539
Centerside I—Office		46,400			67,500
Centre Pointe and Valley View—Industrial		29,000			34,143
Great West Industrial Portfolio—Industrial		93,600			—
Larkspur Courts—Apartments		71,500			97,000
Northern CA RA Industrial Portfolio—Industrial		63,456			69,602
Ontario Industrial Portfolio—Industrial		278,000	(1)		355,399	(1)
Pacific Plaza—Office		104,970	(1)		127,130	(1)
Regents Court—Apartments		59,000	(1)		69,000
Southern CA RA Industrial Portfolio—Industrial		107,218			110,718
The Legacy at Westwood—Apartments		89,224	(1)		126,580
Wellpoint—Office		46,000			51,000
Westcreek—Apartments		31,500			39,190
West Lake North Business Park—Office		54,425			68,622
Westwood Marketplace—Retail		95,100			96,562
Wilshire Rodeo Plaza—Office		213,783	(1)		230,439	(1)

148 Prospectus§ TIAA Real Estate Account

STATEMENT OF INVESTMENTS continued

TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007
(Dollar values shown in thousands)

	Value
Location/Description—Type	2008			2007
COLORADO:
Palomino Park—Apartments	$	173,000		$	194,001
The Lodge at Willow Creek—Apartments		40,000			43,500
The Market at Southpark—Retail		29,000			35,800
CONNECTICUT:
Ten & Twenty Westport Road—Office		174,400			183,006
FLORIDA:
701 Brickell—Office		255,000	(1)		275,942
4200 West Cypress Street—Office		41,568			48,044
Plantation Grove—Retail		11,950			15,400
Pointe on Tampa Bay—Office		49,700			60,972
Publix at Weston Commons—Retail		50,987	(1)		55,200	(1)
Quiet Waters at Coquina Lakes—Apartments		21,810			26,205
Royal St. George—Apartments		—			27,000
Seneca Industrial Park—Industrial		101,296			122,334
South Florida Apartment Portfolio—Apartments		62,155			68,249
Suncrest Village—Retail		15,800			19,500
The Fairways of Carolina—Apartments		20,942			27,208
The North 40 Office Complex—Office		64,398			67,004
Urban Centre—Office		113,274			135,577
FRANCE:
Printemps de L’Homme—Retail		247,621			279,078
GEORGIA:
1050 Lenox Park—Apartments		57,550			85,500
Atlanta Industrial Portfolio—Industrial		54,001			58,300
Glenridge Walk—Apartments		37,575			52,900
Reserve at Sugarloaf—Apartments		44,900	(1)		52,000	(1)
Shawnee Ridge Industrial Portfolio—Industrial		69,000			76,742
ILLINOIS:
Chicago Caleast Industrial Portfolio—Industrial		63,932			77,643
Chicago Industrial Portfolio—Industrial		78,022			86,421
East North Central RA Industrial Portfolio—Industrial		—			38,016
Oak Brook Regency Towers—Office		75,937			86,892
Parkview Plaza—Office		65,846			66,067
MARYLAND:
Broadlands Business Park—Industrial		27,520			35,500
FEDEX Distribution Facility—Industrial		—			9,900
GE Appliance East Coast Distribution Facility—Industrial		40,500			48,000
MASSACHUSETTS:
99 High Street—Office		320,107	(1)		344,688	(1)
Needham Corporate Center—Office		32,494			33,275
Northeast RA Industrial Portfolio—Industrial		30,794			33,300
The Newbry—Office		315,600			389,880
MINNESOTA:
Champlin Marketplace—Retail		17,101			18,375
NEVADA:
UPS Distribution Facility—Industrial		12,100			15,900
NEW JERSEY:
Konica Photo Imaging Headquarters—Industrial		18,300			23,500
Marketfair—Retail		90,759			95,500
Morris Corporate Center III—Office		94,955			119,600

TIAA Real Estate Account§Prospectus 149

STATEMENT OF INVESTMENTS continued

TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007
(Dollar values shown in thousands)

	Value
Location/Description—Type	2008			2007
NJ Caleast Industrial Portfolio—Industrial	$	49,000		$	42,225
Plainsboro Plaza—Retail		33,500			51,000
South River Road Industrial—Industrial		43,872			53,400
NEW YORK:
780 Third Avenue—Office		341,000			375,000
The Colorado—Apartments		153,006	(1)		113,033
OHIO:
Columbus Portfolio—Office		—			26,315
PENNSYLVANIA:
Lincoln Woods—Apartments		32,025			37,917
TENNESSEE:
Airways Distribution Center—Industrial		17,400			4,300
Summit Distribution Center—Industrial		22,700			27,500
TEXAS:
Dallas Industrial Portfolio—Industrial		141,328			154,056
Four Oaks Place—Office		438,000	(1)		419,270
Houston Apartment Portfolio—Apartments		267,468			296,241
Lincoln Centre—Office		269,000	(1)		305,000	(1)
Park Place on Turtle Creek—Office		40,094			48,283
Pinnacle Industrial/DFW Trade Center—Industrial		38,733			46,700
Preston Sherry Plaza—Office		38,400	(1)		45,500
South Frisco Village—Retail		36,300	(1)		48,500	(1)
The Caruth—Apartments		61,349	(1)		65,427
The Maroneal—Apartments		38,456			40,034
UNITED KINGDOM:
1 & 7 Westferry Circus—Office		232,802	(1)		436,127	(1)
VIRGINIA:
8270 Greensboro Drive—Office		57,000			63,500
Ashford Meadows—Apartments		79,319			94,060
One Virginia Square—Office		51,797			59,539
The Ellipse at Ballston—Office		84,018			92,504
WASHINGTON:
Creeksides at Centerpoint—Office		27,200			42,000
Fourth & Madison—Office		407,500	(1)		487,000	(1)
Millennium Corporate Park—Office		162,193			158,000
Northwest RA Industrial Portfolio—Industrial		24,100			23,402
Rainier Corporate Park—Industrial		81,035			81,161
Regal Logistics Campus—Industrial		67,000			71,000
WASHINGTON DC:
1001 Pennsylvania Avenue—Office		550,757	(1)		640,150	(1)
1401 H Street, NW—Office		194,600	(1)		224,573	(1)
1900 K Street—Office		245,000			285,000
Mazza Gallerie—Retail		83,003			97,000
TOTAL REAL ESTATE PROPERTIES
(Cost $10,031,744 and $9,804,489)		10,305,040			11,983,715

150 Prospectus§ TIAA Real Estate Account

STATEMENT OF INVESTMENTS continued

TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007
(Dollar values shown in thousands)

	Value
Location/Description—Type	2008			2007
OTHER REAL ESTATE-RELATED INVESTMENTS—18.45% AND 16.61%
REAL ESTATE JOINT VENTURES—16.30% AND 14.87%
CALIFORNIA:
CA—Colorado Center LP
Yahoo Center (50% Account Interest)	$	239,748	(2)	$	369,402	(2)
CA—Treat Towers LP
Treat Towers (75% Account Interest)		105,074			118,997
FLORIDA:
Florida Mall Associates, Ltd
The Florida Mall (50% Account Interest)		281,941	(2)		296,486	(2)
TREA Florida Retail, LLC
Florida Retail Portfolio (80% Account Interest)		196,202			260,879
West Dade Associates
Miami International Mall (50% Account Interest)		105,312	(2)		109,945	(2)
GEORGIA:
GA—Buckhead LLC
Prominence in Buckhead (75% Account Interest)		78,209			115,427
ILLINOIS:
IL—161 Clark Street LLC
161 North Clark Street (75% Account Interest)		—			3,151	(3)
MASSACHUSETTS:
MA—One Boston Place REIT
One Boston Place (50.25% Account Interest)		212,083			246,440
TENNESSEE:
West Town Mall, LLC
West Town Mall (50% Account Interest)		73,969	(2)		75,827	(2)
VIRGINIA:
Teachers REA IV, LLC
Tyson’s Executive Plaza II (50% Account Interest)		36,048			44,178
VARIOUS:
DDR TC LLC
DDR Joint Venture—Various (85% Account Interest)		712,773	(2,4)		1,028,297	(2,4)
Storage Portfolio I, LLC
Storage Portfolio (75% Account Interest)		67,621	(2,4)		81,943	(2,4)
Strategic Ind Portfolio I, LLC
IDI Nationwide Industrial Portfolio (60% Account Interest)		67,731	(2,4)		76,536	(2,4)
TOTAL REAL ESTATE JOINT VENTURES
(Cost $2,068,714 and $2,005,340)		2,176,711			2,827,508

TIAA Real Estate Account§Prospectus 151

STATEMENT OF INVESTMENTS	continued
TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007
(Dollar values shown in thousands)

	Value
Location/Description	2008		2007
LIMITED PARTNERSHIPS—2.15% AND 1.74%
Cobalt Industrial REIT (10.998% Account Interest)	$	31,784	$	32,840
Colony Realty Partners LP (5.27% Account Interest)		29,000		32,505
Heitman Value Partners Fund (8.43% Account Interest)		16,334		24,489
Lion Gables Apartment Fund (18.46% Account Interest)		186,471		205,162
MONY/Transwestern Mezz RP II (16.67% Account Interest)		17,710		36,366
Transwestern Mezz Realty Partners III, LLC (11.70% Account Interest)		5,186		—
TOTAL LIMITED PARTNERSHIPS (Cost $261,136 and $255,579)		286,485		331,362
TOTAL REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS (Cost $2,329,850 and $2,260,919)		2,463,196		3,158,870

Shares			Value
2008	2007	Issuer	2008	2007
MARKETABLE SECURITIES—3.83% AND 19.97%
REAL ESTATE-RELATED MARKETABLE SECURITIES—0.00% AND 2.24%
—	51,200	Acadia Realty Trust	—	1,311
—	3,300	Alexander’s Inc.	—	1,166
—	53,100	Alexandria Real Estate Equities Inc.	—	5,399
—	164,585	AMB Property Corp.	—	9,474
—	45,100	American Campus Communities Inc.	—	1,211
—	214,600	American Financial Realty Trust	—	1,721
—	159,700	Apartment Investment & Management Co.	—	5,546
—	200,000	Ashford Hospitality Trust Inc.	—	1,438
—	27,500	Associated Estates Realty Corp.	—	260
—	132,200	AvalonBay Communities Inc.	—	12,445
—	109,100	BioMed Realty Trust Inc.	—	2,528
—	198,600	Boston Properties Inc.	—	18,233
—	148,100	Brandywine Realty Trust	—	2,655
—	86,500	BRE Properties Inc.	—	3,506
—	341,650	Brookfield Properties Corp.	—	6,577
—	93,500	Camden Property Trust	—	4,502
—	110,900	CBL & Associates Properties Inc.	—	2,652
—	74,900	Cedar Shopping Centers Inc.	—	766
—	75,400	Colonial Properties Trust	—	1,706
—	79,500	Corporate Office Properties Trust	—	2,504
—	71,100	Cousins Properties Inc.	—	1,571
—	281,100	DCT Industrial Trust Inc.	—	2,617
—	205,000	Developers Diversified Realty Corp.	—	7,849
—	157,000	DiamondRock Hospitality Co.	—	2,352
—	99,000	Digital Realty Trust Inc.	—	3,799
—	164,400	Douglas Emmett Inc.	—	3,717
—	243,000	Duke Realty Corp.	—	6,337
—	51,700	Dupont Fabros Technology	—	1,013
—	39,400	EastGroup Properties Inc.	—	1,649
—	49,900	Education Realty Trust Inc.	—	561

152 Prospectus§ TIAA Real Estate Account

STATEMENT OF INVESTMENTS	continued
TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007
(Dollar values shown in thousands)

Shares			Value
2008	2007	Issuer	2008			2007
—	37,300	Equity Lifestyle Properties Inc.	$	—		$	1,703
—	60,800	Equity One Inc.		—			1,400
—	452,300	Equity Residential		—			16,495
—	42,000	Essex Property Trust Inc.		—			4,095
—	108,700	Extra Space Storage Inc.		—			1,553
—	93,700	Federal Realty Investment Trust		—			7,697
—	101,300	FelCor Lodging Trust Inc.		—			1,579
—	74,700	First Industrial Realty Trust Inc.		—			2,585
—	41,600	First Potomac Realty Trust		—			719
—	384,500	General Growth Properties Inc.		—			15,834
—	62,700	Glimcher Realty Trust		—			896
—	64,200	GMH Communities Trust		—			354
—	360,900	HCP Inc		—			12,552
—	141,700	Health Care REIT Inc		—			6,333
—	84,600	Healthcare Realty Trust Inc		—			2,148
—	70,900	Hersha Hospitality Trust		—			674
—	96,300	Highwoods Properties Inc.		—			2,829
—	55,500	Home Properties Inc.		—			2,489
—	155,800	Hospitality Properties Trust		—			5,020
—	869,070	Host Hotels & Resorts Inc.		—	��		14,809
—	375,400	HRPT Properties Trust		—			2,902
—	95,300	Inland Real Estate Corp.		—			1,349
—	54,100	Kilroy Realty Corp.		—			2,973
—	365,921	Kimco Realty Corp.		—			13,320
—	47,600	Kite Realty Group Trust		—			727
—	66,600	LaSalle Hotel Properties		—			2,125
—	151,900	Liberty Property Trust		—			4,376
—	121,000	Macerich Co./The		—			8,598
—	111,900	Mack-Cali Realty Corp.		—			3,805
—	59,900	Maguire Properties Inc.		—			1,765
—	42,300	Mid-America Apartment Communities		—			1,808
—	155,200	Nationwide Health Properties Inc.		—			4,869
—	25,400	Parkway Properties Inc./Md		—			939
—	65,900	Pennsylvania Real Estate Investment Trust		—			1,956
—	72,200	Post Properties Inc.		—			2,536
—	427,900	Prologis		—			27,120
—	26,900	PS Business Parks Inc.		—			1,414
—	214,614	Public Storage Inc.		—			15,755
—	31,500	Ramco-Gershenson Properties		—			673
—	115,100	Regency Centers Corp.		—			7,423
—	19,300	Saul Centers Inc.		—			1,031
—	139,600	Senior Housing Properties Trust		—			3,166
—	373,221	Simon Property Group Inc.		—			32,418
—	98,507	SL Green Realty Corp.		—			9,207
��	36,500	Sovran Self Storage Inc.		—			1,464
—	124,300	Strategic Hotels & Resorts Inc.		—			2,080
—	27,800	Sun Communities Inc.		—			586
—	98,200	Sunstone Hotel Investors Inc.		—			1,796

TIAA Real Estate Account§Prospectus 153

STATEMENT OF INVESTMENTS	continued
TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007
(Dollar values shown in thousands)

Shares			Value
2008	2007	Issuer	2008		2007
—	52,300	Tanger Factory Outlet Centers	$	—	$	1,972
—	88,800	Taubman Centers Inc.		—		4,368
—	224,000	UDR, Inc.		—		4,446
—	17,000	Universal Health Realty Income Trust		—		602
—	78,500	U-Store-It Trust		—		719
—	221,800	Ventas Inc.		—		10,037
—	237,100	Vornado Realty Trust		—		20,853
—	77,700	Washington Real Estate Investment		—		2,441
—	133,000	Weingarten Realty Investors		—		4,182
TOTAL REAL ESTATE EQUITY SECURITIES (Cost $0 and $439,154)				—		426,630
TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES (Cost $0 and $439,154)				—		426,630

										��
Principal						Maturity Date	Value
2008		2007		Issuer	Yield(5)		2008		2007
OTHER MARKETABLE SECURITIES—3.83% AND 17.73%
BANKERS ACCEPTANCE—0.00% AND 0.20%
$	—	$	4,359	JPMorgan Chase Bank	4.400%	1/18/08		—		4,349
	—		10,000	Wachovia Bank	4.441%	4/21/08		—		9,851
	—		25,000	Wachovia Bank	4.360%	5/7/08		—		24,570
TOTAL BANKERS ACCEPTANCE (Cost $0 and $38,836)								—		38,770
CERTIFICATES OF DEPOSIT—0.00% AND 2.22%
	—		20,000	American Express Centurion Bank	4.750%	2/5/08		—		20,002
	—		25,000	American Express Centurion Bank	4.750%	2/4/08		—		25,002
	—		10,000	Bank of Montreal	5.030%	2/14/08		—		10,004
	—		45,000	Bank of Montreal	5.100%	3/7/08		—		45,031
	—		25,000	Bank of Nova Scotia	5.060%	1/16/08		—		25,004
	—		25,000	Barclays Bank	4.990%	2/27/08		—		25,013
	—		10,000	Calyon	4.820%	1/31/08		—		10,001
	—		50,000	Calyon	5.050%	3/12/08		—		50,033
	—		25,000	Deutsche Bank	4.950%	1/24/08		—		25,004
	—		20,000	Dexia Banque SA	4.880%	3/25/08		—		20,008
	—		32,000	Dexia Banque SA	4.990%	3/10/08		—		32,017
	—		30,000	Rabobank Nederland	5.020%	3/5/08		—		30,016
	—		30,000	Royal Bank of Canada	5.060%	1/25/08		—		30,007
	—		20,000	SunTrust Banks, Inc.	4.845%	1/28/08		—		19,999
	—		15,000	Toronto Dominion Bank	5.040%	2/26/08		—		15,009
	—		40,000	Toronto Dominion Bank	5.300%	1/22/08		—		40,014
TOTAL CERTIFICATES OF DEPOSIT (Cost $0 and $422,007)								—		422,164

154 Prospectus§ TIAA Real Estate Account

STATEMENT OF INVESTMENTS	continued
TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007 (Dollar values shown in thousands)

Principal							Value
2008		2007		Issuer	Yield(5)	Maturity Date	2008		2007
COMMERCIAL PAPER—1.84% AND 9.23%
$	—	$	20,000	Abbey National North America LLC	4.930%	1/9/08	$	—	$	19,977
	—		10,000	Abbey National North America LLC	4.670%	1/8/08		—		9,990
	50,000		—	Abbey National North America LLC	0.071%	1/5/09		49,998		—
	—		50,000	American Express Credit Corp.	4.510%	1/14/08		—		49,908
	—		32,490	American Honda Finance Corp.	4.500–4.510%	1/29/08		—		32,370
	—		15,438	American Honda Finance Corp.	4.310%	2/11/08		—		15,356
	—		7,050	American Honda Finance Corp.	4.250%	2/28/08		—		6,997
	—		2,137	American Honda Finance Corp.	4.380%	1/4/08		—		2,136
	—		13,200	Bank of America Corp	4.780%	3/6/08		—		13,088
	—		30,000	Bank of America Corp	4.800%	4/8/08		—		29,604
	—		20,000	Bank of America Corp	4.970%	1/15/08		—		19,961
	40,000		—	Bank of Nova Scotia	0.193%	1/2/09		39,999		—
	—		34,525	Bank of Scotland	4.720%	2/29/08		—		34,260
	—		27,400	Bank of Scotland	4.710%	2/26/08		—		27,201
	—		20,000	Canadian Imperial Holdings, Inc.	4.703%	1/29/08		—		19,926
	—		40,000	Citigroup Funding Inc.	4.850%	1/23/08		—		39,881
	—		25,000	Citigroup Funding Inc.	4.650%	2/7/08		—		24,880
	—		25,000	Citigroup Funding Inc.	4.650%	2/12/08		—		24,865
	—		20,000	Coca Cola Co.	4.430%	2/19/08		—		19,873
	—		13,000	Coca Cola Co.	4.390%	2/25/08		—		12,907
	—		5,255	Coca Cola Co.	4.200%	2/15/08		—		5,224
	—		30,000	Danske Corp.	4.920%	3/6/08		—		29,746
	—		20,000	Edison Asset Securitization, LLC	4.740%	3/11/08		—		19,790
	—		30,000	General Electric Capital Corp.	4.580%	4/8/08		—		29,607
	—		20,460	General Electric Capital Corp.	4.510%	2/19/08		—		20,331
	—		15,340	General Electric Capital Corp.	4.550%	2/20/08		—		15,241
	—		30,540	General Electric Co.	4.540%	3/4/08		—		30,290
	—		13,200	Goldman Sachs Group Inc	5.200%	1/8/08		—		13,186
	—		37,860	Govco Incorporated	5.100%	2/20/08		—		37,571
	—		29,000	Govco Incorporated	4.850%	3/13/08		—		28,688
	—		20,000	Govco Incorporated	5.400%	2/12/08		—		19,870
	—		12,000	Govco Incorporated	4.680%	1/28/08		—		11,948
	—		35,140	Greenwich Capital Holdings	4.850%	4/14/08		—		34,650
	—		6,990	Harley-Davidson Funding	4.480%	2/21/08		—		6,944
	50,000		—	HSBC Finance Corporation	0.304%	1/7/09		49,997		—
	—		30,000	HSBC Finance Corporation	4.700%	2/21/08		—		29,757
	—		5,420	IBM (International Business Machine Corp.)	4.230%	1/3/08		—		5,418
	—		25,000	IBM Capital Inc	4.250%	3/10/08		—		24,773
	—		20,000	IBM International Group	4.220%	2/27/08		—		19,852
	—		18,900	IBM International Group	4.725%	1/15/08		—		18,863
	—		10,000	IBM International Group	4.725%	1/14/08		—		9,982
	—		25,000	ING (US) Finance	4.820%	2/22/08		—		24,832
	—		20,000	ING (US) Finance	4.730%	1/30/08		—		19,924
	—		22,904	Kitty Hawk Funding Corp	5.030%	3/14/08		—		22,653

TIAA Real Estate Account§Prospectus 155

STATEMENT OF INVESTMENTS	continued
TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007 (Dollar values shown in thousands)

Principal							Value
2008		2007		Issuer	Yield(5)	Maturity Date	2008		2007
$	—	$	20,000	Nestle Capital Corp	4.740%	2/6/08	$	—	$	19,907
	—		20,000	Nestle Capital Corp	5.210%	3/5/08		—		19,834
	—		14,500	Nestle Capital Corp	5.090%	3/11/08		—		14,367
	—		15,300	Paccar Financial Corp	4.500%	2/28/08		—		15,185
	—		10,000	Paccar Financial Corp	4.490%	2/11/08		—		9,947
	—		9,300	Paccar Financial Corp	4.730%	1/14/08		—		9,283
	—		10,000	Park Avenue Receivables Corp	4.650%	3/18/08		—		9,884
	—		19,645	Pfizer Inc	4.410%	5/15/08		—		19,286
	—		28,000	Private Export Funding Corporation	4.640–4.750%	1/30/08		—		27,893
	—		20,000	Private Export Funding Corporation	4.740%	2/5/08		—		19,909
	—		10,000	Private Export Funding Corporation	4.680%	2/11/08		—		9,947
	—		10,000	Private Export Funding Corporation	4.680%	3/3/08		—		9,919
	—		1,500	Private Export Funding Corporation	4.530%	1/31/08		—		1,494
	—		30,000	Procter & Gamble International S.C.	4.740%	2/14/08		—		29,831
	—		17,000	Procter & Gamble International S.C.	4.600%	2/1/08		—		16,931
	—		10,000	Procter & Gamble International S.C.	4.740%	1/16/08		—		9,979
	—		10,000	Procter & Gamble International S.C.	4.750%	1/18/08		—		9,977
	—		10,000	Procter & Gamble International S.C.	4.200%	1/31/08		—		9,961
	—		9,000	Procter & Gamble International S.C.	4.190%	3/14/08		—		8,914
	—		8,000	Procter & Gamble International S.C.	4.350%	3/12/08		—		7,926
	—		4,665	Procter & Gamble International S.C.	4.750%	1/4/08		—		4,663
	50,000		—	Rabobank USA Financial Corp	0.122%	1/5/09		49,999		—
	—		31,573	Ranger Funding Company LLC	5.080–5.580%	1/18/08		—		31,486
	—		12,000	Ranger Funding Company LLC	5.110%	1/10/08		—		11,982
	—		25,000	Royal Bank of Scotland	4.740%	2/8/08		—		24,877
	—		10,000	Shell International Financial	4.470%	3/28/08		—		9,884
	—		25,000	Societe Generale North America, Inc.	4.830%	3/26/08		—		24,718
	—		20,000	Societe Generale North America, Inc.	5.155%	1/10/08		—		19,974
	—		17,420	Societe Generale North America, Inc.	4.640%	4/4/08		—		17,201
	—		15,000	Societe Generale North America, Inc.	4.780%	2/1/08		—		14,940
	25,000		—	Societe Generale North America, Inc.	0.243%	1/13/09		24,997		—
	—		36,000	Swedish Export Credit	4.740%	1/17/08		—		35,920
	—		18,505	Swedish Export Credit	4.720–4.820%	1/14/08		—		18,471
	—		17,800	Swedish Export Credit	4.860%	1/15/08		—		17,765
	—		16,000	Swedish Export Credit	4.370%	3/12/08		—		15,851
	—		10,000	Swedish Export Credit	4.720%	4/9/08		—		9,868
	—		25,000	Toronto-Dominion Holdings USA Inc.	4.710%	2/11/08		—		24,868
	—		10,000	Toronto-Dominion Holdings USA Inc.	5.060%	1/31/08		—		9,961
	—		30,000	Toyota Motor Credit Corp.	4.880%	2/15/08		—		29,827
	—		30,000	Toyota Motor Credit Corp.	4.740%	2/25/08		—		29,787
	—		20,000	Toyota Motor Credit Corp.	4.530%	2/28/08		—		19,850
	—		19,000	Toyota Motor Credit Corp.	4.520%	1/8/08		—		18,980
	8,200		—	Toyota Motor Credit Corp.	0.659%	2/4/09		8,196		—
	22,400		—	Toyota Motor Credit Corp.	0.406%	1/23/09		22,395		—
	—		25,000	UBS Finance, (Delaware) Inc.	4.910%	4/7/08		—		24,676
	—		20,000	UBS Finance, (Delaware) Inc.	5.030%	2/13/08		—		19,889

156 Prospectus§ TIAA Real Estate Account

STATEMENT OF INVESTMENTS	continued
TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007 (Dollar values shown in thousands)

Principal							Value
2008		2007		Issuer	Yield(5)	Maturity Date	2008		2007
$	—	$	17,215	UBS Finance, (Delaware) Inc.	5.000%	2/21/08	$	—	$	17,102
	—		3,970	Unilever Capital Corp	4.230%	1/11/08		—		3,964
	—		20,000	United Parcel Service Inc	4.380%	4/1/08		—		19,758
	—		20,000	United Parcel Service Inc	4.340%	4/28/08		—		19,681
	—		20,000	United Parcel Service Inc	4.340%	4/29/08		—		19,678
	—		30,000	United Parcel Service Inc	4.400%	3/31/08		—		29,640
	—		10,000	United Parcel Service Inc	4.300%	3/18/08		—		9,899
	—		7,831	Variable Funding Capital Corporation	4.640%	4/25/08		—		7,694
	—		30,000	Yorktown Capital, LLC	4.875%	4/15/08		—		29,528
TOTAL COMMERCIAL PAPER(Cost $245,585 and $1,755,528)								245,581		1,755,076
GOVERNMENT AGENCY NOTES—1.99% AND 5.82%
	—		12,840	Fannie Mae Discount Notes	4.285%	3/26/08		—		12,717
	—		16,600	Fannie Mae Discount Notes	4.280%	2/21/08		—		16,505
	—		17,890	Fannie Mae Discount Notes	4.270%	3/28/08		—		17,714
	—		18,990	Fannie Mae Discount Notes	4.230%	2/15/08		—		18,894
	—		20,000	Fannie Mae Discount Notes	4.200%	2/19/08		—		19,890
	—		22,518	Fannie Mae Discount Notes	4.190–4.240%	3/27/08		—		22,299
	—		23,725	Fannie Mae Discount Notes	4.170%	3/5/08				23,554
	—		25,000	Fannie Mae Discount Notes	4.270%	2/22/08		—		24,854
	—		29,045	Fannie Mae Discount Notes	4.190–4.280%	3/20/08		—		28,786
	—		30,000	Fannie Mae Discount Notes	4.220%	4/24/08		—		29,614
	—		30,000	Fannie Mae Discount Notes	4.280%	3/21/08		—		29,729
	—		31,901	Fannie Mae Discount Notes	4.100%	5/28/08		—		31,360
	—		32,465	Fannie Mae Discount Notes	4.330%	1/4/08		—		32,458
	—		41,650	Fannie Mae Discount Notes	4.150–4.180%	4/30/08		—		41,086
	—		44,000	Fannie Mae Discount Notes	4.260%	3/6/08		—		43,678
	14,200		—	Fannie Mae Discount Notes	0.081%	1/30/09		14,200		—
	25,000		—	Fannie Mae Discount Notes	0.030%	1/6/09		25,000		—
	33,400		—	Fannie Mae Discount Notes	0.152%	2/3/09		33,400		—
	11,330		—	Federal Home Loan Bank Discount Notes	0.051%	1/21/09		11,330		—
	18,100		—	Federal Home Loan Bank Discount Notes	0.071%	1/5/09		18,100		—
	50,000		—	Federal Home Loan Bank Discount Notes	0.041%	1/12/09		50,000		—
	100,000		—	Federal Home Loan Bank Discount Notes	0.081%	1/22/09		100,000		—
	—		2,000	Federal Home Loan Banks	4.480%	2/1/08		—		1,993
	—		15,000	Federal Home Loan Banks	4.700%	11/20/08		—		14,992
	—		20,000	Federal Home Loan Banks	4.270%	3/19/08		—		19,824
	—		23,694	Federal Home Loan Banks	4.250%	3/12/08		—		23,505
	—		25,000	Federal Home Loan Banks	4.450%	1/2/08		—		25,000
	—		25,000	Federal Home Loan Banks	4.450%	1/3/08		—		24,997
	—		25,000	Federal Home Loan Banks	4.200%	2/13/08		—		24,880
	—		28,850	Federal Home Loan Banks	4.661%	1/4/08		—		28,844
	—		30,000	Federal Home Loan Banks	4.270%	3/17/08		—		29,743
	—		32,500	Federal Home Loan Banks	4.260%	1/25/08		—		32,419

TIAA Real Estate Account§Prospectus 157

STATEMENT OF INVESTMENTS	continued
TIAA REAL ESTATE ACCOUNT§DECEMBER 31, 2008 AND 2007 (Dollar values shown in thousands)

Principal							Value
2008		2007		Issuer	Yield(5)	Maturity Date	2008		2007
$	—	$	34,945	Federal Home Loan Banks	4.450%	1/7/08	$	—	$	34,926
	—		41,450	Federal Home Loan Banks	4.260–4.900%	1/11/08		—		41,409
	—		43,830	Federal Home Loan Banks	4.300%	1/28/08		—		43,706
	—		77,800	Federal Home Loan Banks	4.280–4.290%	1/16/08		—		77,681
	—		85,900	Federal Home Loan Banks	4.260%	3/24/08		—		85,096
	—		8,500	Freddie Mac Discount Note	4.240%	3/3/08		—		8,441
	—		10,000	Freddie Mac Discount Note	4.320%	2/21/08		—		9,943
	—		10,795	Freddie Mac Discount Note	4.180%	4/25/08		—		10,657
	—		17,925	Freddie Mac Discount Note	4.120%	3/31/08		—		17,738
	—		20,817	Freddie Mac Discount Note	4.175%	4/18/08		—		20,563
	—		22,400	Freddie Mac Discount Note	4.220%	2/14/08		—		22,290
	—		25,487	Freddie Mac Discount Note	4.210%	2/20/08		—		25,344
	—		26,735	Freddie Mac Discount Note	4.145%	4/10/08		—		26,434
	—		30,000	Freddie Mac Discount Note	4.330%	1/24/08		—		29,928
	—		32,470	Freddie Mac Discount Note	4.320%	1/31/08		—		32,367
	14,100		—	Freddie Mac Discount Note	0.203%	1/5/09		14,100		—
TOTAL GOVERNMENT AGENCY NOTES(Cost $266,118 and $1,105,525)								266,130		1,105,858
VARIABLE NOTES—0.00% AND 0.26%
	—		25,000	Wells Fargo Bank	4.600%	1/7/08		—		24,999
	—		25,000	Wells Fargo Bank	4.600%	1/8/08		—		24,999
TOTAL VARIABLE NOTES(Cost $0 and $50,000)								—		49,998
TOTAL OTHER MARKETABLE SECURITIES (Cost $511,703 and $3,371,896)								511,711		3,371,866
TOTAL MARKETABLE SECURITIES(Cost $511,703 and $3,811,050)								511,711		3,798,496

Principal								Value
2008		2007		Borrower	Yield(5)		Maturity Date	2008		2007
MORTGAGE LOAN RECEIVABLE—0.54% AND 0.38%
	75,000		75,000	Klingle Corporation	2.570%	(6)	7/10/11		71,767		72,520
TOTAL MORTGAGE LOAN RECEIVABLE(Cost $75,000 and $75,000)									71,767		72,520
TOTAL INVESTMENTS(Cost $12,948,297 and $15,951,458)								$	13,351,714	$	19,013,601

(1)	The investment has a mortgage loan payable outstanding, as indicated in Note 8.
(2)	The market value reflects the Account’s interest in the joint venture, net of any debt.
(3)	The market value reflects the final settlement due to the Account. The investment was sold on August 24, 2007.
(4)	Located throughout the US.
(5)	Yield represents the annualized yield at the date of purchase.
(6)	Current rate represents the interest rate on this investment at December 31, 2008. At December 31, 2007, the interest rate on this investment was 5.46%.

158 Prospectus§ TIAA 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 statements 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, 2008 and December 31, 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008 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 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, 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.

New York, New York
March 19, 2009

TIAA Real Estate Account§Prospectus 159

CALABASH I, FONTANA, CALIFORNIA
HAVEN DISTRIBUTION CENTER,
RANCHO CUCAMONGA, 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 Calabash I, Fontana, California and Haven Distribution Center, Rancho Cucamonga, California (the Properties), as described in Note A, for the year ended December 31, 2007. This financial statement is the responsibility of the Properties’ 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 statements are 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 Properties’ internal control over financial reporting. Accordingly we express no such opinion. 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.

          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 A, is not intended to be a complete presentation of the Properties’ 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 Properties for the year ended December 31, 2007, in conformity with accounting principles generally accepted in the United States of America.

Aarons Grant & Habif, LLC
April 17, 2008

160 Prospectus§ TIAA Real Estate Account

CALABASH I, FONTANA, CALIFORNIA
HAVEN DISTRIBUTION CENTER, RANCHO CUCAMONGA, CALIFORNIA

STATEMENT OF REVENUES AND CERTAIN EXPENSES

	For the Year Ended December 31, 2007 (Audited)		For the Two Months Ended February 29, 2008 (Unaudited)
REVENUES
Rental income	$	5,406,803	$	901,134
Recoveries		442,721		76,216
Total Revenues		5,849,524		977,350
CERTAIN EXPENSES
Insurance		735,241		79,039
Management fees		73,557		11,710
Operating expenses		5,300		5,300
Repairs and maintenance		21,515		1,626
Total certain expenses		835,613		97,675
Revenues in excess of certain expenses	$	5,013,911	$	879,675

See Independent Auditors’ Report

Note A—Organization and Basis of Presentation

          The statement of revenues and certain expenses (the financial statement) for the year ended December 31, 2007 and the two months ended February 29, 2008, relate to the operations of Calabash I, Fontana, California and Haven Distribution Center, Rancho Cucamonga, California (the Properties). The properties in Fontana, California and Rancho Cucamonga, California contain 528,440 square feet and 830,485 square feet of rentable commercial space, respectively, and were 100% leased at February 29, 2008.

          The accompanying financial statement is presented in conformity with Rule 3-14 of Securities and Exchange Commission Regulation S-X. Accordingly, the financial statement is not representative of the 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 Properties, have been excluded. Expenses excluded consist of interest, depreciation and amortization and certain other expenses not directly related to the future operations of the Properties.

          The statement of revenue and certain expenses for the two months ended February 29, 2008 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 Account§Prospectus 161

Note B—Summary of Significant Accounting Policies

          Use of estimates

          The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect various amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

          Revenue recognition

          Revenue from operating leases, which includes scheduled increases over the lease terms, is recognized on a straight-line basis.

Note C—Future Rent Payments

          Space in the Properties is rented to tenants under non-cancelable operating leases. Approximate minimum future rents required under the leases in effect at December 31, 2007 are as follows:

2007	$	5,458,339
2008		5,458,339
2009		3,608,799
2010		3,282,077
2011		3,757,114
2012 and Thereafter		14,715,365
	$	36,280,033

Note D—Concentrations

          The Properties earned 100% of rent revenue from two tenants during the year ended December 31, 2007.

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TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

CONDENSED STATUTORY-BASIS FINANCIAL STATEMENTS INFORMATION

          (The following condensed statutory-basis financial statements information has been derived from statutory-basis financial statements which are available upon request)

TIAA CONDENSED STATUTORY-BASIS BALANCE SHEETS

	(Unaudited) December 31,
(In millions)	2008		2007
ADMITTED ASSETS
Bonds	$	135,680	$	131,859
Mortgages		19,668		20,443
Real estate		1,645		1,672
Preferred stocks		3,216		4,375
Common stocks		3,017		4,190
Other long-term investments		10,675		10,293
Cash, cash equivalents and short-term investments		5,553		1,603
Investment income due and accrued		1,522		1,519
Separate account assets		12,473		19,021
Net deferred federal income tax asset		1,381		1,076
Other assets		407		358
TOTAL ADMITTED ASSETS	$	195,237	$	196,409
LIABILITIES, CAPITAL AND CONTINGENCY RESERVES
LIABILITIES
Reserves for life and health insurance, annuities and deposit-type contracts	$	159,649	$	147,622
Dividends due to policyholders		2,341		2,419
Federal income taxes		10		1,207
Asset valuation reserve		332		4,436
Interest maintenance reserve		502		603
Separate account liabilities		12,319		19,021
Commercial paper		—		952
Other liabilities		2,330		2,304
TOTAL LIABILITIES		177,483		178,564
CAPITAL AND CONTINGENCY RESERVES
Capital (2,500 shares of $1,000 par value common stock issued and outstanding and $550,000 paid-in capital)		3		3
Contingency Reserves:
For investment losses, annuity and insurance mortality, and other risks		17,751		17,842
TOTAL CAPITAL AND CONTINGENCY RESERVES		17,754		17,845
TOTAL LIABILITIES, CAPITAL AND CONTINGENCY RESERVES	$	195,237	$	196,409

TIAA Real Estate Account § Prospectus 163

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

          (The following condensed statutory-basis financial statements information has been derived from statutory-basis financial statements which are available upon request)

TIAA CONDENSED STATUTORY-BASIS STATEMENTS OF OPERATIONS

	(Unaudited) For the Years Ended December 31,
(In millions)	2008			2007
REVENUES
Insurance and annuity premiums and other considerations	$	14,827		$	10,420
Annuity dividend additions		2,725			2,495
Net investment income		10,559			10,828
Other revenue		161			159
TOTAL REVENUES	$	28,272		$	23,902
BENEFITS AND EXPENSES
Policy and contract benefits	$	13,625		$	10,133
Dividends to policyholders		4,574			4,578
Increase in policy and contract reserves		11,900			4,820
Net operating expenses		831			730
Net transfers (from) to separate accounts		(4,229	)		1,511
Other benefits and expenses		141			198
TOTAL BENEFITS AND EXPENSES	$	26,842		$	21,970
Income before federal income taxes and net realized capital (losses) gains	$	1,430		$	1,932
Federal income tax (benefit) expense		(45	)		348
Net realized capital (losses) gains less capital gains taxes, after transfers to interest maintenance reserve		(4,451	)		(137	)
NET (LOSS) INCOME	$	(2,976	)	$	1,447

BASIS OF PRESENTATION:

          The accompanying financial statements have been prepared on the basis of statutory accounting principles prescribed or permitted by the New York State Insurance Department (the “Department”), a comprehensive basis of accounting that differs from accounting principles generally accepted in the United States (“GAAP”). The Department requires insurance companies domiciled in the State of New York to prepare their statutory-basis financial statements in accordance with the National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”), subject to any deviation prescribed or permitted by the Department (“New York SAP”).

          The preparation of the statutory-basis financial statements of Teachers Insurance and Annuity Association of America (“TIAA” or the “Company”) requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses at the date of the financial statements. Actual results may differ from those estimates. The following is a summary of the significant accounting policies followed by the Company:

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TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

          Investments: Publicly traded securities are accounted for as of the date the investments are purchased or sold (trade date). Other investments are recorded on the settlement date. Realized capital gains and losses on investment transactions are accounted for under the specific identification method. A realized loss is recorded when an impairment is considered to be other-than-temporary. An impairment in an investment is considered to have occurred if an event or change in circumstance indicates that the carrying value of the asset may not be recoverable or the receipt of contractual payments of principal and interest may not occur when scheduled. When an impairment has been determined to have occurred, the investment is written down to fair value and a realized loss is recorded. Management considers available evidence to evaluate the potential impairment of its investments.

          Short-Term Investments: Short-term investments (debt securities with maturities of one year or less at the time of acquisition) that are not impaired are stated at amortized cost using the interest method. Short-term investments impaired are stated at the lower of amortized cost or market value.

          Cash Equivalents: Cash equivalents are short-term, highly liquid investments with original maturities of three months or less at date of purchase and are stated at amortized cost.

          Bonds: Bonds are stated at amortized cost using the interest method. Bonds that are held for sale or NAIC designation 6 and 6Z are valued at the lower of amortized cost or fair value. For other than temporary impairment, the cost basis of the bond is written down to its fair value and the amount of the write down is recognized as a realized loss.

          Loan-Backed Securities and Structured Securities: Included within bonds are loan-backed securities. Loan-backed securities and structured securities not in default, are stated at amortized cost. The retrospective approach is used to determine the carrying amount of loan-backed and structured securities. Estimated future cash flows and expected repayment periods are used in calculating amortization for loan-backed and structured securities. The prospective approach is used to determine the carrying amount of interest only securities, securities for which an other than temporary impairment has been recognized, or securities whose expected future cash flows are lower than the expected cash flows estimated at the time of the acquisition. Loan-backed securities and structured securities held for sale are stated at the lower of amortized cost or fair value. Loan-backed securities and structured securities in default are valued at the lower of amortized cost or fair value. Prepayment assumption for loaned-backed securities and structured securities are obtained from external data services or internal estimates.

          Common Stock: Unaffiliated common stocks are stated at fair value.

          Preferred Stock: Preferred stocks are stated at amortized cost unless they have an NAIC rating designation of 4, 5 or 6 which are stated at the lower of amortized cost or fair value.

TIAA Real Estate Account § Prospectus 165

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

          Mortgages: Mortgages are stated at amortized cost, net of valuation allowances, except that purchase money mortgages are stated at the lower of amortized cost or ninety percent of appraised value. Mortgages held for sale are stated at the lower of amortized cost or fair value. A mortgage is evaluated for impairment when it is probable that the receipt of contractual payments of principal and interest may not occur when scheduled. If the impairment is considered to be temporary, a valuation reserve is established for the excess of the carrying value of the mortgage over its estimated fair value. Changes in valuation reserves for mortgages are included in net unrealized capital gains/losses on investments. When an event occurs resulting in an impairment that is other-than-temporary, a direct write-down is recorded as a realized loss and a new cost basis is established.

          Real Estate: Real estate occupied by the Company and real estate held for the production of income is carried at depreciated cost, less encumbrances. Real estate held for sale is carried at the lower of depreciated cost or fair value, less encumbrances and estimated costs to sell. The Company utilizes the straight-line method of depreciation on real estate. Depreciation is generally computed over a forty-year period. A real estate property may be considered impaired when events or circumstances indicate that the carrying value may not be recoverable. When TIAA determines that an investment in real estate is impaired, a direct write-down is made to reduce the carrying value of the property to its estimated fair value based on an external appraisal, net of encumbrances and a realized loss is recorded.

          Wholly-Owned Subsidiaries: Investments in wholly-owned subsidiaries are stated at the value of their underlying net assets as follows: (1) domestic insurance subsidiaries are stated at the value of their underlying statutory surplus; (2) non-insurance subsidiaries are stated at the value of their underlying audited GAAP equity. Dividends and distributions from subsidiaries are recorded in investment income and changes in the equity of subsidiaries are recorded directly to surplus as unrealized gains or losses.

          Limited Partnerships and Limited Liability Companies: Investments in limited partnerships and limited liability companies are carried at the Company’s percentage of the underlying GAAP equity of the respective entity’s audited financial statements. An unrealized loss is deemed to be other-than-temporary when there is limited ability to recover the loss. A realized loss is recorded for other-than-temporary impairments. Contract Loans: Contract loans are stated at outstanding principal balances.

          Separate Accounts: Separate Accounts are established in conformity with insurance laws and are segregated from the Company’s general account and are maintained for the benefit of the separate account contract holders.

          Foreign Currency Transactions and Translation: Investments denominated in foreign currencies and foreign currency contracts are valued in U.S. dollars, based on exchange rates at the end of the period. Investment transactions in

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TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

foreign currencies are recorded at the exchange rates prevailing on the respective transaction dates. All other asset and liability accounts that are denominated in foreign currencies are adjusted to reflect exchange rates at the end of the period. Realized and unrealized gains and losses due to foreign exchange transactions and translation adjustments, are not separately reported but are collectively included in realized and unrealized capital gains and losses, respectively.

          Derivative Instruments: The Company has filed a Derivatives Use Plan with the Department. This plan details TIAA’s derivative policy objectives, strategies, controls and any restrictions placed on various derivative types. The plan also specifies the procedures and systems that TIAA has established to evaluate, monitor and report on the derivative portfolio in terms of valuation, hedge effectiveness and counterparty credit quality. The Company uses derivative instruments for hedging, income generation, and asset replication purposes. Derivatives used by the Company include foreign currency, interest rate and credit default swaps, foreign currency forwards and interest rate cap contracts.

          Non-Admitted Assets: For statutory accounting purposes only, certain assets are designated as non-admitted assets (principally furniture, equipment, leasehold improvements, prepaid expenses, and a portion of deferred federal income tax assets (“DFIT”)). Investment-related non-admitted assets totaled $305 million and $280 million at December 31, 2008 and 2007, respectively. The non-admitted portion of the DFIT asset was $14,671 million and $1,967 million at December 31, 2008 and 2007, respectively. The other non-admitted assets were $318 million and $340 million at December 31, 2008 and 2007, respectively. Changes in non-admitted assets are charged or credited directly to contingency reserves.

          Premium Revenue: Premiums are recognized as income over the premium-paying period of the related policies. Annuity considerations are recognized as revenue when received. Expenses incurred in connection with acquiring new insurance business are charged to operations as incurred.

          Policy and Contract Reserves: TIAA offers a range of group and individual annuities and individual life policies. Policy and contract reserves for such products are determined in accordance with standard valuation methods approved by the Department and are computed in accordance with standard actuarial formulae. The reserves established utilize assumptions for interest mortality and other risks insured. Such reserves are designed to be sufficient for contractual benefits guaranteed under policy and contract provisions.

          Reserves for deposit-type funds, which do not contain any life contingencies, are equal to deposits received and interest credited to the benefit of contract holders, less withdrawals that represent a return to the contract holder.

          Dividends Declared for the Following Year: Dividends on insurance policies and pension annuity contracts in the payout phase are declared by the TIAA Board of Trustees (the “Board”) in the fourth quarter of each year, and such dividends are credited to policyholders in the following calendar year. Dividends

TIAA Real Estate Account § Prospectus 167

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

on pension annuity contracts in the accumulation phase are declared by the Board in February of each year, and such dividends on the various existing vintages of pension annuity contracts in the accumulation phase are credited to policyholders during the ensuing twelve month period beginning March 1.

          Capitalization Policy: The capitalization threshold was lowered in 2007 to more closely align with industry practices, improve matching of investment benefits and operating expenses. Factors considered in developing the capitalization policy included dollar amount of capital expenditures, expected useful life of the asset and the impact of depreciation, process and benefit improvements and the current cost of capitalizable items as it relates to future purchase cost of similar items.

ADDITIONAL ASSET INFORMATION

          (The following condensed statutory-basis financial statements information has been derived from statutory-basis financial statements which are available upon request)

          Mortgage Diversification: At December 31, the carrying values of mortgage investments were diversified by property type and geographic region as follows:

Property Type	2008		2007
Shopping centers	36.0	%	36.6	%
Office buildings	32.1		31.4
Industrial buildings	17.3		16.4
Apartments	7.3		6.2
Mixed-use projects	3.4		5.3
Hotel	2.6		3.5
Other	0.7		0.6
Land	0.6		—
TOTAL	100.0	%	100.0	%
Geographic Region	2008		2007
Pacific	28.4	%	28.7	%
South Atlantic	23.5		22.8
North Central	13.1		13.5
Middle Atlantic	12.8		11.6
South Central	11.4		10.9
Mountain	4.0		4.4
New England	3.8		4.2
Other	3.0		3.9
TOTAL	100.0	%	100.0	%

          At December 31, 2008 and 2007, approximately 23.7% and 23.2% of the mortgage portfolio, respectively, was invested in California and was included in the Pacific region shown above.

168 Prospectus § TIAA Real Estate Account

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

          The gross unrealized losses and estimated fair values for securities by the length of time that individual securities had been in a continuous unrealized loss position are shown in the table below (in millions):

	Cost*		Gross Unrealized Loss			Estimated Fair Value
DECEMBER 31, 2008
Less than twelve months:
Bonds	$	37,063	$	(4,862	)	$	32,201
Preferred Stocks		1,500		(517	)		983
Common Stocks		2,829		(342	)		2,487
TOTAL LESS THAN TWELVE MONTHS	$	41,392	$	(5,721	)	$	35,671
TWELVE MONTHS OR MORE:
Bonds	$	43,792	$	(16,147	)	$	27,645
Preferred Stocks		1,333		(573	)		760
Common Stocks		—		—			—
TOTAL TWELVE MONTHS OR MORE		45,125		(16,720	)		28,405
TOTAL—ALL BONDS, PREFERRED & COMMON STOCKS	$	86,517	$	(22,441	)	$	64,076

* Amortized cost for bonds and original cost for stocks net of cumulative reported other-than-temporary impairments.

	Cost*		Gross Unrealized Loss			Estimated Fair Value
DECEMBER 31, 2007
Less than twelve months:
Bonds	$	34,629	$	(1,887	)	$	32,742
Preferred Stocks		1,801		(144	)		1,657
Common Stocks		128		(15	)		113
TOTAL LESS THAN TWELVE MONTHS	$	36,558	$	(2,046	)	$	34,512
TWELVE MONTHS OR MORE:
Bonds	$	29,431	$	(1,442	)	$	27,989
Preferred Stocks		1,457		(135	)		1,322
Common Stocks		10		—			10
TOTAL TWELVE MONTHS OR MORE		30,898		(1,577	)		29,321
TOTAL—ALL BONDS, PREFERRED & COMMON STOCKS	$	67,456	$	(3,623	)	$	63,833

* Amortized cost for bonds and original cost for stocks net of cumulative recorded other-than-temporary impairments.

TIAA Real Estate Account § Prospectus 169

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Net Investment Income:The components of net investment income for the years ended December 31 were as follows (in millions):

		2008			2007
Bonds	$	8,232		$	7,901
Mortgages		1,290			1,481
Real estate		285			246
Stocks		347			512
Other long-term investments		692			918
Cash, cash equivalents and short-term investments		95			90
Other		9			5
Total gross investment income		10,950			11,153
Less securities lending expenses		—			—
Less investment expenses		(451	)		(448	)
Net investment income before amortization of net IMR gains		10,499			10,705
Plus amortization of net IMR gains		60			123
NET INVESTMENT INCOME	$	10,559		$	10,828

          Realized Capital Gains and Losses:The net realized capital gains (losses) on sales, redemptions and write-downs due to other than temporary impairments for the years ended December 31 were as follows (in millions):

		2008			2007
Bonds	$	(2,822	)	$	(74	)
Mortgages		(181	)		7
Real estate		20			2
Stocks		(929	)		77
Other long-term investments		(546	)		56
Cash, cash equivalents and short-term investments		(33	)		5
Total before capital gains taxes and transfers to the IMR		(4,491	)		73
Transfers to IMR		41			(44	)
Capital gains taxes		—			(166	)
Net realized capital (losses) gains less capital gains taxes, after transfers to the IMR	$	(4,450	)	$	(137	)

          Write-downs of investments resulting from other-than-temporary impairments (“OTTI”), included in the preceding table, were as follows for the years ended December 31 (in millions):

		2008		2007
Other-than-temporary impairments:
Bonds	$	2,467	$	339
Mortgages		211		49
Real estate		23		—
Stocks		890		100
Other long-term investments		552		42
TOTAL	$	4,143	$	530

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TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

          Unrealized Capital Gains and Losses: The net changes in unrealized capital gains (losses) on investments, resulting in a net increase (decrease) in the valuation of investments for the years ended December 31 were as follows (in millions):

		2008			2007
Bonds	$	(483	)	$	299
Mortgages		(172	)		95
Stocks		(633	)		92
Other long-term investments		(1,474	)		379
Cash, cash equivalents and short-term investments		5			—
TOTAL	$	(2,757	)	$	865

          Withdrawal characteristics of annuity actuarial reserves and deposit-type contracts at December 31 are as follows (in millions):

	2008					2007
	Amount		Percent			Amount		Percent
Subject to Discretionary Withdrawal
At fair value	$	12,127		7.1	%	$	18,752		11.3	%
At book value without adjustment		32,232		18.9	%		25,858		15.6	%
Not subject to discretionary withdrawal		126,465		74.0	%		120,898		73.1	%
TOTAL (GROSS)		170,824		100.0	%		165,508		100.0	%
Reinsurance ceded		—					—
TOTAL (NET)	$	170,824				$	165,508

          Annuity reserves and deposit-type contact funds for the year ended December 31 are as follows (in millions):

		2008		2007
GENERAL ACCOUNT:
Total annuities (excluding supplementary contracts with life)	$	157,965	$	146,066
Supplementary contracts with life contingencies		231		235
Deposit-type contracts		500		455
Miscellaneous reserves, GMDB		1		—
Subtotal		158,697		146,756
SEPARATE ACCOUNTS:
Annuities		12,127		18,752
TOTAL	$	170,824	$	165,508

FEDERAL INCOME TAXES:

          By charter, TIAA is a Stock Life Insurance Company that operates on a non-profit basis, and through December 31, 1997 was exempt from federal income taxation under the Internal Revenue Code. Any non-pension income, however, was subject to federal income taxation as unrelated business income. Effective January 1, 1998, as a result of federal legislation, TIAA is no longer exempt from federal income taxation and is taxed as a stock life insurance company.

TIAA Real Estate Account § Prospectus 171

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

          Beginning with 1998, TIAA has filed a consolidated federal income tax return with its includable affiliates (the “consolidating companies”). The consolidating companies have a tax-sharing agreement that follows the current reimbursement method, whereby members of the group will generally be reimbursed for their losses on a pro-rata basis by other members of the group to the extent that they have taxable income, subject to limitations imposed under the Code. Amounts due to (receivable from) TIAA’s subsidiaries for federal income taxes were $10.3 million and $(43.0) million at December 31, 2008 and 2007, respectively.

          In April of 2004, the IRS completed its audit of the 1998 and 1999 tax returns, the first years in which TIAA’s entire business operations were subject to federal income taxation, and presented TIAA with a Revenue Agent Report asserting certain adjustments to TIAA’s taxable income that would have resulted in an additional tax due of $1.1 billion for the 1998 and 1999 tax years. These adjustments would have disallowed the deductions for certain intangible assets and would adjust certain TIAA tax-basis annuity reserves. In April of 2006, the Internal Revenue Service (“IRS”) completed its audit of the 2000, 2001 and 2002 tax returns and presented a Revenue Agent Report asserting certain adjustments to TIAA’s taxable income that would have resulted in additional tax due of $391 million for the 2000, 2001 and 2002 tax years. These adjustments were the same issues as those raised in 1998 and 1999.

          On September 12, 2008, TIAA executed the second and final settlement with the IRS Appeals Division resolving all remaining issues for tax years 1998-2002. The primary issue before the IRS Appeals Division was the deduction of losses claimed with regard to certain intangible assets. The IRS conceded that $4.8 billion was deductible for losses related to the termination of pension contracts in force on January 1, 1998, the date that TIAA lost its federal tax exemption. The IRS also allowed losses of $9.4 million claimed for the abandonment of developed software. Additional losses claimed by TIAA of $1.9 billion were disallowed as part of the settlement.

          As a result of this settlement TIAA has reduced its December 31, 2007 contingent tax reserve of $1.1 billion to zero. Federal capital gains tax accrued as of December 31, 2007 of $166.1 million has been reduced to zero as a result of the offset of current year net capital losses which may be offset with net capital gains. These adjustments have been reflected in the Summary of Changes in Capital and Contingency Reserves for the twelve months ended December 31, 2008. Additionally, TIAA recorded a gross deferred tax asset as of December 31, 2008 of $8.8 billion related to the expected future deduction of losses with regard to intangible assets recognized as a result of the 2008 IRS settlement. Substantially all of such deferred tax assets are non–admitted in accordance with statutory accounting principles.

          On April 5, 2007, TIAA executed a partial first settlement with the IRS Appeals Division resolving the disputed adjustments to tax-basis annuity reserves for the tax years 1998-2002. TIAA agreed to a permanent adjustment of $273.0 million, which reduced the tax-basis annuity reserves for TIAA contracts in force at the

172 Prospectus § TIAA Real Estate Account

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

beginning of 1998, TIAA’s first year as a taxable entity. In addition, a temporary adjustment of $1.7 billion was applied to TIAA’s 1998 reserve deductions. This adjustment related to reserves established for new rights added to TIAA payout annuity contracts enabling contract-holders to transfer annuity balances into other investment vehicles in accordance with appropriate terms and conditions in the annuity contract. This $1.7 billion adjustment will be recovered by TIAA through deductions over a 20 year period which began with its 2006 tax return. With one exception that is not material, the IRS agreed to accept all deductions related to the annuity reserves as claimed by TIAA on its 1999-2002 tax returns. With respect to deductions for years subsequent to 2004, no binding agreement has been reached with the IRS for reserves associated with the annuity transferability option, since these years were not before IRS Appeals Division. Management believes, however, that it is reasonable to expect that deductions related to subsequent years will not be subject to adjustment by the IRS in future audits, and has not provided for any related contingency reserve. As a result of this settlement, TIAA in the year ended December 31, 2006, reduced its previously established contingent reserve which adjusted statutory surplus by $1.0 billion.

          At December 31, 2008, TIAA’s gross and net deferred tax assets reflect the two IRS settlements as described above. The change of $13.4 billion in the gross deferred tax asset and $305.0 million in the net admitted deferred tax asset are primarily due to the inclusion of future deductions related to the intangible asset and the net operating loss (“NOL”) carry forwards resulting from the settlement, which were not included in the December 31, 2007 gross and net deferred tax assets, based on an interpretation concurred by the New York Insurance Department in 2001. In 2008, the Department agreed with a change in interpretation and recognition of the gross non-admitted tax asset.

          For the years 2003 and 2004 Federal income tax returns for the consolidated companies have been audited by the IRS. In November 2008, the IRS completed its audit and presented the group with a Revenue Agents Report that had no unagreed adjustments. The statute of limitations for the 2005, 2006, and 2007 federal income tax returns are open until September 2009, September 2010, and September 2011, respectively.

          In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 establishes a minimum threshold for financial statement recognition of the benefits of positions taken in tax returns, and requires certain expanded disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006 and is to be applied to all open years as of the effective date. Management has evaluated TIAA’s tax position under the principles of FIN 48, and has concluded that TIAA has not recorded any uncertain tax benefits as of December 31, 2008. TIAA had a contingent tax reserve of $1.1 billion as of December 31, 2007 and was reduced to zero in the current year as discussed above.

TIAA Real Estate Account § Prospectus 173

APPENDIX A — MANAGEMENT OF TIAA

The Real Estate Account has no officers or directors. The Trustees and certain principal executive officers of TIAA as of the date hereof, their dates of birth, and their principal occupations during the past five years, are as follows:

TRUSTEES

Name & Date of Birth (DOB)	Principal Occupations During Past 5 Years
Ronald L. Thompson Chairman of the TIAA Board of Trustees DOB: 6/17/49	Former Chairman and Chief Executive Officer, Midwest Stamping and Manufacturing Company from 1993 through 2005. Director, Washington University in St. Louis.
Elizabeth E. Bailey DOB: 11/26/38	John C. Hower Professor of Public Policy and Management, Wharton School, University of Pennsylvania. Director, Altria Group, Inc., Director, National Bureau of Economic Research; Honorary Trustee, the Brookings Institution.
Glenn A. Britt DOB: 3/6/49	Chief Executive Officer, Time Warner Cable, since 2001, where he has held several positions since 1972. Director, National Cable & Telecommunications Association, Director of Walter Kaitz Foundation, Cable Labs and Xerox Corporation. Trustee, Polytechnic University.
Robert C. Clark DOB: 2/26/44	Harvard University Distinguished Service Professor and Austin Wakeman Scott Professor of Law, Harvard Law School, Harvard University. Formerly Dean and Royall Professor of Law, Harvard Law School from 1989 to 2003. Director, Time Warner, Inc. and Omnicom Group.
Edward M. Hundert, M.D. DOB: 10/1/56	Senior lecturer in Medical Ethics, Harvard Medical School. President, Case Western Reserve University from 2002 to 2006. Formerly, Dean, 2000-2002, University of Rochester School of Medicine and Dentistry, Professor of Medical Humanities and Psychiatry, 1997 to 2002. Board Member, Rock and Roll Hall of Fame.
Marjorie Fine Knowles DOB: 7/4/39	Professor of Law, Georgia State University College of Law.
Donald K. Peterson DOB: 8/13/49	Former Chairman and Chief Executive Officer, Avaya Inc. from 2002 to 2006 and President and Chief Executive Officer from 2000 to 2001. Formerly, Executive Vice President and Chief Financial Officer, Lucent Technologies. Chairman, Board of Trustees, Worcester Polytechnic Institute. Director, Sanford C. Bernstein Fund Inc., Emerj Inc. and Knewco, Inc.
Sidney A. Ribeau DOB: 12/3/47	President, Howard University. Formerly, President, Bowling Green State University, 1995-2008. Director, The Andersons, Convergys and Worthington Industries.
Dorothy K. Robinson DOB: 2/18/51	Vice President and General Counsel, Yale University since 2000. Trustee, Newark Public Radio Inc., Youth Rights Media, Inc. and Friends of New Haven Legal Assistance.
David L. Shedlarz DOB: 4/17/48	Former Vice Chairman of Pfizer Inc. from 2006 to 2007, Executive Vice President from 1999 to 2005 and Chief Financial Officer from 1995 to 2005. Director, Pitney Bowes Inc. and the Hershey Corporation. Chairman and Director, Multiple Sclerosis Society of New York City Chapter.
David F. Swensen DOB: 1/26/54	Chief Investment Officer, Yale University, and adjunct professor of investment strategy. Member, Brookings Institution.

174 Prospectus§ TIAA Real Estate Account

TRUSTEES (continued)

Name & Date of Birth	Principal Occupations During Past 5 Years
Marta Tienda DOB: 8/10/50	Maurice P. During ‘22 Professor in Demographic Studies, Princeton University. Director, Office of Population Research, Princeton University, 1998-2002. Trustee, Corporation of Brown University, Sloan Foundation and Jacobs Foundation. Member of Visiting Committee, Harvard University Kennedy School of Government.
Rosalie J. Wolf DOB: 5/8/41	Managing Partner, Botanica Capital Partners LLC. Formerly, Senior Advisor and Managing Director, Offit Hall Capital Management LLC and its predecessor company, Laurel Management Company LLC from 2001 to 2003; formerly, Treasurer and Chief Investment Officer, The Rockefeller Foundation. Director, North European Oil Royalty Trust; Chairman, Sanford C. Bernstein Fund, Inc.

OFFICER-TRUSTEES

Name & Date of Birth

Principal Occupations During Past 5 Years

Roger W. Ferguson, Jr. DOB: 10/28/51

President and Chief Executive Officer of TIAA since April 2008, and President and Chief Executive Officer of CREF since April 2008. Formerly, Chairman of Swiss Re America Holding Corporation and Head of Financial Services and Member of the Executive Committee, Swiss Re from 2006 to 2008; Vice Chairman and member of the Board of the U.S. Federal Reserve from 1999 to 2006 and a member of its Board of Governors from 1997 to 1999; and Partner and Associate, McKinsey & Company from 1984 to 1997. Currently a member of the Board of Overseers of Harvard University, a member of the Board of Trustees of the Institute for Advance Study, a member of the Council on Foreign Relations and the Group of Thirty.

OFFICERS

Name & Date of Birth	Principal Occupations During Past 5 Years
Georganne C. Proctor DOB: 10/25/56	Executive Vice President and Chief Financial Officer, TIAA and CREF since 2006. Executive Vice President of Finance for Golden West Financial Corporation, the holding company of World Savings Bank, from 2003 through 2005. From 1994 through 2002, served as Senior Vice President, Chief Financial Officer and a member of the board of directors of Bechtel Group, Inc. Director of Redwood Trust, Inc. and Kaiser Aluminum Corporation.
Scott C. Evans DOB: 5/11/59	Executive Vice President of TIAA since 1999 and Head of Asset Management since 2006 of TIAA and CREF, the TIAA-CREF Mutual Funds, the TIAA-CREF Institutional Mutual Funds, the TIAA-CREF Life Funds and TIAA Separate Account VA-1 (collectively, the “TIAA-CREF Funds”). Also served as Chief Investment Officer of TIAA between 2004 and 2006 and the TIAA-CREF Funds between 2003 and 2006.
Mary (Maliz) E. Beams DOB: 3/29/56	Executive Vice President of TIAA and the TIAA-CREF Funds since 2007. President and Chief Executive Officer, TIAA-CREF Individual & Institutional Services, LLC since 2007. Senior Managing Director and Head of Wealth Management Group of TIAA since 2004. Partner, Spyglass Investments from 2002 to 2003.
Jorge Gutierrez DOB: 11/26/61	Treasurer, TIAA since September, 2008. Assistant Treasurer, TIAA from 2004 to 2008.
William J. Mostyn III DOB: 1/18/48	Vice President and Corporate Secretary of TIAA and the TIAA-CREF Funds since April 2008; Deputy General Counsel and Corporate Secretary of Bank of America Corporation from 2005 to 2007; Deputy General Counsel, Secretary and Corporate Governance Officer of The Gillette Company from 1974 to 2005.

TIAA Real Estate Account§Prospectus 175

PORTFOLIO MANAGEMENT TEAM

Name & Date of Birth	Principal Occupations During Past 5 Years
Margaret A. Brandwein DOB: 11/26/46	Managing Director and Portfolio Manager, TIAA Real Estate Account since 2004. From 2001 to 2004, Head of Commercial Mortgages — West Coast for TIAA.
Thomas C. Garbutt DOB: 10/12/58	Managing Director and Head of Global Real Estate Equity Division, TIAA.
Philip J. McAndrews DOB: 12/13/58	Managing Director and Head of Real Estate Portfolio Management, TIAA-CREF Global Real Estate since 2005. Between 2003 and 2005, portfolio manager for the Real Estate Account. Between 1997 and 2003, Head of the Real Estate Acquisitions and Joint Ventures group for TIAA.

APPENDIX B — SPECIAL TERMS

Accumulation: The total value of your accumulation units in the Real Estate Account.

Accumulation Period: The period that begins with your first premium and continues until the entire accumulation has been applied to purchase annuity income, transferred from the Account, or paid to you or a beneficiary.

Accumulation Unit: A share of participation in the Real Estate Account for someone in the accumulation period. The Account’s accumulation unit value changes daily.

Annuity Unit: A measure used to calculate the amount of annuity payments due a participant.

Beneficiary: Any person or institution named to receive benefits if you die during the accumulation period or if you (and your annuity partner, if you have one) die before the guaranteed period of your annuity ends.

Business Day: Any day the New York Stock Exchange (NYSE) is open for trading. A business day ends at 4 p.m. Eastern time, or when trading closes on the NYSE, if earlier.

Calendar Day: Any day of the year. Calendar days end at the same time as business days.

Commuted Value: The present value of annuity payments due under an income option or method of payment not based on life contingencies. Present value is adjusted for investment gains or losses since the annuity unit value was last calculated.

Eligible Institution: A nonprofit institution, including any governmental institution, organized in the United States.

176 Prospectus§ TIAA Real Estate Account

ERISA: The Employee Retirement Income Security Act of 1974, as amended.

General Account: All of TIAA’s assets other than those allocated to the Real Estate Account or to other existing or future TIAA separate accounts.

Good Order: Actual receipt of an order along with all information and supporting legal documentation necessary to effect the transaction. This information and documentation generally includes your complete application and any other information or supporting documentation we may require. 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 either in general or with respect to a particular plan, contract or transaction.

Income Change Method: The method under which you choose to have your annuity payments revalued. Under the annual income change method, your payments are revalued once each year. Under the monthly income change method, your payments are revalued every month.

Separate Account: An investment account legally separated from the general assets of TIAA, whose income and investment gains and losses are credited to or charged against its own assets, without regard to TIAA’s other income, gains or losses.

Valuation Day: Any day the NYSE is open for trading, as well as, for certain contracts, the last calendar day of each month. Valuation days end as of the close of all U.S. national exchanges where securities or other investments of the Account are principally traded. Valuation days that aren’t business days will end at 4 p.m. Eastern Time.

Valuation Period: The time from the end of one valuation day to the end of the next.

TIAA Real Estate Account§Prospectus 177

PART II

INFORMATION NOT REQUIRED IN A PROSPECTUS

Item 13. Other Expenses of Issuance and Distribution.

SEC Registration Fees	$	279,000
Costs of printing and engraving		600,000*
Legal fees		50,000*
Accounting fees		30,000*
Blue Sky Registration Fees		5,000*
Miscellaneous		36,000*
Total	$	1,000,000*

* Approximate

Item 14. Indemnification of Directors and Officers.

          Trustees, officers, and employees of TIAA may be indemnified against liabilities and expenses incurred in such capacity pursuant to Article Six of TIAA’s bylaws (see Exhibit 3(B)). Article Six provides that, to the extent permitted by law, TIAA will indemnify any person made or threatened to be made a party to any action, suit or proceeding by reason of the fact that such person is or was a trustee, officer, or employee of TIAA or, while a trustee, officer, or employee of TIAA, served any other organization in any capacity at TIAA’s request. To the extent permitted by law, such indemnification could include judgments, fines, amounts paid in settlement, and expenses, including attorney’s fees. TIAA has in effect an insurance policy that will indemnify its trustees, officers, and employees for liabilities arising from certain forms of conduct.

          Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to trustees, officers, or employees of TIAA, pursuant to the foregoing provision or otherwise, TIAA has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in that Act and is therefore unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a trustee, officer, or employee in the successful defense of any action, suit or proceeding) is asserted by a trustee, officer, or employee in connection with the securities being registered, TIAA will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in that Act and will be governed by the final adjudication of such issue.

Item 15. Recent Sales of Unregistered Securities.

          None.

II-1

Item 16. Exhibits and Financial Statement Schedules.

(a)	Exhibits
(1)	(A)	Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account, dated as of January 1, 2008, by and among Teachers Insurance and Annuity Association of America, for itself and on behalf of the Account, and TIAA-CREF Individual & Institutional Services, LLC.8
(3)	(A)	Restated Charter of TIAA4
	(B)	Bylaws of TIAA (as amended)5
(4)	(A)	Forms of RA, GRA, GSRA, SRA, IRA Real Estate Account Contract Endorsements1, Keogh Contract2, Retirement Select and Retirement Select Plus Contracts and Endorsements6and Retirement Choice and Retirement Choice Plus Contracts2
	(B)	Forms of Income-Paying Contracts1
(5)		Opinion and Consent of Jonathan Feigelson, Esquire*
(10)	(A)	Independent Fiduciary Agreement, dated February 22, 2006, by and among TIAA, the Registrant, and Real Estate Research Corporation7
	(B)	Amendment to Independent Fiduciary Agreement, dated December 17, 2008, between TIAA, on behalf of the Registrant, and Real Estate Research Corporation9
	(C)	Custodian Agreement, dated as of March 3, 2008, by and between TIAA, on behalf of the Registrant, and State Street Bank and Trust Company, N.A.3
(23)	(A)	Consent of Jonathan Feigelson, Esquire (filed as Exhibit 5)*
	(B)	Consent of Dechert LLP**
	(C)	Consent of PricewaterhouseCoopers LLP*
	(D)	Consent of Aarons Grant & Habif, LLC*
(24)	Powers of Attorney**

*	Filed herewith.
**	Previously filed.
1	Previously filed and incorporated herein by reference to the Account’s Post-Effective Amendment No. 2 to the Registration Statement on Form S-1, filed April 30, 1996 (File No. 33-92990).
2	Previously filed and incorporated herein by reference to the Account’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed May 2, 2005 (File No. 333-121493).
3	Previously filed and incorporated herein by reference to Exhibit 10.(b) to the Annual Report on Form 10-K of the Account for the fiscal year ended December 31, 2007 and filed with the Commission on March 20, 2008 (File No. 33-92990).
4	Previously filed and incorporated herein by reference to Exhibit 3(A) to the Account’s Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed December 21, 2004 (File No. 333-121493).
5	Previously filed and incorporated herein by reference to Exhibit 3(B) to the Account’s Quarterly Report on Form 10-Q for the period ended September 30, 2006 and filed with the Commission on November 14, 2006 (File No. 33-92990).
6	Previously filed and incorporated herein by reference to the Account’s Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed April 29, 2004 (File No. 333-113602).
7	Previously filed and incorporated herein by reference to the Account’s Annual Report on Form 10-K for the period ended December 31, 2005, filed with the Commission on March 15, 2006 (File No. 33-92990).
8	Previously filed and incorporated herein by reference to the Account’s Current Report on Form 8-K, filed with the Commission on January 7, 2008 (File No. 33-92990).
9	Previously filed and incorporated herein by reference to the Account’s Current Report on Form 8-K, filed with the Commission on December 22, 2008 (File No. 33-92990).
(b)	Financial Statement Schedules
	All Schedules have been omitted because they are not required under the related instructions or are inapplicable.

II-2

Item 17. Undertakings.

          The undersigned Registrant hereby undertakes:

          (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:

(i)	To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.
(ii)	To reflect in the prospectus any facts or events arising after the effective date of the Registration Statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the Registration Statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement.
(iii)	To include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement.

          (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof.

          (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering.

          (4) To provide the full financial statements of TIAA promptly upon written or oral request.

          (5) That, for the purpose of determining liability under the Securities Act of 1933 to any purchaser, each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

          (6) That, for the purpose of determining liability of the Registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities:

          The undersigned Registrant undertakes that in a primary offering of securities of the undersigned Registrant pursuant to this Registration Statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned Registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

(i)	Any preliminary prospectus or prospectuses of the undersigned Registrant relating to the offering required to be filed pursuant to Rule 424;
(ii)	Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned Registrant or used or referred to by the undersigned Registrant;
(iii)	The portion of any other free writing prospectus relating to the offering containing material information about the undersigned Registrant or its securities provided by or on behalf of the undersigned Registrant; and
(iv)	Any other communication that is an offer in the offering made by the undersigned Registrant to the purchaser.

II-3

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

INDEX OF AUDITED STATUTORY - BASIS FINANCIAL STATEMENTS

DECEMBER 31, 2008

	Page
Report of Management Responsibility	2
Report of Independent Auditors	3
Statutory - Basis Financial Statements:	4
Statements of Admitted Assets, Liabilities and Capital and Contingency Reserves	4
Statements of Operations	5
Statements of Changes in Capital and Contingency Reserves	5
Statements of Cash Flow	6
Notes to Financial Statements	7

REPORT OF MANAGEMENT RESPONSIBILITY

April 8, 2009

To the Policyholders of Teachers Insurance and Annuity Association of America:

The accompanying statutory-basis financial statements of Teachers Insurance and Annuity Association of America (“TIAA”) are the responsibility of management. They have been prepared on the basis of statutory accounting principles, a comprehensive basis of accounting comprised of accounting principles prescribed or permitted by the New York State Insurance Department. The financial statements of TIAA have been presented fairly and objectively in accordance with such statutory accounting principles.

TIAA’s internal control over financial reporting is a process effected by those charged with governance, management and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with statutory accounting principles. TIAA’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the entity; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with statutory accounting principles, and the receipts and expenditures of the entity are being made only in accordance with authorizations of management and those charged with governance; and (3) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the entity’s assets that could have a material effect on the financial statements.

Management is responsible for establishing and maintaining effective internal control over financial reporting. Management assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2008, based on the framework set forth by the Committee of Sponsoring Organizations of the Treadway Commission inInternal Control—Integrated Framework. Based on that assessment, management concluded that, as of December 31, 2008, TIAA’s internal control over financial reporting is effective based on the criteria established inInternal Control—Integrated Framework.

In addition, TIAA’s internal audit personnel provide regular reviews and assessments of the internal controls and operations of TIAA, and the Vice President of Internal Audit regularly reports to the Audit Committee of the TIAA Board of Trustees.

The independent auditors of PricewaterhouseCoopers LLP have audited the accompanying statutory-basis financial statements of TIAA for the years ended December 31, 2008, 2007 and 2006. To maintain auditor independence and avoid even the appearance of a conflict of interest, it continues to be TIAA’s policy that any management advisory or consulting service, which is not in accordance with TIAA’s specific auditor independence policies designed to avoid such conflicts, be obtained from a firm other than the independent auditor. The independent auditors’ report expresses an opinion on the fairness of presentation of these statutory-basis financial statements.

The Audit Committee of the TIAA Board of Trustees, comprised entirely of independent, non-management trustees, meets regularly with management, representatives of the independent auditor and internal audit personnel to review matters relating to financial reporting, internal controls and auditing. In addition to the annual independent audit of the TIAA statutory-basis financial statements, the New York State Insurance Department and other state insurance departments regularly examine the operations and financial statements of TIAA as part of their periodic corporate examinations.

/s/ Roger W. Ferguson, Jr.	/s/ Georganne C. Proctor
Roger W. Ferguson, Jr.	Georganne C. Proctor
President and Chief Executive Officer	Executive Vice President and Chief Financial Officer

2

REPORT OF INDEPENDENT AUDITORS

To the Board of Directors of Teachers Insurance and Annuity Association of America:

We have audited the accompanying statutory-basis statements of admitted assets, liabilities and capital and contingency reserves of Teachers Insurance and Annuity Association of America (the “Company”) as of December 31, 2008 and 2007, and the related statutory-basis statements of operations, of changes in capital and contingency reserves, and of cash flows for each of the three years in the period ended December 31, 2008.

As described in Note 2 to the financial statements, the Company prepared these financial statements using accounting practices prescribed or permitted by the Insurance Department of the State of New York, which practices differ from accounting principles generally accepted in the United States of America. The effects on the financial statements of the variances between the statutory basis of accounting and accounting principles generally accepted in the United States of America, although not reasonably determinable, are presumed to be material.

In our opinion, because of the effects of the matter discussed in the preceding paragraph, the financial statements referred to above do not present fairly, in conformity with accounting principles generally accepted in the United States of America, the financial position of the Company as of December 31, 2008 and 2007, or the results of its operations or its cash flows for each of the three years in the period ended December 31, 2008.

In our opinion, the financial statements referred to above present fairly, in all material respects, the admitted assets, liabilities and capital and contingency reserves of the Company as of December 31, 2008 and 2007, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2008, on the basis of accounting described in Note 2.

As discussed in Note 2 to the financial statements, on January 1, 2008, the Company adopted Statement of Statutory Accounting Principles No. 98,Treatment of Cash Flows When Quantifying Changes in Valuation and Impairments, an Amendment of SSAP No. 43—Loan-backed and Structured Securities.

As discussed in Note 2 to the financial statements, on January 1, 2007, the Company adopted Statement of Statutory Accounting Principles No. 97,Investments in Subsidiary, Controlled, and Affiliated Entities, A Replacement of SSAP No. 88.

A company’s internal control over financial reporting is a process effected by those charged with governance, management, and other personnel, designed to provide reasonable assurance regarding the preparation of reliable financial statements in accordance with accounting practices prescribed or permitted by the Insurance Department of the State of New York. A company’s internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting practices prescribed or permitted by the Insurance Department of the State of New York, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and those charged with governance; and (iii) provide reasonable assurance regarding prevention, or timely detection and correction of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent, or detect and correct misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2008, based on criteria established inInternal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). The Company’s management is responsible for these financial statements, for maintaining effective internal control over financial reporting and for its assertion of the effectiveness of internal control over financial reporting, included in the accompanying Report of Management Responsibility. Our responsibility is to express opinions on these financial statements and on the Company’s internal control over financial reporting based on our audits. We conducted our audits of the financial statements in accordance with auditing standards generally accepted in the United States of America and our audit of internal control over financial reporting in accordance with attestation standards established by the American Institute of Certified Public Accountants. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement and whether effective internal control over financial reporting was maintained in all material respects. Our audits of the financial statements included 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. Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our opinions.

/s/ PricewaterhouseCoopers LLP

New York, New York

April 8, 2009

 

3

STATUTORY–BASIS STATEMENTS OF ADMITTED ASSETS, LIABILITIES AND CAPITAL AND CONTINGENCY RESERVES

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

	December 31,
(In millions)	2008			2007
ADMITTED ASSETS			��
Bonds	$	135,680		$	131,859
Mortgages		19,668			20,443
Real estate		1,645			1,672
Preferred stocks		3,216			4,375
Common stocks		3,017			4,190
Other long-term investments		10,675			10,293
Cash, cash equivalents and short-term investments		5,553			1,603
Investment income due and accrued		1,522			1,519
Separate account assets		12,473			19,021
Net deferred federal income tax asset		1,381			1,076
Other assets		407			358
Total admitted assets	$	195,237		$	196,409
LIABILITIES, CAPITAL AND CONTINGENCY RESERVES
Liabilities
Reserves for life and health insurance, annuities and deposit-type contracts	$	159,649		$	147,622
Dividends due to policyholders		2,341			2,419
Federal income taxes		10			1,207
Asset valuation reserve		332			4,436
Interest maintenance reserve		502			603
Separate account liabilities		12,319			19,021
Commercial paper		—			952
Other liabilities		2,330			2,304
Total liabilities		177,483			178,564
Capital and Contingency Reserves
Capital (2,500 shares of $1,000 par value common stock issued and outstanding and $550,000 paid-in capital)		3			3
Contingency Reserves:
For investment losses, annuity and insurance mortality, and other risks		17,751			17,842
Total capital and contingency reserves		17,754			17,845
Total liabilities, capital and contingency reserves	$	195,237		$	196,409

See notes to statutory-basis financial statements

4

STATUTORY–BASIS STATEMENTS OF OPERATIONS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

	For the Years Ended December 31,
(In millions)	2008			2007			2006
REVENUES
Insurance and annuity premiums and other considerations	$	14,827		$	10,420		$	11,154
Annuity dividend additions		2,725			2,495			2,089
Net investment income		10,559			10,828			10,313
Other revenue		161			159			119
Total revenues	$	28,272		$	23,902		$	23,675
BENEFITS AND EXPENSES
Policy and contract benefits	$	13,625		$	10,133		$	9,812
Dividends to policyholders		4,574			4,578			3,986
Increase in policy and contract reserves		11,900			4,820			4,949
Net operating expenses		831			730			581
Net transfers (from) to separate accounts		(4,229	)		1,511			1,903
Other benefits and expenses		141			198			190
Total benefits and expenses	$	26,842		$	21,970		$	21,421
Income before federal income taxes and net realized capital (losses) gains	$	1,430		$	1,932		$	2,254
Federal income tax (benefit) expense		(45	)		348			(594	)
Net realized capital (losses) gains less capital gains taxes, after transfers to interest maintenance reserve		(4,451	)		(137	)		608
Net (loss) income	$	(2,976	)	$	1,447		$	3,456

STATUTORY–BASIS STATEMENTS OF CHANGES IN CAPITAL AND CONTINGENCY RESERVES

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

	For the Years Ended December 31,
(In millions)	2008			2007			2006
CHANGES IN CAPITAL AND CONTINGENCY RESERVES
Net (loss) income	$	(2,976	)	$	1,447		$	3,456
Net unrealized capital (losses) gains on investments		(2,757	)		865			398
Change in the asset valuation reserve		4,104			(698	)		(689	)
Change in net deferred federal income tax asset		13,009			57			(1,154	)
Prior year federal income tax settlement		1,244			—			—
Change in non-admitted assets:
Net deferred federal income tax		(12,704	)		55			1,155
Other invested assets		31			(199	)		(20	)
Other		(34	)		(36	)		14
Other, net		(8	)		4			(2	)
NET CHANGE IN CAPITAL AND CONTINGENCY RESERVES		(91	)		1,495			3,158
CAPITAL AND CONTINGENCY RESERVES AT BEGINNING OF YEAR		17,845			16,350			13,192
CAPITAL AND CONTINGENCY RESERVES AT END OF YEAR	$	17,754		$	17,845		$	16,350

See notes to statutory-basis financial statements

5

STATUTORY–BASIS STATEMENTS OF CASH FLOWS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

	For the Years Ended December 31,
(In millions)	2008			2007			2006
CASH FROM OPERATIONS
Insurance and annuity premiums and other considerations	$	14,827		$	10,420		$	11,153
Miscellaneous income		162			159			106
Net investment income		10,606			10,789			10,296
Total Receipts		25,595			21,368			21,555
Policy and contract benefits		13,533			10,100			9,788
Dividends paid to policyholders		1,928			1,892			1,849
Operating expenses		979			708			674
Federal income tax benefit		(91	)		(10	)		(62	)
Net transfers (from) to separate accounts		(4,050	)		1,505			1,904
Total Disbursements		12,299			14,195			14,153
Net cash from operations		13,296			7,173			7,402
CASH FROM INVESTMENTS
Proceeds from long-term investments sold, matured, or repaid:
Bonds		13,238			11,663			17,210
Stocks		2,092			3,326			2,269
Mortgages and real estate		2,805			5,556			4,388
Other invested assets		1,981			2,576			2,105
Miscellaneous proceeds		(27	)		47			7
Cost of investments acquired:
Bonds		20,367			21,599			20,425
Stocks		1,062			3,120			1,582
Mortgages and real estate		2,390			2,412			3,612
Other invested assets		4,587			4,846			2,409
Miscellaneous applications		222			163			214
Net cash used for investments		(8,539	)		(8,972	)		(2,263	)
CASH FROM FINANCING AND OTHER
Net deposits on deposit-type contracts funds		32			12			(3	)
Net collateral for security lending disbursements		—			—			(3,460	)
Net commercial paper (redeemed) issued		(952	)		952			—
Other cash provided (applied)		113			(26	)		(36	)
Net cash used by financing and other		(807	)		938			(3,499	)
NET CHANGE IN CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS		3,950			(861	)		1,640
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS, BEGINNING OF YEAR		1,603			2,464			824
CASH, CASH EQUIVALENTS AND SHORT-TERM INVESTMENTS, END OF YEAR	$	5,553		$	1,603		$	2,464

See notes to statutory-basis financial statements

6

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 1—Organization

Teachers Insurance and Annuity Association of America (“TIAA” or the “Company”) was established as a legal reserve life insurance company under the insurance laws of the State of New York in 1918. The Company’s primary purpose is to aid and strengthen nonprofit educational and research organizations, governmental entities and other nonprofit institutions by providing retirement and insurance benefits for their employees and their families and by counseling these organizations and their employees on benefit plans and other measures of economic security.

Note 2—Significant Accounting Policies

BASIS OF PRESENTATION:

The accompanying financial statements have been prepared on the basis of statutory accounting principles prescribed or permitted by the New York State Insurance Department (the “Department”), a comprehensive basis of accounting that differs from accounting principles generally accepted in the United States (“GAAP”). The Department requires insurance companies domiciled in the State of New York to prepare their statutory-basis financial statements in accordance with the National Association of Insurance Commissioners’ (“NAIC”) Accounting Practices and Procedures Manual (“NAIC SAP”), subject to any deviation prescribed or permitted by the Department (“New York SAP”).

The table below provides a reconciliation of the Company’s net income (loss) and capital and contingency reserves between NAIC SAP and the New York SAP annual statement filed with the Department. The primary differences arise because the Company maintains more conservative reserves, as prescribed or permitted by New York SAP, under which annuity reserves are generally discounted on the basis of contractually guaranteed interest rates and mortality tables (in millions).

	2008			2007		2006
Net (Loss) Income, New York SAP	$	(3,283	)	$	1,429	$	2,334
New York SAP Prescribed or Permitted Practices:
Federal Income Tax Settlement		1,244			—		—
Additional Reserves for:
Term Conversions		2			—		1
Deferred and Payout Annuities issued after 2000		424			490		374
Net (Loss) Income, NAIC SAP	$	(1,613	)	$	1,919	$	2,709
Capital and Contingency Reserves, New York SAP	$	17,754		$	17,827	$	15,282
New York SAP Prescribed or Permitted Practices:
Goodwill/Intangible Asset Limitation		20			28		34
Additional Reserves for:
Term Conversions		11			9		9
Deferred and Payout Annuities issued after 2000		3,809			3,385		2,895
Capital and Contingency Reserves, NAIC SAP	$	21,594		$	21,249	$	18,220

During 2008 the Company executed a settlement with the Internal Revenue Service (“IRS”) Appeals Division which resulted in an adjustment of $1.2 billion. (See Note 15) The Company, after consultation with the Department, recorded the adjustment as an increase to contingency reserves and not through net income.

Reconciliations of Net Income and Contingency Reserves: Subsequent to the filing of its New York SAP financial statements, the Company made the following adjustments to the Statutory-Basis financial statements. Reconciliations of TIAA’s net income and contingency reserves between the New York SAP as originally filed and these audited financial statements are shown below (in millions):

	2008			2007		2006
(Loss) Income—New York SAP—as filed with Department	$	(3,283	)	$	1,429	$	2,334
Adjustment to Current Federal Income Taxes		—			18		1,122
Treatment of Guarantee of Subsidiary Debt		307			—		—
(Loss) Income—Audited Financial Statement	$	(2,976	)	$	1,447	$	3,456
	2008			2007		2006
Capital and Contingency Reserves—New York SAP—as filed with Department	$	17,754		$	17,827	$	15,282
Adjustment to Current Federal Income Taxes		—			18		1,122
Change in Deferred Income Taxes		—			—		(1,117	)
Change in Non-Admitted Deferred Income Taxes		—			—		1,063
Capital and Contingency Reserves—Audited Financial Statement	$	17,754		$	17,845	$	16,350

Application of Accounting Pronouncements: For reporting periods beginning on or after January 1, 2009, SSAP 98,Treatment of Cash Flows When Quantifying Changes in Valuation and Impairments, an Amendment of SSAP No. 43—Loan-backed and Structured Securities establishes statutory accounting principles for impairment analysis and subsequent valuation of loan-backed and structured securities. The change resulting from the adoption of this statement shall be accounted for prospectively. No cumulative effect adjustments or application of the new guidance to prior events or periods are required, similar to a change in accounting estimate. The Company elected to early adopt SSAP 98 which resulted in an additional $469 million of realized losses being recognized at December 31, 2008.

For reporting periods ending on or after December 31, 2007, SSAP No. 97,Investment in Subsidiary, Controlled, and Affiliated Entities, A Replacement of SSAP No. 88, was implemented. The statement establishes statutory accounting principles for investments in subsidiaries, controlled and affiliated entities. SSAP 97 clarified the bases that a company could use to value its equity investment in its investment subsidiaries. The initial application of this statement resulted in a $249.5 million increase in non-admitted assets at December 31, 2007.

For reporting periods ending December 31, 2007 and thereafter, SSAP No. 96,Settlement Requirements for Intercompany Transactions, An Amendment to SSAP No. 25,became effective. This statement established a statutory aging threshold for admission of loans and advances to related parties outstanding as of the reporting date. The statement requires transactions between related parties to be in the form of a written agreement and must provide for timely settlement of amounts owed, with a specific due date. This change resulted in a $30.5 million increase in non-admitted assets at December 31, 2007.

For reporting periods beginning after January 1, 2007, SSAP No. 95,Exchanges of Nonmonetary Assets, A Replacement of SSAPNo. 28—Nonmonetary Transactions, was implemented. This

 

7

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 2—Significant Accounting Policies (cont.)

statement established statutory accounting principles for nonmonetary transactions and requires that exchanges of nonmonetary assets shall generally be based on the fair value of the assets (or services) involved. The cost of a nonmonetary asset acquired in exchange for another nonmonetary asset is the fair value of the asset surrendered to obtain it, and a gain or loss should be recognized on the exchange. SSAP 95 did not have a significant impact on the Company’s statutory financial statements in 2008 or 2007.

Accounting Principles Generally Accepted in the United States: The Financial Accounting Standards Board (“FASB”) dictates the requirements for financial statements that are prepared in conformity with GAAP with the applicable authoritative accounting pronouncements. As a result, the Company cannot refer to financial statements prepared in accordance with NAIC SAP and New York SAP as having been prepared in accordance with GAAP.

The differences between GAAP and NAIC SAP would have a material effect on the Company’s financial statements and the primary differences can be summarized as follows:

Under GAAP:

Ÿ The asset valuation reserve (“AVR”) is eliminated as a reserve and the credit-related realized gains and losses are reported in the statement of income on a pretax basis as incurred;

Ÿ The interest maintenance reserve (“IMR”) is eliminated and the realized gains and losses resulting from changes in interest rates are reported as a component of net income rather than being accumulated in and subsequently amortized into income over the remaining life of the investment sold;

Ÿ Dividends on insurance policies and annuity contracts are accrued as the related earnings emerge from operations rather than being accrued in the year when they are declared;

Ÿ Certain assets designated as “non-admitted assets” are included in the GAAP balance sheet rather than excluded from assets in the statutory balance sheet;

Ÿ Policy acquisition costs are deferred and amortized over the lives of the policies issued rather than being charged to operations as incurred;

Ÿ Policy and contract reserves are based on estimates of expected mortality, morbidity, persistency and interest rather than being based on statutory mortality, morbidity and interest requirements;

Ÿ Investments in wholly-owned subsidiaries, other entities under the control of the parent, and certain variable interest entities are consolidated in the parent’s financial statements rather than being carried at the parent’s share of the underlying audited GAAP equity or statutory surplus of a domestic insurance subsidiary;

Ÿ Investments in bonds considered to be “available for sale” are carried at fair value rather than amortized cost;

Ÿ State taxes are included in the computation of deferred taxes. A deferred tax asset is recorded for the amount of gross deferred tax assets expected to be realized in future years, and a valuation allowance is established for deferred tax assets not realizable, rather than not being included in the deferred income tax asset;

Ÿ For purposes of calculating the defined benefit and the post-retirement benefit obligations, active participants not currently vested would also be included in determining the liability;

Ÿ Annuities that do not incorporate significant insurance risk are classified as investment contracts and are not accounted for as insurance contracts;

Ÿ Derivatives are generally valued at fair value rather than being accounted for in a manner consistent with the hedged item, even when the derivatives qualify for hedge accounting;

Ÿ Certain reinsurance transactions are accounted for as financing transactions under GAAP and as reinsurance for statutory purposes, and assets and liabilities are reported gross of reinsurance for GAAP and net of reinsurance for statutory purposes.

The effects of these differences, while not determined, are presumed to be material.

ACCOUNTING POLICIES:

The preparation of the Company’s statutory-basis financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses at the date of the financial statements. Actual results may differ from those estimates. The following is a summary of the significant accounting policies followed by the Company:

Investments: Publicly traded securities are accounted for as of the date the investments are purchased or sold (trade date). Other investments are recorded on the settlement date. Realized capital gains and losses on investment transactions are accounted for under the specific identification method. A realized loss is recorded when an impairment is considered to be other-than-temporary. An impairment in an investment is considered to have occurred if an event or change in circumstance indicates that the carrying value of the asset may not be recoverable or the receipt of contractual payments of principal and interest may not occur when scheduled. When an impairment has been determined to have occurred, the investment is written down to fair value and a realized loss is recorded. Management considers available evidence to evaluate the potential impairment of its investments.

Short-Term Investments: Short-term investments (debt securities with maturities of one year or less at the time of acquisition) that are not impaired are stated at amortized cost using the interest method. Short-term investments impaired are stated at the lower of amortized cost or market value.

Cash Equivalents: Cash equivalents are short-term, highly liquid investments with original maturities of three months or less at date of purchase and are stated at amortized cost.

Bonds: Bonds are stated at amortized cost using the interest method. Bonds that are held for sale or NAIC designation 6 and 6Z are valued at the lower of amortized cost or fair value. For other than temporary impairment, the cost basis of the bond is written down to its fair value and the amount of the write down is recognized as a realized loss.

Loan-Backed Securities and Structured Securities: Included within bonds are loan-backed securities. Loan-backed securities and structured securities not in default, are stated at amortized cost. The retrospective approach is used to determine the carrying amount of loan-backed and structured securities. Estimated future cash flows and expected repayment periods are used in calculating amortization for loan-backed and structured securities. The prospective approach is used to determine the carrying amount of interest only securities, securities for which an other than temporary impairment has been recognized, or secu-

8

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 2—Significant Accounting Policies (cont.)

rities whose expected future cash flows are lower than the expected cash flows estimated at the time of the acquisition. Loan-backed securities and structured securities held for sale are stated at the lower of amortized cost or fair value. Loan-backed securities and structured securities in default are valued at the lower of amortized cost or fair value. Prepayment assumption for loaned-backed securities and structured securities are obtained from external data services or internal estimates.

Common Stock: Unaffiliated common stocks are stated at fair value.

Preferred Stock: Preferred stocks are stated at amortized cost unless they have an NAIC rating designation of 4, 5 or 6 which are stated at the lower of amortized cost or fair value.

Mortgages: Mortgages are stated at amortized cost, net of valuation allowances, except that purchase money mortgages are stated at the lower of amortized cost or ninety percent of appraised value. Mortgages held for sale are stated at the lower of amortized cost or fair value. A mortgage is evaluated for impairment when it is probable that the receipt of contractual payments of principal and interest may not occur when scheduled. If the impairment is considered to be temporary, a valuation reserve is established for the excess of the carrying value of the mortgage over its estimated fair value. Changes in valuation reserves for mortgages are included in net unrealized capital gains/losses on investments. When an event occurs resulting in an impairment that is other-than-temporary, a direct write-down is recorded as a realized loss and a new cost basis is established.

Real Estate: Real estate occupied by the Company and real estate held for the production of income is carried at depreciated cost, less encumbrances. Real estate held for sale is carried at the lower of depreciated cost or fair value, less encumbrances and estimated costs to sell. The Company utilizes the straight-line method of depreciation on real estate. Depreciation is generally computed over a forty-year period. A real estate property may be considered impaired when events or circumstances indicate that the carrying value may not be recoverable. When TIAA determines that an investment in real estate is impaired, a direct write-down is made to reduce the carrying value of the property to its estimated fair value based on an external appraisal, net of encumbrances and a realized loss is recorded.

Wholly-Owned Subsidiaries: Investments in wholly-owned subsidiaries are stated at the value of their underlying net assets as follows: (1) domestic insurance subsidiaries are stated at the value of their underlying statutory surplus; (2) non-insurance subsidiaries are stated at the value of their underlying audited GAAP equity. Dividends and distributions from subsidiaries are recorded in investment income and changes in the equity of subsidiaries are recorded directly to surplus as unrealized gains or losses.

Limited Partnerships and Limited Liability Companies:Investments in limited partnerships and limited liability companies are carried at the Company’s percentage of the underlying GAAP equity of the respective entity’s audited financial statements. An unrealized loss is deemed to be other-than-temporary when there is limited ability to recover the loss. A realized loss is recorded for other-than-temporary impairments.

Contract Loans: Contract loans are stated at outstanding principal balances.

Separate Accounts: Separate Accounts are established in conformity with insurance laws and are segregated from the Company’s general account and are maintained for the benefit of the separate account contract holders.

Securities Lending: The Company had a securities lending program whereby it loaned securities to qualified brokers in exchange for cash collateral and required a minimum of 102 percent of the fair value of the loaned securities. When securities were loaned, the Company received additional income on the collateral and continued to receive income on the loaned securities. The Company’s securities lending program was discontinued in 2006.

Foreign Currency Transactions and Translation: Investments denominated in foreign currencies and foreign currency contracts are valued in U.S. dollars, based on exchange rates at the end of the period. Investment transactions in foreign currencies are recorded at the exchange rates prevailing on the respective transaction dates. All other asset and liability accounts that are denominated in foreign currencies are adjusted to reflect exchange rates at the end of the period. Realized and unrealized gains and losses due to foreign exchange transactions and translation adjustments, are not separately reported but are collectively included in realized and unrealized capital gains and losses, respectively.

Derivative Instruments: The Company has filed a Derivatives Use Plan with the Department. This plan details TIAA’s derivative policy objectives, strategies, controls and any restrictions placed on various derivative types. The plan also specifies the procedures and systems that TIAA has established to evaluate, monitor and report on the derivative portfolio in terms of valuation, hedge effectiveness and counterparty credit quality. The Company uses derivative instruments for hedging, income generation, and asset replication purposes. Derivatives used by the Company include foreign currency, interest rate and credit default swaps, foreign currency forwards and interest rate cap contracts. See Note 12.

Non-Admitted Assets: For statutory accounting purposes only, certain assets are designated as non-admitted assets (principally furniture, equipment, leasehold improvements, prepaid expenses, and a portion of deferred federal income tax assets (“DFIT”)). Investment-related non-admitted assets totaled $305 million and $280 million at December 31, 2008 and 2007, respectively. The non-admitted portion of the DFIT asset was $14,671 million and $1,967 million at December 31, 2008 and 2007, respectively. The other non-admitted assets were $318 million and $340 million at December 31, 2008 and 2007, respectively. Changes in non-admitted assets are charged or credited directly to contingency reserves.

Furniture and Fixtures, Equipment, Leasehold Improvements and Computer Software: Electronic data processing equipment (“EDP”), computer software, furniture and equipment that qualify for capitalization are depreciated using the straight-line method over 3 years. Office alterations and leasehold tenant improvements that qualify for capitalization are depreciated over 5 years and the remaining life of the lease, respectively.

Accumulated depreciation of EDP equipment and computer software was $340 million and $233 million at December 31, 2008 and 2007, respectively. Related depreciation expenses allocated to TIAA were $38 million, $35 million and $22 million in 2008,

 

9

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 2—Significant Accounting Policies (cont.)

2007 and 2006, respectively. Accumulated depreciation of all furniture and equipment and leasehold improvements, which is non-admitted, was $346 million and $303 million at December 31, 2008, and 2007, respectively. Related depreciation expenses allocated to TIAA was $19 million, $14 million and $20 million in 2008, 2007 and 2006, respectively.

Premium Revenue: Premiums are recognized as income over the premium-paying period of the related policies. Annuity considerations are recognized as revenue when received. Expenses incurred in connection with acquiring new insurance business are charged to operations as incurred.

Policy and Contract Reserves: TIAA offers a range of group and individual annuities and individual life policies. Policy and contract reserves for such products are determined in accordance with standard valuation methods approved by the Department and are computed in accordance with standard actuarial formulae. The reserves established utilize assumptions for interest mortality and other risks insured. Such reserves are designed to be sufficient for contractual benefits guaranteed under policy and contract provisions.

Reserves for deposit-type funds, which do not contain any life contingencies, are equal to deposits received and interest credited to the benefit of contract holders, less withdrawals that represent a return to the contract holder.

Dividends Declared for the Following Year: Dividends on insurance policies and pension annuity contracts in the payout phase are declared by the TIAA Board of Trustees (the “Board”) in the fourth quarter of each year, and such dividends are credited to policyholders in the following calendar year. Dividends on pension annuity contracts in the accumulation phase are declared by the Board in February of each year, and such dividends on the various existing vintages of pension annuity contracts in the accumulation phase are credited to policyholders during the ensuing twelve month period beginning March 1.

Asset Valuation Reserve: The AVR is a reserve required by NAIC SAP to provide for potential future credit and equity losses. Reserve components of the AVR are maintained for bonds, stocks, mortgages, real estate, other invested assets and derivatives. Realized and unrealized credit and equity capital gains and losses, net of capital gains taxes, are credited to or charged against the related components of the AVR. Statutory formulae determine the required reserve components primarily based on factors applied to asset classes, and insurance companies may also establish additional reserves for any component; however, the ultimate balance cannot exceed the statutory maximum reserve for that component. Contributions and adjustments to the AVR are reported as transfers to or from contingency reserves. No voluntary contributions were made in either 2008 or 2007.

Interest Maintenance Reserve: The IMR is a reserve required by NAIC SAP which accumulates realized interest rate-related capital gains and losses on sales of debt securities and mortgages. Such capital gains and losses are amortized out of the IMR, under the grouped method of amortization, over the remaining lives of the assets sold.

Capitalization Policy: The capitalization threshold was lowered in 2007 to more closely align with industry practices, improve matching of investment benefits and operating expenses. Factors considered in developing the capitalization policy included dollar amount of capital expenditures, expected useful life of the asset and the impact of depreciation, process and benefit improvements and the current cost of capitalizable items as it relates to future purchase cost of similar items.

Note 3—Long-Term Bonds, Preferred Stocks, and Common Stocks

The amortized cost, estimated fair value, and unrealized gains and losses of long-term bonds, preferred stocks, and common stocks at December 31, are shown below (in millions):

	Cost*		Gross Unrealized					Estimated Fair Value
			Gains		Losses
December 31, 2008
U.S. Government	$	5,887	$	1,248	$	(7	)	$	7,128
All Other Governments		1,597		54		(100	)		1,551
States, Territories & Possessions		1,346		255		(62	)		1,539
Political Subdivisions of States, Territories & Possessions		—		—		—			—
Special Revenue & Special Assessment, Non-guaranteed Agencies & Government		30,625		1,296		(88	)		31,833
Public Utilities		8,503		267		(615	)		8,155
Industrial & Miscellaneous		87,761		1,072		(20,137	)		68,696
Total Bonds		135,719		4,192		(21,009	)		118,902
Preferred Stocks		3,221		30		(1,090	)		2,161
Common Stocks Unaffiliated		937		43		(125	)		855
Common Stocks Affiliated**		3,263		427		(217	)		3,473
Total Bonds and Stocks	$	143,140	$	4,692	$	(22,441	)	$	125,391

10

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 3—Long-Term Bonds, Preferred Stocks, and Common Stocks (cont.)

	Cost*		Gross Unrealized					Estimated Fair Value
			Gains		Losses
December 31, 2007
U.S. Government	$	4,812	$	325	$	—		$	5,137
All Other Governments		741		83		(4	)		820
States, Territories & Possessions		842		176		(3	)		1,015
Political Subdivisions of States, Territories & Possessions		18		3		—			21
Special Revenue & Special Assessment, Non-guaranteed Agencies & Government		25,990		602		(333	)		26,259
Public Utilities		4,897		263		(107	)		5,053
Industrial & Miscellaneous		94,571		3,026		(2,882	)		94,715
Total Bonds		131,871		4,478		(3,329	)		133,020
Preferred Stocks		4,382		41		(279	)		4,144
Common Stocks Unaffiliated		1,349		143		(15	)		1,477
Common Stocks Affiliated**		2,714		1,849		—			4,563
Total Bonds and Stocks	$	140,316	$	6,511	$	(3,623	)	$	143,204

* Amortized cost for bonds and original cost for stocks net of cumulative recorded other-than-temporary impairments.

** Also reported in Note 6 Subsidiaries and Affiliates.

Impairment Review Process: All securities are subjected to TIAA’s process for identifying other-than-temporary impairments. The quarterly impairment identification process utilizes, but is not limited to, a screening process based on declines in fair value of more than 20%. The Company writes down securities that it deems to have an other-than-temporary impairment in value in the period that the securities are deemed to be impaired, based on management’s case-by-case evaluation of the decline in value and prospects for recovery. Management considers a wide range of factors in the impairment evaluation process, including, but not limited to, the following: (a) the extent to which and the length of time the fair value has been below amortized cost; (b) the financial condition and near-term prospects of the issuer; (c) whether the debtor is current on contractually obligated interest and principal payments; (d) the intent and ability of the Company to retain the investment for a period of time sufficient to allow for any anticipated recovery in fair value or repayment; (e) information obtained from regulators and rating agencies; (f) the potential for impairments in an entire industry sector or sub-sector; and (g) the potential for impairments in certain economically-depressed geographic locations. Where an impairment is considered to be other-than-temporary, the Company recognizes a write-down as a realized loss and adjusts the cost basis of the security accordingly. The Company does not change the revised cost basis for subsequent recoveries in value. Once an impairment write-down has been recorded, the Company continues to review the impaired security for appropriate valuation on an ongoing basis.

The gross unrealized losses and estimated fair values for securities by the length of time that individual securities had been in a continuous unrealized loss position are shown in the table below (in millions):

	Cost*		Gross Unrealized Loss			Estimated Fair Value
December 31, 2008
Less than twelve months:
Bonds	$	37,063	$	(4,862	)	$	32,201
Preferred Stocks		1,500		(517	)		983
Common Stocks		2,829		(342	)		2,487
Total less than twelve months	$	41,392	$	(5,721	)	$	35,671
Twelve months or more:
Bonds	$	43,792	$	(16,147	)	$	27,645
Preferred Stocks		1,333		(573	)		760
Common Stocks		—		—			—
Total twelve months or more		45,125		(16,720	)		28,405
Total—All bonds, preferred & common stocks	$	86,517	$	(22,441	)	$	64,076

* Amortized cost for bonds and original cost for stocks net of cumulative reported other-than-temporary impairments.

	Cost*		Gross Unrealized Loss			Estimated Fair Value
December 31, 2007
Less than twelve months:
Bonds	$	34,629	$	(1,887	)	$	32,742
Preferred Stocks		1,801		(144	)		1,657
Common Stocks		128		(15	)		113
Total less than twelve months	$	36,558	$	(2,046	)	$	34,512
Twelve months or more:
Bonds	$	29,431	$	(1,442	)	$	27,989
Preferred Stocks		1,457		(135	)		1,322
Common Stocks		10		—			10
Total twelve months or more		30,898		(1,577	)		29,321
Total—All bonds, preferred & common stocks	$	67,456	$	(3,623	)	$	63,833

* Amortized cost for bonds and original cost for stocks net of cumulative recorded other-than-temporary impairments.

For 2008, the categories of securities where the estimated fair value declined and remained below cost for less than twelve months were concentrated in commercial mortgage-backed securities (20%), finance (16%), residential mortgage-backed securities (15%), asset-backed securities (9%), manufacturing (8%), real estate investment trust (8%), oil & gas (7%), public utilities (5%), services (3%), communication (2%), mining (2%), retail (2%), government (2%) and revenue & special obligations (1%). The preceding percentages were calculated as a percentage of the gross unrealized loss. The Company held eleven bond investments, six preferred stock investments, two common stock subsidiary controlled and affiliated (“SCA”) investments where each had a gross unrealized loss greater than $25 million at December 31, 2008. These investments represented 15% or $840 million in the aggregate of the total $5.7 billion unrealized loss.

For 2008, the categories of securities where the estimated fair value declined and remained below cost for twelve months or greater were concentrated in commercial mortgage-backed securities (57%), residential mortgage-backed securities (12%),

 

11

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 3—Long-Term Bonds, Preferred Stocks, and Common Stocks (cont.)

asset-backed securities (8%), finance (7%), manufacturing (3%), public utilities (3%), oil & gas (2%), real estate investment trust (2%), communication (1%), mining (1%), retail (1%), revenue & special obligations (1%), transportation (1%) and other securities (1%). The preceding percentages were calculated as a percentage of the gross unrealized loss. The Company held forty-eight bond investments and eleven preferred stock investments where each had a gross unrealized loss greater than $25 million at December 31, 2008. These investments represented 11% or $1.9 billion in the aggregate of the total $16.7 billion unrealized loss.

For 2007, the categories of securities where the estimated fair value declined and remained below cost for less than twelve months were concentrated in commercial mortgage-backed securities (40%), finance (18%), residential mortgage-backed securities (14%), asset-backed securities (8%), real estate investment trust (7%), manufacturing (3%), public utilities (3%), services (2%), oil & gas (1%), retail (1%), transportation (1%), mining (1%) and government (1%). The preceding percentages were calculated as a percentage of the gross unrealized loss. The Company held thirty-six bond investments, eight preferred stock investments, one common stock investment where each had a gross unrealized loss greater than $5 million at December 31, 2007. These investments represented 19% or $379 million in the aggregate of the total $2.0 billion unrealized loss.

For 2007, the categories of securities where the estimated fair value declined and remained below cost for twelve months or greater were concentrated in commercial mortgage-backed securities (25%), residential mortgage-backed securities (24%), finance (18%), asset-backed securities (10%), public utilities (8%), manufacturing (5%), oil & gas (3%), services (2%), real estate investment trust (1%), government (1%), mining (1%), communication (1%) and transportation (1%). The preceding percentages were calculated as a percentage of the gross unrealized loss. The Company held twenty-five bond investments and eight preferred stock investments where each had a gross unrealized loss greater than $5 million at December 31, 2007. These investments represented 14% or $224 million in the aggregate of the total $1.6 billion unrealized loss.

The statutory carrying value and estimated fair value of long-term bond investments at December 31, 2008, by contractual maturity, are shown below (in millions):

	Carrying Value		Estimated Fair Value
Due in one year or less	$	2,103	$	2,102
Due after one year through five years		14,903		14,393
Due after five years through ten years		23,759		21,474
Due after ten years		26,961		26,847
Subtotal		67,726		64,816
Residential mortgage-backed securities		39,512		38,048
Commercial mortgage-backed securities		21,595		10,981
Asset-backed securities		6,847		5,057
Total	$	135,680	$	118,902

Bonds not due at a single maturity date have been included in the preceding table based on the year of final maturity. Actual maturities may differ from contractual maturities because borrowers may have the right to prepay obligations, although prepayment premiums may be applicable.

Included in the preceding table under asset-backed securities is TIAA’s exposure to sub-prime mortgages totaling approximately $3.8 billion. Ninety-three percent (93%) of the sub-prime securities were rated investment grade (NAIC 1 and 2).

The following table presents the Company’s commercial mortgage-backed securities portfolio based on December 31, 2008 carrying value (in millions):

NAIC Designation		Carrying Value		Estimated Fair Value
1		$	18,736	$	10,029
2	��		2,075		621
3			375		130
4			276		112
5			96		51
6			37		38
Total		$	21,595	$	10,981

With respect to the commercial mortgage-backed securities (“CMBS”) in the above table, approximately 96% were rated investment grade (NAIC 1 and 2) and approximately 64% were issued prior to 2006 (based on carrying value). While recent market events have resulted in significant illiquidity in the broad CMBS markets and consequently reduced trading activity and valuations available in the marketplace, the underlying investments in the CMBS portfolio have continued to perform within the Company’s original expectations as of the time of purchase. The Company has continued to maintain its historical procedures surrounding the evaluation of fundamental underwriting and investment standards within its investment portfolios, including investments in CMBS. Additionally, the Company continues to manage the CMBS portfolio to appropriately support its contractual obligations and will recognize impairments when diminishments in fair value are determined to be other than temporary. Management continues to actively monitor the market, credit and liquidity risk of the CMBS portfolio as an integral component of its overall asset liability management program.

Included in the Company’s long-term investments are NAIC 6 and 6Z totaling approximately $844 million. The statutory carrying value of these investments is listed in the following table (in millions):

	Carrying Value
Due in one year or less	$	24
Due after one year through five years		162
Due after five years through ten years		184
Due after ten years		261
Subtotal		631
Residential mortgage-backed securities		68
Commercial mortgage-backed securities		38
Asset-backed securities		107
Total	$	844

12

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 3—Long-Term Bonds, Preferred Stocks, and Common Stocks (cont.)

The carrying values of long-term bond investments were diversified by industry classification at December 31 as follows:

	2008		2007
Residential mortgage-backed securities	29.1	%	25.6	%
Commercial mortgage-backed securities	15.9		16.6
Manufacturing	8.5		8.6
Finance and financial services	8.0		10.0
Public utilities	7.4		6.9
Government	6.4		6.8
Asset-backed securities	5.1		5.7
Oil and gas	4.5		4.1
Communications	3.5		3.5
Services	2.6		2.9
Real estate investment trusts	2.4		3.0
Retail and wholesale trade	2.2		2.0
Revenue and special obligations	2.0		2.1
Transportation	1.2		1.2
Mining	1.2		1.0
Total	100.0	%	100.0	%

At December 31, 2008 and 2007, 95.1% and 94.9%, respectively, of the long-term bond portfolio was comprised of investment grade securities.

During 2008 and 2007, the Company recorded bonds and stocks acquired through troubled debt restructurings with book values aggregating $19 million and $42 million, through non-monetary transactions. When restructuring troubled debt, TIAA generally accounts for assets at their fair value at the time of restructuring or at the carrying value of the assets given up if lower. If the fair value is less than the carrying value of the assets given up, the required write-down is recognized as a realized capital loss. During 2008 and 2007, the Company also acquired bonds and stocks through exchanges aggregating $877 million and $804 million, of which approximately $1 million and $37 million were acquired through non-monetary transactions, respectively. When exchanging securities, TIAA generally accounts for assets at fair value unless the exchange was as a result of restricted 144A’s exchanged for unrestricted securities, which are accounted for at book value. During 2008 and 2007, TIAA acquired common stocks from Other Invested Asset fund investment distributions totaling $18 million and $55 million, respectively.

Debt securities of $8 million at December 31, 2008 and 2007, respectively, were on deposit with governmental authorities or trustees, as required by law.

The Company does not have any restricted common stock or preferred stock.

For the years ended December 31, 2008 and 2007, the carrying amount of bonds and stocks denominated in a foreign currency was $3,408 million and $4,188 million, respectively. Bonds that totaled $1,506 million and $1,612 million at December 31, 2008 and 2007, respectively, represent amounts due from related parties that are collateralized by real estate owned by TIAA’s investment subsidiaries and affiliates.

The Company uses a third party proprietary system in determining the market value of its structured securities. In 2008, in accordance with SSAP 43, the Company changed from the retrospective method to the prospective method due to negative yields and early adopted SSAP 98 in the fourth quarter on securities totaling $184 million carrying value. As a result of

early adoption of SSAP 98, structured securities were written down during the fourth quarter of 2008 by $469 million.

Note 4—Mortgages

The Company originates mortgages that are principally collateralized by commercial real estate. The coupon rates for non-mezzanine commercial mortgages originated during 2008 ranged from 5.94% to 8.43% and ranged from 4.96% to 8.77% for 2007.

The Company also acquires mezzanine real estate loans, which are secured by a pledge of direct or indirect equity interests in an entity that owns real estate. There were no mezzanine real estate loans acquired during 2008 and the coupon rate for mezzanine real estate loans acquired during 2007 ranged from 5.83% to 6.96%, respectively.

The maximum percentage of any one loan to the value of the security at the time of the loan, exclusive of insured, guaranteed or purchase money mortgages, was 80% for commercial loans (includes mezzanine loans).

For the years ended December 31, 2008 and 2007, the carrying value of mezzanine real estate loans was $784 million and $832 million, respectively.

Impairment Review Process: The Company monitors the effects of current and expected market conditions and other factors on the collectability of mortgages to identify and quantify any impairment in value. Any impairment is classified as either temporary, for which, a recovery is anticipated, or other-than-temporary. Mortgages held to maturity with impaired values at December 31, 2008 and 2007 have been written down to net realizable values based upon independent appraisals of the collateral while mortgages held for sale have been written down to the current fair value of the loan, as shown in the table below. For impaired mortgages where the impairments were deemed to be temporary, an allowance for credit losses has been established, as indicated below (in millions):

	2008			2007			2006
Investment in impaired mortgages, with temporary allowances for credit losses (at net carried value plus accrued interest)	$	—		$	—		$	—
Related temporary allowances for credit losses	$	—		$	—		$	—
Investment in impaired mortgages, net of other-than-temporary impairment losses recognized	$	259		$	164		$	1,031
Related write-downs for other-than-temporary impairments	$	(209	)	$	(9	)	$	(26	)
Average investments in impaired mortgages	$	185		$	746		$	179
Interest income recognized on impaired mortgages during the period	$	14		$	40		$	5
Interest income recognized on a cash basis during the period	$	14		$	50		$	6

There was no activity affecting the allowance for credit losses on mortgages as of December 31, 2008 or 2007.

During the first quarter 2009, the Company transferred 20 mortgages to held for sale and recognized a loss of $424 million.

 

13

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 4—Mortgages (cont.)

Mortgage Diversification: At December 31, the carrying values of mortgage investments were diversified by property type and geographic region as follows:

Property Type	2008		2007
Shopping centers	36.0	%	36.6	%
Office buildings	32.1		31.4
Industrial buildings	17.3		16.4
Apartments	7.3		6.2
Mixed-use projects	3.4		5.3
Hotel	2.6		3.5
Other	0.7		0.6
Land	0.6		—
Total	100.0	%	100.0	%

Geographic Region	2008		2007
Pacific	28.4	%	28.7	%
South Atlantic	23.5		22.8
North Central	13.1		13.5
Middle Atlantic	12.8		11.6
South Central	11.4		10.9
Mountain	4.0		4.4
New England	3.8		4.2
Other	3.0		3.9
Total	100.0	%	100.0	%

At December 31, 2008 and 2007, approximately 23.7% and 23.2% of the mortgage portfolio, respectively, was invested in California and was included in the Pacific region shown above.

Scheduled Mortgage Maturities: At December 31, 2008, contractual maturities for mortgages were as follows (in millions):

	Carrying Value
Due in one year or less	$	1,625
Due after one year through five years		7,704
Due after five years through ten years		9,399
Due after ten years		940
Total	$	19,668

Actual maturities may differ from contractual maturities because borrowers may have the right to prepay mortgages, although prepayment premiums may be applicable.

There were no troubled debt restructurings during the periods ended December 31, 2008 or 2007. When restructuring mortgages, TIAA generally requires participation features, yield maintenance stipulations, and/or the establishment of property-specific escrow accounts funded by the borrowers. With respect to impaired loans, the Company accrues interest income to the extent it is deemed collectible. Due and accrued income on any mortgage in default for more than 180 days is non-admitted. Cash received on impaired mortgages that are performing according to their contractual terms is applied in accordance with those terms. For mortgages in the process of foreclosure, cash received is initially held in suspense and applied as return of principal at the time that the foreclosure process is completed, or the mortgage is otherwise disposed. There were no mortgages with interest more than 180 days past due at December 31, 2008 or 2007.

During 2008 and 2007, the Company did not reduce the interest rate of any outstanding loans.

The Company has no Reverse Mortgages as of December 31, 2008 or 2007.

Mortgages that totaled $180 million and $212 million at December 31, 2008 and 2007, respectively, represent the carrying value of amounts due from related parties that are collateralized by real estate owned by TIAA investment subsidiaries and affiliates.

For the years ended December 31, 2008 and 2007, the carrying value of mortgages denominated in foreign currency was $507 million and $745 million, respectively.

The Company does not underwrite nor does it hold sub-prime mortgages in the commercial mortgage portfolio and does not have any material indirect exposure from sub-prime lenders who are tenants in buildings that are secured by commercial mortgages.

Note 5—Real Estate

The Company makes investments in commercial real estate directly, through wholly owned subsidiaries and through real estate limited partnerships. The Company monitors the effects of current and expected market conditions and other factors on the reliability of real estate investments to identify and quantify any impairment in value. Other-than-temporary impairments on directly owned real estate investments for the years ended December 31, 2008 and 2007 were $23 million and $0, respectively, and these amounts are included in the impairment table in Note 4. At December 31, 2008 and 2007, TIAA’s directly owned real estate investments of $1,645 million and $1,672 million, respectively, were carried net of third party mortgage encumbrances, which totaled approximately $160 million and $163 million, respectively.

At December 31, the carrying values of real estate investments were diversified by property type and geographic region as follows:

Property Type	2008		2007
Office buildings	62.8	%	63.7	%
Industrial buildings	15.6		15.5
Mixed-use projects	11.0		14.9
Apartments	6.5		2.7
Land held for future development	3.1		2.3
Retail	0.8		0.7
Income-producing land underlying improved real estate	0.2		0.2
Total	100.0	%	100.0	%

Geographic Region	2008		2007
South Atlantic	37.8	%	42.5	%
North Central	17.7		13.9
Middle Atlantic	14.2		13.6
Pacific	12.7		12.5
South Central	8.0		8.0
Other	7.6		7.6
Mountain	2.0		1.9
Total	100.0	%	100.0	%

At December 31, 2008 and 2007, approximately 18.4% and 17.7% of the real estate portfolio, respectively, was invested in Florida and was included in the South Atlantic region shown above.

14

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 5—Real Estate (cont.)

Depreciation expense on directly owned real estate investments for the years ended December 31, 2008, 2007 and 2006, was $60 million, $53 million and $50 million, respectively; the amount of accumulated depreciation at December 31, 2008 and 2007 was $374 million and $328 million, respectively.

There were no real estate properties acquired via the assumption of debt or in satisfaction of debt during 2008 or 2007.

The Company’s real estate portfolio does not have any material exposure from sub-prime lenders who are tenants in the buildings that are directly owned.

The Company does not engage in retail land sales operations.

Note 6—Subsidiaries and Affiliates

TIAA’s investment subsidiaries and affiliates have been created for legal or other business reasons and are primarily involved in real estate and securities investment activities for the Company. The larger investment subsidiaries and affiliates are ND Properties, Inc., TIAA Realty, Inc., Ceres Agricultural Properties, LLC and 485 Properties, LLC (in millions):

	2008			2007		2006
Net carrying value	$	4,456		$	4,550	$	3,921
Other than temporary impairment	$	5		$	9	$	11
Net investment income (distributed from investment subs and aff.)	$	82		$	132	$	191
Amounts due (to) from subs and affiliates	$	(31	)	$	2	$	(19	)
Capital contributions	$	1,606		$	1,529	$	231
Return of capital	$	1,168		$	1,216	$	992

The 2008 other-than-temporary impairments relate to real estate investments that were impaired and/or reclassified to Held for Sale, and written down to external appraisal values or estimated net sales price.

TIAA’s operating subsidiaries and affiliates primarily consist of TIAA-CREF Tuition Financing, Inc. (“TFI”), Teachers Personal Investors Services (“TPIS”) and Teachers Advisors, Inc. (“Advisors”) which are wholly-owned subsidiaries of TIAA-CREF Enterprises, Inc. (“Enterprises”) a wholly-owned subsidiary of TIAA, TIAA-CREF Trust Company, FSB (“Trust”), TIAA-CREF Individual & Institutional Services LLC (“Services”), TIAA-CREF Asset Management Commingled Funds Trust I (“TCAM”), TIAA-CREF Investment Management, LLC, TIAA Global Markets, Inc. (“TGM”), TIAA-CREF Redwood, LLC, and Active Extension Funds I and II which are also wholly-owned subsidiaries of TIAA (in millions):

	2008		2007		2006
Net carrying value	$	480	$	810	$	871
Other than temporary impairment	$	141	$	56	$	36
Net investment income (distributed from investment subs and aff.)	$	—	$	—	$	3
Amounts due from subs and affiliates	$	37	$	121	$	58
Capital contributions	$	269	$	148	$	82
Return of capital	$	389	$	228	$	3

The 2008 other-than-temporary impairments were a result of a decline in equity value of three subsidiaries for which the carrying value is not expected to be recovered.

To conform to the NAIC Annual Statement presentation, the Company’s share of net carrying value of these entities is reported as affiliated common stock or as other long-term investments.

TIAA provides a $750 million uncommitted and unsecured 364-day revolving line of credit to TGM. During 2008, there were 5 draw downs totaling $172 million that were repaid by December 31, 2008. During 2007, there were 3 draw downs totaling $500 million that were repaid by December 31, 2007. There is no outstanding principal and accrued interest on this line of credit as of December 31, 2008 or 2007. The carrying value of TGM at December 31, 2008 was $(348) million. Pursuant to TIAA’s guarantee of TGM as disclosed in Note 21, TIAA reported the negative equity of TGM as a liability in Other liabilities on the balance sheet.

TIAA provides a $100 million committed and unsecured 364-day revolving line of credit to TCAM. In 2008, there were 3 draw downs totaling $89 million. In 2007, there were 13 draw downs totaling $314 million. At December 31, 2008 and December 31, 2007, outstanding principal plus accrued interest totaled $36 million and $26 million, respectively.

As of December 31, 2008 and 2007, TIAA’s investments in TIAA-CREF mutual funds totaled approximately $468 million and $863 million, respectively. These amounts are reported in the caption “Common Stocks” in the accompanying balance sheets.

TIAA provides a $100 million unsecured 364-day revolving line of credit to TIAA-CREF Life. As of December 31, 2008, $30 million of this facility was maintained on a committed basis for which TIAA-CREF Life pays a commitment fee of 3 basis points on the undrawn committed amount. During 2008, there were 17 draw downs totaling $41 million which were repaid by December 31, 2008. As of December 31, 2008 outstanding principal plus accrued interest was $ 0.

Note 7—Other Long-Term Investments

The components of TIAA’s carrying value in other long-term investments at December 31 were (in millions):

	2008		2007
Unaffiliated other invested assets	$	6,417	$	6,379
Affiliated other invested assets		3,044		3,003
Contract loans		908		862
Other long-term assets		306		49
Total other long-term investments	$	10,675	$	10,293

As of December 31, 2008, unaffiliated other invested assets of $6,417 million consist primarily of private equity funds of which $4,647 million invest in securities and $1,495 million invest in real estate related holdings. The remaining $275 million of unaffiliated other invested assets consist of defeased loans. As of December 31, 2008, affiliated other invested assets totaling $3,044 million represents investment subsidiaries totaling $2,605 million of which $2,350 million investment in real estate related holdings. The remaining $439 million of affiliated other invested assets represents operating subsidiaries and trusts. Other long-term assets in the table above consist primarily of $299 million in derivatives.

For the years ended December 31, 2008 and 2007, other-than-temporary impairments in other long-term investments for which the carrying value is not expected to be recovered were $552 million and $42 million, respectively.

For the years ended December 31, 2008 and 2007, other long-term investments denominated in foreign currency were $1,411 million and $875 million, respectively.

 

15

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 7—Other Long-Term Investments (cont.)

The Company holds investments in Low Income Housing Tax Credits (“LIHTC”) which have remaining tax credit years ranging from 2 years to 12 years with a required holding period of 15 years. The Company’s investments in LIHTC properties are not currently subject to regulatory review and do not exceed 10% of the Company’s admitted assets.

Note 8—Commitments

The outstanding obligation for future investments at December 31, 2008, is shown below by asset category (in millions):

	2009		2010		In later years		Total Commitments
Bonds	$	162	$	71	$	22	$	255
Mortgages		187		—		—		187
Real estate		4		—		—		4
Common stocks		101		60		3		164
Other long-term investments		1,838		1,873		1,736		5,447
Total	$	2,292	$	2,004	$	1,761	$	6,057

In the preceding table under mortgage commitments for 2009, $45.9 million was withdrawn in January 2009, resulting in a commitment withdrawal fee of $689 thousand.

The funding of bond commitments is contingent upon the continued favorable financial performance of the potential borrowers and the funding of mortgage and real estate commitments are generally contingent upon the underlying properties meeting specified requirements, including construction, leasing and occupancy. Due to TIAA’s due diligence in closing mortgage commitments, there is a lag between commitment and closing. For other long–term investments, primarily fund investments, there are scheduled capital calls that extend into future years.

Included in the amounts of other long-term investments in the above table is the Company’s commitments to purchase tax credits of $8.9 million of which $2.2 million is to be disbursed in 2009 and $6.7 million in later years.

Other long-term investment commitments also include the Company’s limited partnership in the Hines Development Fund Limited Partnership (“Development Fund I & II”) whose primary focus is the development and redevelopment of real estate projects in Western Europe. Each of the limited partners made a specified commitment to the fund; TIAA committed 130 million Euros which is approximately $182 million (in U.S. dollars) to Development Fund I and 100 million Euros which is approximately $140 million (in U.S. dollars) to Development Fund II as of December 31, 2008. The limited partners’ commitments are pledged as collateral to facilitate the financing of the activities of the fund by third parties through equity lines of credit. The limited partners do not anticipate funding their commitments but remain committed to do so should it become necessary for the Development Fund to make cash capital calls.

Note 9—Investment Income and Capital Gains and Losses

Net Investment Income: The components of net investment income for the years ended December 31 were as follows (in millions):

	2008			2007			2006
Bonds	$	8,232		$	7,901		$	7,536
Mortgages		1,290			1,481			1,781
Real estate		285			246			244
Stocks		347			512			368
Other long-term investments		692			918			635
Cash, cash equivalents and short-term investments		95			90			46
Other		9			5			4
Total gross investment income		10,950			11,153			10,614
Less securities lending expenses		—			—			(13	)
Less investment expenses		(451	)		(448	)		(423	)
Net investment income before amortization of net IMR gains		10,499			10,705			10,178
Plus amortization of net IMR gains		60			123			135
Net investment income	$	10,559		$	10,828		$	10,313

Due and accrued income excluded from net investment income is as follows: Bonds in or near default or that are over 90 days past due; Preferred Stocks that are over 90 days past due and with a NAIC designation of 4, 5 or 6; Common Stocks Affiliated related to real estate with rents over 90 days past due; Mortgages with amounts greater than the excess of property value over the unpaid principal balance and on mortgages in default more than eighteen months; and Real Estate relating to rent in arrears for more than 90 days. The total due and accrued income excluded from net investment income was $1 million for both years of 2008 and 2007, and $2 million for 2006.

Future rental income expected to be received under existing real estate leases in effect as of December 31, 2008 (in millions):

	2009		2010		2011		2012		2013		Thereafter		Total
Future rental income	$	149	$	136	$	119	$	99	$	75	$	175	$	753

Realized Capital Gains and Losses: The net realized capital gains (losses) on sales, redemptions and write-downs due to other than temporary impairments for the years ended December 31 were as follows (in millions):

	2008			2007			2006
Bonds	$	(2,822	)	$	(74	)	$	125
Mortgages		(181	)		7			(31	)
Real estate		20			2			70
Stocks		(929	)		77			407
Other long-term investments		(546	)		56			50
Cash, cash equivalents and short-term investments		(33	)		5			7
Total before capital gains taxes and transfers to the IMR		(4,491	)		73			628
Transfers to IMR		41			(44	)		(20	)
Capital gains taxes		—			(166	)		—
Net realized capital (losses) gains less capital gains taxes, after transfers to the IMR	$	(4,450	)	$	(137	)	$	608

16

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 9—Investment Income and Capital Gains and Losses (cont.)

Write-downs of investments resulting from other-than-temporary impairments (“OTTI”), included in the preceding table, were as follows for the years ended December 31 (in millions):

	2008		2007		2006
Other-than-temporary impairments:
Bonds	$	2,467	$	339	$	109
Mortgages		211		49		27
Real estate		23		—		2
Stocks		890		100		33
Other long-term investments		552		42		45
Total	$	4,143	$	530	$	216

The Company did not have any troubled debt restructurings during 2008 or 2007, therefore there were no related losses recognized.

In adherence with statutory accounting principals the Company holds its investments until maturity. The Company performs periodic reviews of its portfolio to identify investments which may have deteriorated in credit quality to determine if any are candidates for sale in order to maintain a quality portfolio of investments. Investments which are deemed candidates for sale are continually monitored until sold and carried at the lower of amortized cost or fair value. In accordance with the Company’s valuation and impairment process the investment will be monitored quarterly for further declines in fair value at which point an other than temporary impairment will be recorded until actual disposal of the investment. Proceeds from sales of long-term bond investments during 2008, 2007 and 2006 were $5,099 million, $4,840 million and $9,275 million, respectively. Gross gains of $111 million, $190 million and $327 million and gross losses, excluding impairments considered to be other-than-temporary, of $646 million, $65 million and $172 million were realized on these sales during 2008, 2007 and 2006, respectively.

Wash Sales: The Company does not engage in the practice of wash sales, however, in isolated case in the course of asset management activities, a security may be sold and repurchased in whole or in part within the thirty-days of the sale when an opportunity to significantly enhance the return on the investment is present.

The details by NAIC designation 3 or below of securities sold during 2008 and 2007, respectively, and reacquired within thirty days of the sale date are (in millions):

	2008
	Number of Transactions	Book Value of Sale		Cost of Repurchases		Gains/ (Losses)
NAIC 3	20	$	17.4	$	17.3	$	0.1
NAIC 4	12		0.4		0.3		—
NAIC 5	5		2.0		2.0		0.1
Total	37	$	19.8	$	19.6	$	0.2

	2007
	Number of Transactions	Book Value of Sale		Cost of Repurchases		Gains/ (Losses)
NAIC 3	6	$	7.5	$	7.5	$	0.1
NAIC 4	2		1.2		1.3		—
Total	8	$	8.7	$	8.8	$	0.1

Unrealized Capital Gains and Losses: The net changes in unrealized capital gains (losses) on investments, resulting in a net increase (decrease) in the valuation of investments for the years ended December 31 were as follows (in millions):

	2008			2007		2006
Bonds	$	(483	)	$	299	$	220
Mortgages		(172	)		95		3
Stocks		(633	)		92		173
Other long-term investments		(1,474	)		379		2
Cash, cash equivalents and short-term investments		5			—		—
Total	$	(2,757	)	$	865	$	398

Note 10—Securitizations

When TIAA sells bonds and mortgages in a securitization transaction, it may retain interest-only strips, one or more subordinated tranches, residual interest, or servicing rights, all of which are retained interests in the securitized receivables. The Company’s ownership of the related retained interests may be held directly by the Company or indirectly through an investment subsidiary. The retained interests are associated with Special Purpose Entities/Qualified Special Purpose Entities (“SPEs/QSPEs”) that issue equity and debt which is non-recourse to the Company. Fair value used to determine gain or loss on a securitization transaction is based on quoted market prices, if available; however, quotes are generally not available for retained interests, so the Company either obtains an estimated fair value from an independent pricing service or estimates fair value internally based on the present value of future expected cash flows using management’s best estimates of future credit losses, forward yield curves, and discount rates that are commensurate with the risks involved.

The Company has not initiated any securitization transactions in which it sold assets held on its balance sheet into SPEs/QSPEs during 2008. Advisors, a downstream subsidiary of TIAA, provides investment advisory services for most assets securitized by the Company.

During 2007, TIAA entered into a securitization transaction in which it sold commercial mortgages with a total principal balance of approximately $2,092 million and recognized a gain of approximately $34 million. TIAA received proceeds of approximately $2,009 million and retained subordinated interests with a fair value of approximately $77 million. The total cash flows received on interests retained were approximately $2,017 million for the year ending 2007. TIAA’s total principal amount outstanding is $2,092 million, the derecognized piece is $2,009 million, and the retained principal amount is $83 million. There were no delinquencies or credit losses at December 31, 2008, 2007 and 2006, respectively.

 

17

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 10—Securitizations

The following table summarizes the Company’s retained interests in securitized financial assets from transactions originated since 2000 (in millions):

							Sensitivity Analysis of Adverse Changes in Key Assumptions
Issue Year	Type of Collateral	Carrying Value		Estimated Fair Value			10% Adverse			20% Adverse
2000	Bonds	$	73	$	66	(a)	$	(2	)	$	(4	)
2001	Bonds	$	238	$	211	(b)	$	(6	)	$	(11	)
2002	Bonds	$	27	$	4	(c)	$	—		$	(1	)
2007	Mortgages	$	76	$	32	(d)	$	(1	)	$	(3	)

The key assumptions applied to both the fair values and sensitivity analysis of the retained interests on December 31, 2008 was as follows:

(a) The retained interests securitized in 2000 are valued utilizing a discounted cash flow methodology. Cash flows are discounted at rates ranging from 8.47% to 12.47%. Considerations in the determination of discount rates would include transaction structure and credit quality of underlying assets. To test valuation sensitivity, the fair values of the retained interests were recalculated using 10% and 20% adverse changes in the overall discount rate.

(b) The retained interests securitized in 2001 were valued using an independent third-party pricing service, which uses the discounted cash flow analysis of anticipated cash flows. Cash flows are discounted at rates ranging from 7.46% to 72.65% (weighted average rate of 10.64%). Considerations in the determination of discount rates would include transaction structure and credit quality of underlying assets. To test valuation sensitivity, the fair values of the retained interests were recalculated using 10% and 20% adverse changes in the overall discount rate.

(c) The retained interests securitized in 2002 was valued using an independent third-party pricing service. Cash flows are discounted at 61.21%. Considerations in the determination of discount rates would include transaction structure and credit quality of underlying assets. To test valuation sensitivity, the fair values of the retained interests were recalculated using 10% and 20% adverse changes in the overall discount rates.

(d) The retained interests securitized in 2007 were valued using an independent third-party pricing service, which uses the discounted cash flow analysis of anticipated cash flows, including assumptions of anticipated prepayment speeds. Cash flows are discounted at rates ranging from 12.01% to 83.89% (weighted average rate of 20.63%). Considerations in the determination of discount rates would include transaction structure and credit quality of underlying assets. To test valuation sensitivity, the fair values of the retained interests were recalculated using 10% and 20% adverse changes in the overall discount rates.

Note that the sensitivity analysis above does not give effect to any offsetting benefits of financial instruments which may hedge the risks inherent to these financial interests. Additionally, changes in particular assumptions, such as discount rates, may in practice change other valuation assumptions which may magnify or counteract the effect of these disclosed sensitivities.

Note 11—Disclosures About Fair Value of Financial Instruments

Included in the Company’s financial statements are certain financial instruments carried at fair value. Other financial instruments are periodically measured at fair value, such as when impaired, or, for certain bonds and preferred stock when carried at the lower of cost or market.

The fair value of an asset is the amount at which that asset could be bought or sold in a current transaction between willing parties, that is, other than in a forced or liquidation sale. The fair value of a liability is the amount at which that liability could be incurred or settled in a current transaction between willing parties, that is, other than in a forced or liquidation sale.

Fair values are based on quoted market prices when available. When market prices are not available, fair values are primarily provided by a third party pricing service for identical or comparable assets, or through the use of valuation methodologies using observable market inputs. These fair values are generally estimated using discounted cash flow analyses, incorporating current market inputs for similar financial instruments with comparable terms and credit quality. In instances where there is little or no market activity for the same or similar instruments, the Company estimates fair value using methods, models and assumptions that management believes market participants would use to determine a current transaction price. These valuation techniques involve management estimation and judgment which becomes significant with increasingly complex instruments or pricing models. Where appropriate, adjustments are included to reflect the risk inherent in a particular methodology, model or input used.

The Company’s financial assets and liabilities carried at fair value have been classified, for disclosure purposes, based on a hierarchy defined by SFAS 157,Fair Value Measurements. The hierarchy gives the highest ranking to fair values determined using unadjusted quoted prices in active markets for identical assets and liabilities (Level 1) and the lowest ranking to fair values determined using methodologies and models with unobservable inputs (Level 3). An asset’s or a liability’s classification is based on the lowest level input that is significant to its measurement. For example, a Level 3 fair value measurement may include inputs that are both observable (Levels 1 and 2) and unobservable (Level 3). The levels of the fair value hierarchy are as follows:

Level 1—Values are unadjusted quoted prices for identical assets and liabilities in active markets accessible at the measurement date.

Level 2—Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices from those willing to trade in markets that are not active, or other inputs that are observable or can be corroborated by market data for the term of the instrument. Such inputs include market interest rates and volatilities, spreads and yield curves.

Level 3—Certain inputs are unobservable (supported by little or no market activity) and significant to the fair value measurement. Unobservable inputs reflect the Company’s best estimate of what hypothetical market participants would use to determine a transaction price for the asset or liability at the reporting date.

18

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 11 – Disclosures About Fair Value of Financial Instruments (cont.)

FINANCIAL ASSETS AND LIABILITIES MEASURED AT FAIR VALUE ON A RECURRING BASIS:

The following table provides information as of December 31, 2008 about the Company’s financial assets and liabilities measured at fair value on a recurring basis (in millions):

	Level 1		Level 2			Level 3		Total
Assets at fair value:
Common stocks	$	581	$	274		$	—	$	855
Derivatives		—		282			—		282
Separate accounts, net		951		512			11,010		12,473
Total assets at fair value	$	1,532	$	1,068		$	11,010	$	13,610
Liabilities at fair value:
Derivatives	$	—	$	(195	)	$	—	$	(195	)
Total liabilities at fair value	$	—	$	(195	)	$	—	$	(195	)

Fair values and changes in the fair values of separate account assets generally accrue directly to the policyholders and therefore there is no net impact to the Company’s revenues and expenses or surplus.

Changes in Level 3 Assets and Liabilities measured at Fair Value on a recurring basis

The following is a reconciliation of the beginning and ending balances for net assets measured at fair value on a recurring basis using Level 3 inputs during the year ended December 31, 2008 (in millions):

	Separate Account Net Assets
Balance at 1/1/08:	$	13,823
Total gains or losses (realized/unrealized) included in surplus		(2,518	)
Other activity		(295	)
Balance at 12/31/08	$	11,010

Separate account net assets consist of directly owned real estate, joint ventures, limited partnerships and a note receivable held by the Real Estate Account (“REA”) net of mortgages issued to REA. The impact on overall surplus is offset by concurrent changes in value in both separate account assets and separate account liabilities in the Company’s Statement of Assets, Liabilities and Capital and Contingency Reserves. Other activity consists principally of acquisitions of properties or ownership interests and assumptions of mortgages and principal repayments made thereon.

ASSETS MEASURED AT FAIR VALUE ON A NON-RECURRING BASIS:

Certain financial assets are measured at fair value on a non-recurring basis, such as certain bonds and preferred stock valued at the lower of cost or fair value, or investments that are impaired during the reporting period and recorded at fair value on the balance sheet at December 31, 2008. The following table summarizes the changes in assets measured at fair value on a non-recurring basis as of December 31, 2008 and the related net gains and losses for those items (in millions):

	Level 1		Level 2		Level 3		Total Gains (Losses)
Bonds	$	—	$	1,353	$	35	$	(1,811	)
Preferred Stock		28		223		3		(524	)
Other Long Term Investments		—		—		906		(740	)
Sub-total	$	28	$	1,576	$	944	$	(3,075	)

Described below are the Company’s application of the fair value hierarchy to its assets and liabilities carried at fair value on a recurring and non-recurring basis:

Level 1 Financial Instruments

Unadjusted quoted prices for these securities are provided to the Company by independent pricing services. Common stock and separate account assets in Level 1 primarily include mutual fund investments valued by the respective mutual fund companies and exchange-listed equities. Preferred stocks carried on a lower of cost or market basis are those that trade in an active market where prices for identical securities are readily available.

Level 2 Financial Instruments

Typical inputs to models used by independent pricing services include but are not limited to benchmark yields, reported trades, broker-dealer quotes, issuer spreads, benchmark securities, bids, offers, reference data, and industry and economic events. Because most bonds and preferred stocks do not trade daily, independent pricing services regularly derive fair values using recent trades of securities with similar features. When recent trades are not available, pricing models are used to estimate the fair values of securities by discounting future cash flows at estimated market interest rates.

If an independent pricing service is unable to provide the fair value for a security due to insufficient market information, such as for a private placement transaction, the Company will determine the fair value internally using a matrix pricing model. This model estimates fair value using discounted cash flows at a market yield considering the appropriate treasury rate plus a spread. The spread is derived by reference to similar securities, and may be adjusted based on specific characteristics of the security, including inputs that are not readily observable in the market. The Company assesses the significance of unobservable inputs for each security priced internally and classifies that security in Level 2 only if the unobservable inputs are insignificant.

Common stocks included in Level 2 include those which are traded in an inactive market or for which prices for identical securities are not available.

Derivative assets and liabilities classified in Level 2 represent over-the-counter instruments that include, but are net limited to, fair value hedges using foreign currency swaps, foreign currency forwards, interest rate swap and credit default swaps. Fair values for these instruments are determined internally using market observable inputs that include, but are not limited to, forward currency rates, interest rates, credit default rates and published observable market indices.

Separate account assets in Level 2 consist principally of short-term government agency notes and commercial paper. Preferred stocks in Level 2 are those carried on a lower of cost or market basis using daily trade prices based on prices for similar

 

19

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 11 – Disclosures About Fair Value of Financial Instruments (cont.)

securities observable in the market. Bonds carried in Level 2 are composed of corporate bonds and asset-backed securities.

Level 3 Financial Instruments

Bonds classified as Level 3 include asset-backed securities that were manually priced. Valuation of separate account net assets and liabilities classified in Level 3 is generally based on discounted cash flow analyses which utilize market rates, but valuation methods may also include cost and comparable sales approaches.

Other long term assets in Level 3 include private equity holdings, real estate partnerships and investment interests in affiliates where carrying values approximate market or where permanent impairments were taken.

Fair Value of Financial Instruments

The estimated fair value amounts of financial instruments presented in the following tables were determined by the Company using market information available as of December 31, 2008 and 2007 and appropriate valuation methodologies. However, considerable judgment may be required to interpret market data in developing the estimates of fair value for financial instruments for which there are no available market value quotations. The estimates presented are not necessarily indicative of the amounts the Company could have realized in a market exchange. The use of different market assumptions and/or estimation methodologies may have a material effect on the estimated fair value amounts.

(In millions)	Carrying Value	Estimated Fair Value
December 31, 2008
Assets
Bonds	135,680	118,902
Mortgages	19,668	18,799
Preferred stocks	3,216	2,161
Common stocks	3,017	4,328
Cash, cash equivalents and short-term investments	5,553	5,553
Contract loans	908	908
Derivative financial instruments	299	334
Separate account assets	12,473	12,473
Liabilities
Liability for deposit-type contracts	500	500
Derivative financial instruments	370	481
Separate account liabilities	12,319	12,319

(In millions)	Carrying Value	Estimated Fair Value
December 31, 2007
Assets
Bonds	131,859	133,020
Mortgages	20,443	20,919
Preferred stocks	4,375	4,144
Common stocks	4,190	6,039
Cash, cash equivalents and short-term investments	1,603	1,603
Contract loans	862	862
Derivative financial instruments	44	45
Separate account assets	19,021	19,021
Liabilities
Liability for deposit-type contracts	454	454
Derivative financial instruments	810	868
Separate account liabilities	19,021	19,021

Bonds: The fair values for publicly traded long-term bond investments were determined using prices provided by third party pricing services. For privately placed long-term bond investments without a readily ascertainable market value, such values were determined with the assistance of an independent pricing service utilizing a discounted cash flow methodology based on coupon rates, maturity provisions and credit assumptions.

The aggregate carrying value and estimated fair value of publicly traded and privately placed bonds at December 31 were as follows (in millions):

	2008				2007
	Carrying Value		Estimated Fair Value		Carrying Value		Estimated Fair Value
Publicly traded bonds	$	100,695	$	91,019	$	96,235	$	96,573
Privately placed bonds		34,985		27,883		35,624		36,447
Total bonds	$	135,680	$	118,902	$	131,859	$	133,020

Mortgages: The fair values of mortgages were generally determined by discounted cash flow methodology based on coupon rates, maturity provisions and credit assumptions.

Preferred Stocks: The fair values of preferred stocks were determined using prices provided by third party pricing or valuations from the NAIC.

Common Stocks:Fair value of unaffiliated common stock is based on quoted market prices, where available, or prices provided by state regulatory authorities. The Company estimates the fair value of its common stock affiliated by determining the fair value of the underlying assets of the affiliated entities.

Cash, Cash Equivalents, and Short-Term Investments: The carrying values were considered reasonable estimates of fair value.

Contract Loans: Contract loans are stated at outstanding principal balances.

Deposit-type contracts: For deposit-type contracts the fair value approximates the carrying value. The carrying value is payable upon demand.

Derivative Financial Instruments: The fair value of interest rate cap contracts and credit default swap contracts are estimated by external parties and are reviewed internally for reasonableness based on anticipated interest rates, estimated future cash flows, and anticipated credit market conditions. The fair value of for-

20

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 11 – Disclosures About Fair Value of Financial Instruments (cont.)

eign currency swaps and forward contracts and interest rate swap contracts are estimated internally based on estimated future cash flows, anticipated foreign exchange relationships and anticipated interest rates and such values are reviewed for reasonableness with estimates provided by TIAA’s counterparties.

Note 12—Derivative Financial Instruments

The Company uses derivative instruments for hedging, income generation, and asset replication purposes. The Company does not engage in derivative financial instrument transactions for speculative purposes. The Company enters into derivatives directly with counterparties of high credit quality (i.e., rated AA- or better at the date of a transaction) and monitors counterparty credit quality on an ongoing basis. The Company does not require or post cash collateral on derivative instruments. TIAA’s counterparty credit risk is limited to the net positive fair value of its derivative positions for each individual counterparty, unless otherwise described below. Effective January 1, 2003 TIAA adopted SSAP 86,“Accounting for Derivative Instruments and Hedging Activities,” and has applied this statement to all derivative transactions entered into or modified on or after that date. On September 12, 2008, FASB issued FSP FAS 133-1 and FIN 45-4. This FSP amendsFASB Statement No. 133, Accounting for Derivative instruments and Hedging Activities (FAS 133) and defines certain disclosures by sellers of credit derivatives, including credit derivatives embedded in a hybrid instrument. This FSP also amendsFASB interpretation No. 45, Guarantor’s Accounting and Disclosure Requirements for Guarantees, Including Indirect Guarantees of Indebtedness to Others (“FIN 45”) and defines additional disclosure about the current status of the payment/performance risk of a guarantee. The NAIC has adopted the FSP disclosures included within FAS 133 and FIN 45 for annual audited statements in accordance with guidelines provided by the Statutory Accounting Principles Working Group.

Foreign Currency Swap Contracts: TIAA enters into foreign currency swap contracts to exchange fixed and variable amounts of foreign currency at specified future dates and at specified rates (in U.S. dollars) as a cash flow hedge to manage currency risks on investments denominated in foreign currencies. This type of derivative instrument is traded over-the-counter, and the Company is exposed to both market and counterparty risk. The changes in the carrying value of foreign currency exchange rates are recognized as unrealized gains or losses. Derivative instruments used in hedging transactions that do not qualify for hedge accounting treatment are accounted for at fair value. The net unrealized gain for the year ended December 31, 2008, from foreign currency swap contracts that do not qualify for hedge accounting treatment was $537.1 million. The net realized loss for the year ended December 31, 2008, from all foreign currency swap contracts was $78.1 million.

Equity Index Options: TIAA purchases out-of-the- money put options on the S&P 500 Index to hedge a portion of the General Account equity position against a sudden or sustained decline in value. These options are traded over-the-counter and the Company is exposed to both market and counterparty risk. These instruments are carried at fair value. On December 31, 2008, the Company did not hold any Equity Index Options. The net realized gain for the year ended December 31, 2008, from all Equity Index Option contracts was $1.6 million.

Foreign Currency Forward Contracts: TIAA enters into foreign currency forward contracts to exchange foreign currency at specified future dates and at specified rates (in U.S. dollars) as a cash flow hedge to manage currency risks on investments denominated in foreign currencies. This type of derivative instrument is traded over-the-counter, and the Company is exposed to both market and counterparty risk. The changes in the value of the contracts related to foreign currency exchange rates are recognized as unrealized gains or losses. A foreign exchange premium/(discount) is recorded at the time a contract is opened, based on the difference between the forward exchange rate and the spot rate. The Company amortizes the foreign exchange premium/(discount) into investment income over the life of the forward contract or at the settlement date, if the forward contract is less than a year. The net unrealized gain for the year ended December 31, 2008, from foreign currency forward contracts that do not qualify for hedge accounting treatment was $30.2 million. The net realized loss for the year ended December 31, 2008, from all foreign currency forward contracts was $4.1 million.

Interest Rate Swap Contracts: TIAA enters into interest rate swap contracts to hedge against the effect of interest rate fluctuations on certain variable interest rate bonds. These contracts are designated as cash flow hedges and allow TIAA to lock in a fixed interest rate and to transfer the risk of higher or lower interest rates. This type of derivative instrument is traded over-the-counter, and the Company is exposed to both market and counterparty risk. TIAA also enters into interest rate swap contracts to exchange the cash flows on certain fixed interest rate bonds into variable interest rate cash flows. These contracts are entered into as a fair value hedge in connection with certain interest sensitive products. Generally, no cash is exchanged at the outset of the contract and no principal payments are made by either party. These transactions are entered into pursuant to master agreements that provide for a single net payment to be made by one counterparty at each due date. Net payments received and net payments made or accrued under interest rate swap contracts are included in net investment income. Derivative instruments used in hedging transactions that do not meet or no longer meet the accounting criteria of an effective hedge are accounted for at fair value. The net unrealized gain for the year ended December 31, 2008, from interest rate swap contracts that do not qualify for hedge accounting treatment was $32.5 million. The net realized gain for the year ended December 31, 2008, from all interest rate swap contracts was $0.6 million.

Credit Default Swap Contracts: The Company purchases credit default swaps (“CDS”) to hedge against unexpected adverse credit events on selective investments in the TIAA portfolio. As economic events unfolded during 2008, TIAA increased its purchases of credit default swaps. These swap contracts qualify as fair value hedges and the premium payment to the counterparty is expensed as incurred. Derivative instruments used in hedging transactions that do not meet or no longer meet the criteria of an effective hedge are accounted for at fair value. The net unrealized gain for the year

 

21

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 12—Derivative Financial Instruments (cont.)

ended December 31, 2008, from credit default swap contracts that do not qualify for hedge accounting treatment was $21.6 million. The net realized gain for the year ended December 31, 2008, from credit default swap contracts was $1.7 million.

Credit Default Swaps used in Replication Transactions: A Replication Synthetic Asset Transaction (“RSAT”) is a written credit derivative transaction (the derivative component) entered into concurrently with another fixed income instrument (the cash component) in order to “replicate” the investment characteristics of another instrument (the reference entity).

As part of a strategy to replicate desired credit exposure in conjunction with high-rated host securities, TIAA writes (sells) credit default swaps on either single name corporate credits or credit indices and provides credit default protection to the buyer. This type of derivative instrument is traded over-the-counter, and the Company is exposed to market, credit and counterparty risk. The carrying value of credit default swaps represents the unamortized premium received for selling the default protection. This premium is amortized into investment income over the life of the swap. The Company has negligible counterparty credit risk with the buyer.

Events or circumstances that would require the Company to perform under a written credit derivative position may include, but are not limited to, bankruptcy, failure to pay, debt moratorium, debt repudiation, restructuring of debt and acceleration or default. The maximum potential amount of future payments (undiscounted) the Company could be required to

make under the credit derivative is represented by the Notional amount of the contract. Should a credit event occur, the amounts owed to a counterparty by TIAA may be subject to recovery provisions that include, but are not limited to:

1. Notional amount payment by TIAA to Counterparty and delivery of physical security by Counterparty to TIAA.

2. Notional amount payment by TIAA to Counterparty net of contractual recovery fee.

3. Notional amount payment by TIAA to Counterparty net of auction determined recovery fee.

The following table contains information related to replication positions where credit default swaps have been sold by the Company on the Dow Jones North American Investment Grade Bond Series of indexes (DJ.NA.IG). The index is comprised of 125 of the most liquid investment grade credits domiciled in North America and represents a broad exposure to the investment grade corporate market. TIAA has written contracts on the overall index, whereby TIAA is obligated to perform should a credit event occur with any reference entity that comprises the index. TIAA has also written contracts on the “Super Senior” (30% to 100%) Tranche of the Dow Jones North American Investment Grade Bond Series # 9 Index (DJ.NA.IG.9), whereby TIAA is obligated to perform should the default rate of the entire index exceed 30%. The maximum potential amount of future payments (undiscounted) the Company could be required to make under these positions is represented by the notional amount. TIAA will record an impairment (realized loss) on a derivative position if an existing condition or set of circumstances indicates there is limited ability to recover an unrealized loss.

(In millions)	Term	Notional	Average Annual Premium Received		Fair Value		Impairment
Asset Class
DJ Investment Grade Index	less than 2 years	853	0.43	%	(46	)	(23	)
DJ Investment Grade Index	2–3 years	488	0.40	%	(33	)	(18	)
DJ Investment Grade Index	3–4 years	171	0.35	%	(10	)	(5	)
Super Senior Tranche DJ.NA.IG.9	3–4 years	4,764	0.79	%	48		—
Totals		6,276			(41	)	(46	)

The following table contains information related to replication positions where credit default swaps have been sold by the Company on individual debt obligations of corporations and sovereign nations. The maximum potential amount of future payments (undiscounted) the Company could be required to make under these positions is represented by the Notional amount. TIAA will record an impairment (realized loss) on a derivative position if an existing condition or set of circumstances indicates there is limited ability to recover an unrealized loss.

(In millions)	Term	Notional	Average Annual Premium Received		Fair Value		Impairment
Asset Class
Corporate	0–6 years	240	0.82	%	(20	)	(9	)
Sovereign	0–5 years	130	2.01	%	(11	)	—
Total		370			(31	)	(9	)

22

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 12—Derivative Financial Instruments (cont.)

Information related to the credit quality of replication positions where credit default swaps have been sold by the Company on indexes, individual debt obligations of corporations and sovereign nations appears below. The values are listed in order of their NAIC Credit Designation asset, with a designation of 1 having the highest credit quality and designations of 4 or below as low credit quality based on the underlying asset referenced by the credit default swap.

(In millions)	Reference Entity Asset Class	RSAT Notional Amount	Derivative Component Fair Value		Cash Component Fair Value	RSAT Fair Value
RSAT NAIC Designator
1 Highest Quality	Index	—	—		—	—
	Tranche	4,764	48		5,835	5,883
	Corporate	145	(5	)	173	168
	Sovereign	10	(1	)	14	13
	Subtotal	4,919	42		6,022	6,064
2 High Quality	Index	1,512	(89	)	1,217	1,128
	Tranche	—	—		—	—
	Corporate	90	(10	)	106	96
	Sovereign	35	(5	)	49	44
	Subtotal	1,637	(104	)	1,372	1,268
3 Medium Quality	Index	—	—		—	—
	Tranche	—	—		—	—
	Corporate	—	—		—	—
	Sovereign	80	(6	)	109	102
	Subtotal	80	(6	)	109	102
4 Low Quality	Index	—	—		—	—
	Tranche	—	—		—	—
	Corporate	5	(3	)	7	4
	Sovereign	5	(1	)	6	5
	Subtotal	10	(4	)	13	9
Total		6,646	(72	)	7,516	7,443

		2008					2007
(In millions)		Notional	Carrying Value		Estimated FV		Notional	Carrying Value		Estimated FV
Foreign currency swap contracts	Assets	1,798	202		210		252	13		14
	Liabilities	1,461	(290	)	(344	)	3,235	(776	)	(819	)
	Subtotal	3,259	(88	)	(134	)	3,487	(763	)	(805	)
Foreign currency forward contracts	Assets	90	19		19		73	1		1
	Liabilities	150	(16	)	(16	)	215	(27	)	(27	)
	Subtotal	240	3		3		288	(26	)	(26	)
Interest rate swap contracts	Assets	490	49		49		361	17		17
	Liabilities	3	—		—		39	—		—
	Subtotal	493	49		49		400	17		17
Credit default swap contracts (RSAT)	Assets	5,109	—		26		436	—		—
	Liabilities	1,537	(57	)	(98	)	1,424	(3	)	(19	)
	Subtotal	6,646	(57	)	(72	)	1,860	(3	)	(19	)
Credit default swap contracts (other)	Assets	660	28		28		215	2		2
	Liabilities	473	(7	)	(7	)	291	(3	)	(3	)
	Subtotal	1,133	21		21		506	(1	)	(1	)
Equity Index Options	Assets	—	—		—		600	11		11
	Liabilities	—	—		—		—	—		—
	Subtotal	—	—		—		600	11		11
Total Derivatives	Assets	8,147	298		332		1,937	44		45
	Liabilities	3,624	(370	)	(465	)	5,204	(809	)	(868	)
	Total	11,771	(72	)	(133	)	7,141	(765	)	(823	)

During 2008, the average fair value of derivatives used for other than hedging purposes, which are the credit default swaps used in replication synthetic asset transactions was $48 million in liabilities.

 

23

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 13—Separate Accounts

The TIAA Separate Account VA-1 (“VA-1”) is a segregated investment account and was organized on February 16, 1994 under the insurance laws of the State of New York for the purpose of TIAA issuing and funding individual variable annuity contracts. VA-1 was registered with the Securities and Exchange Commission, (the “Commission”) effective November 1, 1994 as an open-end, diversified management investment company under the Investment Company Act of 1940. Currently, VA-1 consists of a single investment portfolio, the Stock Index Account (“SIA”). The SIA was established on October 3, 1994 and invests in a diversified portfolio of equity securities selected to track the overall market for common stocks publicly traded in the United States.

The TIAA Real Estate Account (“REA”) is a segregated investment account and was organized on February 22, 1995 under the insurance laws of the State of New York for the purpose of funding variable annuity contracts. REA was registered with the Commission under the Securities Act of 1933 effective October 2, 1995. REA’s target is to invest between 75% and 85% of its assets directly in real estate or in real estate-related investments, with the remainder of its assets invested in money market instruments, government and corporate debt securities and other publicly traded securities to maintain adequate liquidity.

The TIAA Separate Account VA-3 (“VA-3”) is a segregated investment account and was organized on May 17, 2006 under the laws of the State of New York for the purposes of funding individual and group variable annuities for employees of colleges, universities, other educational and research organizations, and other governmental and non-profit institutions. Its main purpose is to invest funds for retirement and pay income based on a choice of investment accounts. VA-3 is registered with the Commission as an investment company under the Investment Company Act of 1940, effective September 29, 2006, and operates as a unit investment trust.

Other than the guarantees disclosed in Note 21, the Company does not make any guarantees to policyholders on its separate accounts. All accounts offer full or partial withdrawal at market value with no surrender charges. The assets and liabilities of these accounts (which represent participant account values) are carried at fair value (directly held real estate is carried at appraised value).

Information regarding separate accounts of the Company for the years ended December 31 is as follows (in millions):

	Non-guaranteed Separate Accounts
		2008		2007		2006
Premiums and considerations	$	2,035	$	3,343	$	3,356
Reserves:
For accounts with assets at:
Fair value	$	12,127	$	18,752	$	15,126
Amortized cost		—		—		—
Total reserves	$	12,127	$	18,752	$	15,126
By withdrawal characteristics:
At fair value	$	12,127	$	18,752	$	15,126
Total reserves	$	12,127	$	18,752	$	15,126

The following is a reconciliation of transfers to or (from) the Company to the Separate Accounts (in millions):

	2008			2007			2006
Transfers as reported in the Summary of Operations of the Separate Accounts Statement:
Transfers to Separate Accounts	$	2,217		$	3,698		$	3,647
Transfers from Separate Accounts		(6,443	)		(2,186	)		(1,741	)
Net transfers (from) or to Separate Accounts	$	(4,226	)	$	1,512		$	1,906
Reconciling Adjustments:
Fund transfer exchange loss	$	(3	)	$	(1	)	$	(3	)
Transfers as reported in the Summary of Operations of the Life, Accident & Health Annual Statement	$	(4,229	)	$	1,511		$	1,903

Note 14—Management Agreements

Under Cash Disbursement and Reimbursement Agreements, TIAA serves as the common pay-agent for its operating subsidiaries. The Company has allocated expenses of $1,327 million to its various subsidiaries and affiliates during 2008. In addition, under management agreements, TIAA provides investment advisory and administrative services for TIAA-CREF Life and administrative services to the TIAA-CREF Trust Company, FSB, and VA-1.

Activities necessary for the operation of the College Retirement Equities Fund (“CREF”), a companion organization, are provided at cost by two subsidiaries of TIAA, TIAA-CREF Investment Management, LLC (“Investment Management”) and Services, which provide investment advisory, administrative and distribution services for CREF.

Such services are provided in accordance with an Investment Management Services Agreement between CREF and Investment Management, and in accordance with a Principal Underwriting and Administrative Services Agreement between CREF and Services. The management fees collected under these agreements and the equivalent allocated expenses, which amounted to approximately $1,142 million, $1,075 million and $889 million in 2008, 2007 and 2006, respectively, are not included in the statements of operations and had no effect on TIAA’s operations.

Advisors provide investment advisory services for VA-1, certain proprietary funds and other separately managed portfolios in accordance with investment management agreements. TPIS and Services distribute variable annuity contracts for VA-1 and VA-3 as well as registered securities for certain proprietary funds and non-proprietary mutual funds.

All services necessary for the operation of REA are provided at cost by TIAA and Services. TIAA provides investment management and administrative services for REA. Distribution services are provided in accordance with a Distribution Services Agreement between REA and Services. Effective January 1, 2008 the Distribution and Administrative Services Agreement between REA and Services was modified to limit the work performed by Services to distribution activities with TIAA assuming responsibility for all administrative activities. TIAA and Services receive management fee payments from REA on a daily basis according to formulae established each year and adjusted periodically, and

24

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 14—Management Agreements (cont.)

with the objective of keeping the management fees as close as possible to actual expenses attributable to operating REA. Any differences between actual expenses and daily charges are adjusted quarterly.

The following are the amounts due to/(from) subsidiaries and affiliates as of December 31, 2008 (in millions):

	Receivable				Payable
Subsidiary/Affiliate	2008		2007		2008		2007
College Retirement Equities Fund	$	—	$	89.5	$	68.0	$	23.9
Investment Management		6.3		—		—		1.2
TIAA-CREF Life		12.1		24.3		—		—
TIAA Pension		0.6		—		—		—
TIAA-CREF Trust Company FSB		—		1.2		0.1		—
Services		2.0		0.4		0.6		—
TIAA Real Estate Account		1.6		10.4		—		—
Total	$	22.6	$	125.8	$	68.7	$	25.1

Note 15—Federal Income Taxes

By charter, TIAA is a Stock Life Insurance Company that operates on a non-profit basis, and through December 31, 1997 was exempt from federal income taxation under the Internal Revenue Code. Any non-pension income, however, was subject to federal income taxation as unrelated business income. Effective January 1, 1998, as a result of federal legislation, TIAA is no longer exempt from federal income taxation and is taxed as a stock life insurance company.

Beginning with 1998, TIAA has filed a consolidated federal income tax return with its includable affiliates (the “consolidating companies”). The consolidating companies have a tax-sharing agreement that follows the current reimbursement method, whereby members of the group will generally be reimbursed for their losses on a pro-rata basis by other members of the group to the extent that they have taxable income, subject to limitations imposed under the Code. Amounts due to (receivable from) TIAA’s subsidiaries for federal income taxes were $10.3 million and $(43.0) million at December 31, 2008 and 2007, respectively. The consolidating companies, as of December 31, 2008, which file a consolidated federal income tax return with TIAA are as follows:

 1) TIAA-CREF Life Insurance Company

 2) TIAA-CREF Enterprises, Inc.

 3) Dan Properties, Inc.

 4) JV Georgia One, Inc.

 5) Teachers Michigan Properties, Inc.

 6) JV Minnesota One, Inc.

 7) JWL Properties, Inc.

 8) Liberty Place Retail, Inc.

 9) MOA Enterprises, Inc.

10) ND Properties, Inc.

11) Savannah Teachers Properties, Inc.

12) TCT Holdings, Inc.

13) Teachers Advisors, Inc.

14) Teachers Boca Properties II, Inc.

15) Teachers Pennsylvania Realty, Inc.

16) Teachers Personal Investors Service, Inc.

17) T-Investment Properties Corp.

18) T-Land Corp.

19) WRC Properties, Inc.

20) TIAA-CREF Tuition Financing, Inc.

21) TIAA-CREF Trust Company, FSB

22) MOA Investors I, Inc.

23) 730 Texas Forest Holdings, Inc.

24) TIAA Global Markets, Inc.

25) T-C Sports Co., Inc.

26) TIAA Board of Overseers

27) TIAA Realty, Inc.

28) TIAA Park Evanston, Inc.

29) Port Northwest IV Corporation

In April of 2004, the IRS completed its audit of the 1998 and 1999 tax returns, the first years in which TIAA’s entire business operations were subject to federal income taxation, and presented TIAA with a Revenue Agent Report asserting certain adjustments to TIAA’s taxable income that would have resulted in an additional tax due of $1.1 billion for the 1998 and 1999 tax years. These adjustments would have disallowed the deductions for certain intangible assets and would adjust certain TIAA tax-basis annuity reserves. In April of 2006, the Internal Revenue Service (“IRS”) completed its audit of the 2000, 2001 and 2002 tax returns and presented a Revenue Agent Report asserting certain adjustments to TIAA’s taxable income that would have resulted in additional tax due of $391 million for the 2000, 2001 and 2002 tax years. These adjustments were the same issues as those raised in 1998 and 1999.

On September 12, 2008, TIAA executed the second and final settlement with the IRS Appeals Division resolving all remaining issues for tax years 1998-2002. The primary issue before the IRS Appeals Division was the deduction of losses claimed with regard to certain intangible assets. The IRS conceded that $4.8 billion was deductible for losses related to the termination of pension contracts in force on January 1, 1998, the date that TIAA lost its federal tax exemption. The IRS also allowed losses of $9.4 million claimed for the abandonment of developed software. Additional losses claimed by TIAA of $1.9 billion were disallowed as part of the settlement.

As a result of this settlement TIAA has reduced its December 31, 2007 contingent tax reserve of $1.1 billion to zero. Federal capital gains tax accrued as of December 31, 2007 of $166.1 million has been reduced to zero as a result of the offset of current year net capital losses which may be offset with net capital gains. These adjustments have been reflected in the Summary of Changes in Capital and Contingency Reserves for the twelve months ended December 31, 2008. Additionally, TIAA recorded a gross deferred tax asset as of December 31, 2008 of $8.8 billion related to the expected future deduction of losses with regard to intangible assets recognized as a result of the 2008 IRS settlement. Substantially all of such deferred tax assets are non–admitted in accordance with statutory accounting principles.

On April 5, 2007, TIAA executed a partial first settlement with the IRS Appeals Division resolving the disputed adjustments to tax-basis annuity reserves for the tax years 1998-2002. TIAA agreed to a permanent adjustment of $273.0 million, which reduced the tax-basis annuity reserves for TIAA contracts in force at the beginning of 1998, TIAA’s first year as a taxable entity. In addition, a temporary adjustment of $1.7 billion was applied to TIAA’s 1998 reserve deductions. This adjustment related to reserves established for new rights added to TIAA payout annuity

 

25

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 15—Federal Income Taxes (cont.)

contracts enabling contract-holders to transfer annuity balances into other investment vehicles in accordance with appropriate terms and conditions in the annuity contract. This $1.7 billion adjustment will be recovered by TIAA through deductions over a 20 year period which began with its 2006 tax return. With one exception that is not material, the IRS agreed to accept all deductions related to the annuity reserves as claimed by TIAA on its 1999-2002 tax returns. With respect to deductions for years subsequent to 2004, no binding agreement has been reached with the IRS for reserves associated with the annuity transferability option, since these years were not before IRS Appeals Division. Management believes, however, that it is reasonable to expect that deductions related to subsequent years will not be subject to adjustment by the IRS in future audits, and has not provided for any related contingency reserve. As a result of this settlement, TIAA in the year ended December 31, 2006, reduced its previously established contingent reserve which adjusted statutory surplus by $1.0 billion.

The components of TIAA’s net deferred tax asset were as follows (in millions):

	2008			2007			Change
Gross deferred tax assets	$	16,382		$	3,114		$	13,268
Gross deferred tax liabilities		(330	)		(71	)		(259	)
Net deferred tax asset		16,052			3,043			13,009
Deferred tax assets, non-admitted		(14,671	)		(1,967	)		(12,704	)
Net deferred tax asset, admitted	$	1,381		$	1,076		$	305

The tax effects of temporary differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows (in millions):

	2008			2007
Deferred tax assets:
Investments	$	1,479		$	100
Intangible asset		8,835			—
Differences between statutory and tax reserves		1,174			1,171
Policyholder dividends		816			844
Deferred compensation		156			184
Balance of payout option reserve due to IRS Settlement		508			537
Net operating loss carryover		2,964			—
Capital loss carryover		132			—
Other		318			278
Total deferred tax assets		16,382			3,114
Non-admitted deferred tax assets		(14,671	)		(1,967	)
Total admitted deferred tax assets	$	1,711		$	1,147
Deferred tax liabilities:
Investments including partnership interest	$	329		$	70
Other		1			1
Total deferred tax liabilities		330			71
Net admitted deferred tax assets	$	1,381		$	1,076

At December 31, 2008, TIAA’s gross and net deferred tax assets reflect the two IRS settlements as described above. The change of $13.4 billion in the gross deferred tax asset and $305.0 million in the net admitted deferred tax asset are primarily due to the inclusion of future deductions related to the intangible asset and the net operating loss (“NOL”) carry forwards resulting from the settlement, which were not included in the December 31, 2007

gross and net deferred tax assets, based on an interpretation concurred by the New York Insurance Department in 2001. In 2008, the Department agreed with a change in interpretation and recognition of the gross non-admitted tax asset.

A reconciliation of TIAA’s statutory tax rate to actual federal income tax rate was as follows (in millions):

	For the Years Ended December 31,
	2008	2007	2006
Net gain from operations	$1,430	$1,932	$2,254
Realized Capital Gain (Loss) inclusive of OTTI	(4,492)	73	—
Statutory rate	35%	35%	35%
Tax at statutory rate	$(1,072)	$702	$789
Investment items	(257)	(87)	(242)
Consolidation and dividends from subsidiaries	(59)	(113)	(48)
Amortization of interest maintenance reserve	(21)	(43)	(47)
Adjustment to policyholder dividend liability	(27)	67	17
Accrual of contingent tax provision	—	423	467
Settlement of contingent tax exposure	—	—	(1,033)
Intangible write-off deduction	(431)	—	—
Net operating loss carry forward utilized	—	(400)	(489)
Book/tax capital gain differences deferred for tax	1,144	51	—
Capital loss carry back and (carry forward) utilized	244	(146)	—
Other	102	137	17
Tax provision (benefit) expense before subsidiary settlements, other payments (refunds) and increase in net operating loss	$(377)	$591	$(569)
Increase in net operating loss to carry forward	377	—	—
Subsidiary settlements and other (refunds) payments	(45)	(76)	(25)
Current federal income tax (benefit) expense	$(45)	$515	$(594)
Current effective tax rate	1%	26%	(26%)
Deferred federal income tax (benefit) expense	$(305)	$(112)	$1
Deferred effective tax rate	9%	(6%)	0%
Total federal income tax (benefit) expense	$(350)	$403	$(594)
Total federal effective tax rate	10%	20%	(26%)

TIAA had $698.2 million of tax basis capital losses in 2008, of which $319.5 million was carried back to 2007 and $378.7 million is carried forward. The capital loss carry forward will expire in the year 2013. The 2007 current effective rate reflects the capital gains tax. No capital gains were reflected in the effective rate for years prior to 2007 because no capital gains tax was incurred.

As of December 31, 2008, TIAA had net operating loss carry forwards as follows (in millions):

Year Incurred	Operating Loss		Year of Expiration
1998	$	4,505	2013
1999		1,041	2014
2001		181	2016
2002		786	2017
2003		500	2018
2004		380	2019
2007		—	2022
2008		1,077	2023
Total	$	8,470

26

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 15—Federal Income Taxes (cont.)

At December 31, 2007, TIAA’s gross deferred tax asset of $3.1 billion did not include any benefit from NOL carry forwards. Consistent with prior years, however, TIAA’s federal income tax return for 2007 included a significant NOL carry forward as a result of tax deductions related to intangible assets. The NOL carry forward on TIAA’s 2007 federal income tax return was $11.4 billion. These intangible asset tax deductions were not recognized as a benefit in 2007 because they were recognized subsequent to the 2008 settlement described above.

As of December 31, 2008, TIAA had foreign tax credit carry forwards as follows (in millions):

Year Incurred	Foreign Tax Credit		Year of Expiration
2005	$	1	2015
2006		2	2016
2007		2	2017
2008		2	2018
Total	$	7

As of December 31, 2008 TIAA had general business credit carry forwards as follows (in millions):

Year Incurred	General Business Credit		Year of Expiration
2001	$	—	2021
2002		1	2022
2003		2	2023
2004		2	2024
2005		2	2025
2006		5	2026
2007		7	2027
2008		6	2028
Total	$	25

TIAA did not incur federal income taxes in 2008 or preceding years that would be available for recoupment in the event of future net losses.

For the years 2003 and 2004 Federal income tax returns for the consolidated companies have been audited by the IRS. In November 2008, the IRS completed its audit and presented the group with a Revenue Agents Report that had no unagreed adjustments. The statute of limitations for the 2005, 2006, and 2007 federal income tax returns are open until September 2009, September 2010, and September 2011, respectively.

In July 2006, the Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48 Accounting for Uncertainty in Income Taxes—An Interpretation of FASB Statement No. 109 (“FIN 48”). FIN 48 establishes a minimum threshold for financial statement recognition of the benefits of positions taken in tax returns, and requires certain expanded disclosures. FIN 48 is effective for fiscal years beginning after December 15, 2006 and is to be applied to all open years as of the effective date. Management has evaluated TIAA’s tax position under the principles of FIN 48, and has concluded that TIAA has not recorded any uncertain tax benefits as of December 31, 2008. TIAA had a contingent tax reserve of $1.1 billion as of December 31, 2007 and was reduced to zero in the current year as discussed above.

Note 16—Pension Plan and Postretirement Benefits

Retirement Plans, Deferred Compensation, Post Employment Benefits and other Post Retirement Benefit Plans

TIAA maintains a qualified, noncontributory defined contribution pension plan covering substantially all employees. All qualified employee pension plan liabilities are fully funded through retirement annuity contracts. Contributions are made semi-monthly to each participant’s contract based on a percentage of salary, with the applicable percentage varying by attained age. All contributions are fully vested after three years of service. Forfeitures arising from terminations prior to vesting are used to reduce future employer contributions. The accompanying statements of operations include contributions to the pension plan of approximately $40 million, $34 million and $32 million in 2008, 2007 and 2006, respectively. This includes supplemental contributions made to company-owned annuity contracts under a non-qualified deferred compensation plan.

In addition to the pension plan, the Company provides certain other postretirement life and health insurance benefits to eligible retired employees who meet prescribed age and service requirements. As of December 31, 2008, the measurement date, the status of this plan for retirees and eligible active employees is summarized below (in millions):

	Postretirement Benefits
	12/31/2008			12/31/2007			12/31/2006
Change in benefit obligation
Benefit obligation at beginning of period	$	99		$	105		$	102
Eligibility cost		4			3			3
Interest cost		6			6			5
Actuarial losses/(gains)		9			(11	)		(1	)
Benefit paid		(5	)		(4	)		(4	)
Plan amendments		—			—			—
Benefit obligation at end of period	$	113		$	99		$	105
Fair value of assets		—			—			—
Funded status	$	(113	)	$	(99	)	$	(105	)
Unrecognized initial transition obligation		3			4			5
Unrecognized net losses		9			—			12
Accrued postretirement benefit cost	$	(101	)	$	(95	)	$	(88	)

The Company is expecting to receive a 28% federal subsidy for plan prescription benefits arising from the Medicare Prescription Drug Act of 2003 (“The Act”).

The postretirement benefit obligation for non-vested employees was approximately $94 million at December 31, 2008 and approximately $65 million at December 31, 2007.

The net periodic postretirement (benefit) cost for the years ended December 31 includes the following components (in millions):

	Postretirement Benefits
	2008		2007		2006
Components of net periodic cost
Eligibility cost	$	4	$	3	$	3
Interest cost		6		6		5
Amortization of transition obligation		1		1		1
Net periodic cost	$	11	$	10	$	9

 

27

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 16 – Pension Plan and Postretirement Benefits (cont.)

The cost of postretirement benefits includes a reduction arising from The Act subsidy of $2 million for 2008, $3 million for both 2007 and 2006, respectively.

The Company allocates benefit expenses to certain subsidiaries based upon salaries. The cost of postretirement benefits reflected in the accompanying statements of operations was approximately $5 million for year of 2008, $4 million for both year of 2007 and 2006.

The assumptions used by the Company to calculate the benefit cost and obligations in the year are as follows:

	Postretirement Benefits
	2008		2007		2006
Weighted-average assumption
Discount rate for benefit costs	6.25	%	5.75	%	5.50	%
Discount rate for benefit obligations	5.75	%	6.25	%	5.75	%
Rate of increase in compensation levels	4.00	%	4.00	%	4.00	%
Medical cost trend rates	5.00–9.00	%	5.00–10.00	%	5.00–11.00	%
Immediate Rate	9.50	%	10.00	%	11.00	%
Ultimate Rate	5.00	%	5.00	%	5.00	%
Year Ultimate Rate Reached	2014		2013		2013
Ultimate medical care cost trend rate after a five year gradual decrease	5.00	%	5.00	%	5.00	%
Dental cost trend rate	5.25	%	5.25	%	5.25	%

The assumed medical cost trend rates have a significant effect on the amounts reported. A one-percentage point increase or decrease in assumed medical cost trend rates would have the following effects (in millions):

	Postretirement Benefits
	2008			2007			2006
One percentage point increase
Increase in postretirement benefit obligation	$	12		$	10		$	11
Increase in eligibility and interest cost	$	1		$	1		$	1
One percentage point decrease
(Decrease) in postretirement benefit obligation	$	(10	)	$	(9	)	$	(9	)
(Decrease) in eligibility and interest cost	$	(1	)	$	(1	)	$	(1	)

ESTIMATED FUTURE BENEFIT PAYMENTS

The following benefit payments are expected to be paid (in millions):

Gross Cash Flows (Before Medicare Part D Subsidy Receipts)
2009	7
2010	7
2011	8
2012	8
2013	9
Total for 2014-2018	56
Medicare Part D Subsidy Receipts
2009	0.3
2010	0.4
2011	0.4
2012	0.5
2013	0.6
Total for 2014-2018	5.0

The Company also maintains a non-qualified deferred compensation plan for non-employee trustees and members of the TIAA

Board of Overseers. The plan provides an award equal to 50% of the annual stipend that is invested annually in company-owned annuity contracts. Payout of accumulations is normally made in a lump sum following the trustees’ or member’s separation from the Board.

The Company has provided an unfunded Supplemental Executive Retirement Plan (“SERP”) to certain select executives and any TIAA associate deemed eligible by the Board of Trustees.

The SERP provided an annual retirement benefit payable at normal retirement calculated as 3% of the participant’s 5-year average total compensation based on an average of the highest five of the last ten years multiplied by the number of years of service not in excess of 15 years. This amount is reduced by the benefit arising from the basic TIAA defined contribution annuity contracts.

Effective July 31, 2007, the SERP was curtailed. Under this curtailment, all participants, who had not attained the age of 55 and completed five years of service forfeited their benefits under the plan. The one time cost associated with the curtailment of $5 million was due to the need to recognize the past service liability. This one time cost is included in the 2007 SERP total expense. In addition an expense of $11 million was recognized by the Company relating to the funding of separate annuity contracts for individuals who forfeited benefit given the SERP curtailment.

The accumulated benefit obligation totaled $45 million and $42 million as of December 31, 2008 and 2007, respectively. The Company had an accrued pension cost of $47 million and $45 million and had no additional minimum liability accrued as of December 31, 2008 and 2007, respectively. The Company did not have any projected benefit obligation for non-vested employees for 2008 or 2007.

The SERP obligations were determined based upon a discount rate of 6.21% and a rate of compensation increase of 5.0% at December 31, 2008. In accordance with NAIC SSAP No. 89, only vested obligations are reflected in the funded status.

The obligations of TIAA under the SERP are unfunded, unsecured promises to make future payments. As such, the plan has no assets. Contributions for a given period are equal to the benefit payments for that period. The expected rate of return on plan assets is not applicable. During 2007, the SERP expense, including expenses associated with the curtailment, totaled $11 million.

Future benefits expected to be paid by the SERP are as follows (in millions):

1/1/2009 to 12/31/2009	$	4
1/1/2010 to 12/31/2010	$	4
1/1/2011 to 12/31/2011	$	4
1/1/2012 to 12/31/2012	$	4
1/1/2013 to 12/31/2013	$	4
1/1/2014 to 12/31/2018	$	18

Note 17—Policy and Contract Reserves

Policy and contract reserves are determined in accordance with standard valuation methods approved by the Department and are computed in accordance with standard actuarial formulae. The reserves are based on assumptions for interest, mortality and other risks insured and establish a sufficient provision for all benefits guaranteed under policy and contract provisions.

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NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA continued

Note 17—Policy and Contract Reserves (cont.)

For annuities and supplementary contracts, policy and contract reserves are generally equal to the present value of guaranteed benefits. For most annuities, the present value calculation uses the guaranteed interest and mortality table or a more conservative basis and for most accumulating annuities the reserve thus calculated is equal to the account balance. For the Personal Annuity (“PA”), deferred annuity reserves in the general account are equal to the account balance plus the present value, at the maximum statutory valuation rate on an issue year basis, of excess interest guaranteed beyond the valuation date. In addition, a reserve is maintained in the general account for the PA’s Guaranteed Minimum Death Benefit (“GMDB”) provision. The reserve for the GMDB is calculated in accordance with Actuarial Guideline 34, Variable Annuity Minimum Guaranteed Death Benefit Reserves and New York State Regulation 151 and was approximately $1.1 million at December 31, 2008 and $0.1 million at December 31, 2007, respectively.

For retained assets, an accumulation account issued from the proceeds of annuities and life insurance policies, reserves held are equal to the total current account balances of all account holders.

The Tabular Interest, Tabular Less Actual Reserve Released and Tabular Cost have all been determined by formulae as prescribed by the NAIC except for deferred annuities, for which tabular interest has been determined from the basic data.

In aggregate, the reserves established for all annuity and supplementary contracts utilize assumptions for interest at a weighted average rate of approximately 3%. Approximately 91% of annuity and supplementary contract reserves are based on the 1983 Table set back at least 9 years or the Annuity 2000 table set back at least 9 years.

Withdrawal characteristics of annuity actuarial reserves and deposit-type contracts at December 31 are as follows (in millions):

	2008				2007
	Amount		Percent		Amount		Percent
Subject to Discretionary Withdrawal
At fair value	$	12,127	7.1	%	$	18,752	11.3	%
At book value without adjustment		32,232	18.9	%		25,858	15.6	%
Not subject to discretionary withdrawal		126,465	74.0	%		120,898	73.1	%
Total (gross)		170,824	100.0	%		165,508	100.0	%
Reinsurance ceded		—				—
Total (net)	$	170,824			$	165,508

Annuity reserves and deposit-type contact funds for the year ended December 31 are as follows (in millions):

	2008		2007
General Account:
Total annuities (excluding supplementary contracts with life)	$	157,965	$	146,066
Supplementary contracts with life contingencies		231		235
Deposit-type contracts		500		455
Miscellaneous reserves, GMDB		1		—
Subtotal		158,697		146,756
Separate Accounts:
Annuities		12,127		18,752
Total	$	170,824	$	165,508

For Ordinary and Collective Life Insurance, reserves for all policies are calculated in accordance with New York State Insurance Regulation 147. Reserves for regular life insurance policies are computed by the Net Level Premium method for issues prior to January 1, 1990, and by the Commissioner’s Reserve Valuation Method for issues on and after such date. Annual renewable and five-year renewable term policies issued on or after January 1, 1994 use segmented reserves, where each segment is equal to the term period. The Cost of Living riders issued on and after January 1, 1994 also use segmented reserves, where each segment is equal to one year in length.

Reserves for the vast majority of permanent insurance policies, term insurance policies, and regular insurance policies use Commissioners’ Standard Ordinary Mortality Tables with rates ranging from 2.25% to 6.00%. Term conversion reserves are based on TIAA term conversion mortality experience and 4.00% interest.

Liabilities for incurred but not reported life insurance claims and disability waiver of premium claims are based on historical experience and set equal to a percentage of paid claims. Reserves for amounts not yet due for incurred but not reported disability waiver of premium claims are a percentage of the total Active Lives Disability Waiver of Premium Reserve.

The Company waives deduction of deferred fractional premiums upon death of the insured and returns any portion of the final premium beyond the date of death. Surrender values of approximately $0.2 million in excess of the legally computed reserves were held as an additional reserve liability at December 31, 2008 and $0.1 million at December 31, 2007, respectively. As of December 31, 2008 and December 31, 2007, TIAA had $1.1 billion and $1.6 billion, respectively, of insurance in force for which the gross premiums were less than the net premiums according to the standard of valuation set by the Department. Reserves to cover these insurance amounts totaled $16.9 million and $20.6 million at December 31, 2008 and December 31, 2007, respectively.

For Immediate Annuities not involving life contingencies and Supplementary Contracts not involving life contingencies, for each valuation rate of interest, the tabular interest has been calculated as the product of the valuation rate times the mean liability for the year. For all other funds not involving life contingencies, tabular interest has been calculated as the total interest credited to such funds.

Note 18—Reinsurance

In 2005 and 2004, the Company entered into reinsurance agreements with RGA Reinsurance Company. In accordance with these agreements, the Company assumed Credit Life, Credit A&H, Term Life and Whole Life liabilities through coinsurance funds withheld and modified coinsurance arrangements on a proportional basis. During 2007, the Credit Life and Credit A&H agreement was recaptured, as well as one of the Term Life and Whole Life agreements. The statutory coinsurance reserves on these agreements at the end of the statutory reporting period immediately before recapture were approximately $18.4 million and $41.2 million, respectively.

 

29

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS

TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA

Note 18—Reinsurance

At December 31, disclosures related to these assumed coinsurance agreements were (in millions):

	2008			2007			2006
Aggregated assumed premiums	$	22		$	(2	)	$	52
Reinsurance payable on paid and unpaid losses	$	—		$	—		$	1
Modified coinsurance reserves	$	183		$	171		$	162
Increase in policy and contract reserves	$	(4	)	$	(50	)	$	9
Funds withheld under coinsurance	$	—		$	—		$	14

In 2004, TIAA and TIAA-CREF Life entered into a series of agreements with Metropolitan Life Insurance Company (“MetLife”) including an administrative agreement for MetLife to service the long-term care business of TIAA and TIAA-CREF Life, an indemnity reinsurance agreement where TIAA and TIAA-CREF Life ceded to MetLife 100% of the long-term care liability and an assumption reinsurance agreement where, after appropriate filings in each jurisdiction, MetLife has begun the process of offering the TIAA and TIAA-CREF Life policyholders the option of transferring their policies from TIAA and TIAA-CREF Life to MetLife. At December 31, 2008 there were still premiums in force of $27 million.

The Company remains liable for reinsurance ceded if the reinsurer fails to meet its obligation on the business assumed. All reinsurance is placed with unaffiliated reinsurers. The Company does not have reinsurance agreements in effect under which the reinsurer may unilaterally cancel the agreement. Amounts shown in the financial statements are reported net of the impact of reinsurance. The major lines in the accompanying financial statements that were reduced by these reinsurance agreements include (in millions):

	2008		2007		2006
Insurance and annuity premiums	$	23	$	46	$	36
Policy and contract benefits	$	81	$	91	$	101
Increase in policy and contract reserves	$	50	$	187	$	32
Reserves for life and health insurance	$	686	$	736	$	923

Note 19—Commercial Paper Program

TIAA began issuing commercial paper in May 1999 and currently has a maximum authorized program of $2 billion. The Company had $ 0 and $952 million outstanding obligations, as of December 31, 2008 and 2007, respectively.

The Company maintains a committed and unsecured 5-year revolving credit facility of $1 billion with a group of banks to support the commercial paper program. This liquidity facility has not been utilized.

Note 20—Capital and Contingency Reserves and Shareholders’ Dividends Restrictions

The portion of contingency reserves represented or reduced by each item below as of December 31 are as follows (in millions):

	2008			2007
Net unrealized capital (losses) gains	$	(2,757	)	$	865
Asset valuation reserve	$	4,104		$	(698	)
Net deferred federal income tax	$	13,009		$	(57	)
Non-admitted asset value	$	(12,707	)	$	(180	)
Net change in separate account	$	(1	)	$	—

Capital: TIAA has 2,500 shares of Class A common stock authorized, issued and outstanding. All outstanding shares of the Company are collectively held by the TIAA Board of Overseers, a nonprofit corporation created to hold the stock of TIAA. By charter, the Company operates without profit to its sole shareholder.

Dividend Restrictions: Under the New York Insurance Law, the Company is permitted without prior insurance regulatory clearance to pay a stockholder dividend as long as the aggregated amount of all such dividends in any calendar year does not exceed the lesser of (i) 10% of its surplus to policyholders as of the immediately preceding calendar year and (ii) its net gain from operations for the immediately preceding calendar year (excluding realized investment gains). TIAA has not paid dividends to its shareholder and has no plans to do so in the current year.

Note 21—Contingencies and Guarantees

SUBSIDIARY AND AFFILIATE GUARANTEES:

TGM, a wholly-owned subsidiary of TIAA, was formed for the purpose of issuing notes and other debt instruments and investing the proceeds in compliance with the investment guidelines approved by the Board of Directors of TGM. TGM is authorized to issue up to $5 billion in debt and TIAA’s Board of Trustees authorized TIAA to guarantee up to $5 billion of TGM’s debt. As of December 31, 2008, TGM had $3,295 million of outstanding debt and accrued interest. The Company also provides a $750 million uncommitted and unsecured 364-day revolving line of credit to TGM. During 2008, there were 5 draw downs totaling $172 million that were repaid by December 31, 2008. As of December 31, 2008, there were no outstanding principal or accrued interest on the line of credit.

The Company has a financial support agreement with TIAA-CREF Life. Under this agreement, the Company will provide support so that TIAA-CREF Life will have the greater of (a) capital and surplus of $250 million, (b) the amount of capital and surplus necessary to maintain TIAA-CREF Life’s capital and surplus at a level not less than 150% of the NAIC Risk Based Capital model or (c) such other amount as necessary to maintain TIAA-CREF Life’s financial strength rating at least the same as TIAA’s rating at all times. This agreement is not an evidence of indebtedness or an obligation or liability of the Company and does not provide any creditor of TIAA-CREF Life with recourse to TIAA. The Company made no additional capital contributions to TIAA-CREF Life during 2008 under this agreement. On March 17, 2009, the Company made a $70 million capital contribution to TIAA-CREF Life in accordance with the financial support agreement. The Company also provides a $100 million unsecured 364-day revolving line of credit to TIAA-CREF Life. As of December 31, 2008, $30 million of this facility was maintained on a committed basis for which the Company received a commitment fee of 3 bps per annum on the undrawn committed amount. During 2008, there were 17 draw downs totaling $41 million that were repaid by December 31, 2008. As of December 31, 2008, outstanding principal plus accrued interest was $0.

The Company provides guarantees to the CREF accounts, for which it is compensated, for certain mortality and expense risks, pursuant to an Immediate Annuity Purchase Rate Guarantee Agreement. The Company also provides a $1.0 billion uncommitted line of credit to CREF and the TIAA-CREF Mutual

30

NOTES TO STATUTORY–BASIS FINANCIAL STATEMENTS TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA concluded

Note 21—Contingencies and Guarantees (cont.)

Funds (the “Funds”). Loans under this revolving credit facility are for a maximum of 60 days and are made solely at the discretion of the Company to fund shareholder redemption requests or other temporary or emergency needs of CREF and the Funds. It is the intent of the Company, CREF and the Funds to use this facility as a supplemental liquidity facility, which would only be used after CREF and the Funds have exhausted the availability of the current $1.5 billion committed credit facility that is maintained with a group of banks.

Separate Account Guarantees: The Company provides mortality and expense guarantees to VA-1, for which it is compensated. The Company guarantees that, at death, the total death benefit payable from the fixed and variable accounts will be at least a return of total premiums paid less any previous withdrawals. The Company also guarantees that expense charges to VA-1 participants will never rise above the maximum amount stipulated in the contract.

The Company provides mortality, expense and liquidity guarantees to REA and is compensated for these guarantees. The Company guarantees that once REA participants begin receiving lifetime annuity income benefits, monthly payments will never be reduced as a result of adverse mortality experience. The Company also guarantees that expense charges to REA participants will never rise above the maximum amount stipulated in the contract. The Company provides REA with a liquidity guarantee to ensure it has funds available to meet participant transfer or cash withdrawal requests. If REA cannot fund participant requests, the Company’s general account will fund them by purchasing Accumulation Units in REA. The Company guarantees that participants will be able to redeem their Accumulation Units at the then current daily Accumulation Unit Value.

Pursuant to the liquidity guarantee obligation, TIAA General Account owned 576,868 accumulation units issued by the TIAA Real Estate Separate Account as of December 31, 2008. The Company purchased $155.6 million of accumulation units on December 24, 2008. The Company has purchased an additional $845.5 million and approximately 3.2 million accumulation units during 2009.

The Company provides mortality and expense guarantees to VA-3 and is compensated for these guarantees. The Company guarantees that once VA-3 participants begin receiving lifetime annuity income benefits, monthly payments will never be reduced as a result of adverse mortality experience. The Company also guarantees that expense charges to VA-3 participants will never rise above the maximum amount stipulated in the contract.

Leases: The Company occupies leased office space in many locations under various long-term leases. At December 31, 2008, the future minimum lease payments are estimated as follows (in millions):

Year	2009		2010		2011		2012		2013		Thereafter		Total
Amount	$	35	$	32	$	30	$	29	$	25	$	67	$	218

Leased space expense is allocated among the Company and affiliated entities. Rental expense charged to the Company for the years ended December 31, 2008, 2007 and 2006 was approximately $36 million, $32 million and $35 million, respectively.

OTHER CONTINGENCIES AND GUARANTEES:

In the ordinary conduct of certain of its investment activities, the Company provides standard indemnities covering a variety of potential exposures. For instance, the Company provides indemnifications in connection with site access agreements relating to due diligence review for real estate acquisitions, and the Company provides indemnification to underwriters in connection with the issuance of securities by or on behalf of TIAA or its subsidiaries. It is TIAA management’s opinion that the fair value of such indemnifications are negligible and do not materially affect the Company’s financial position, results of operations or liquidity.

Other contingent liabilities arising from litigation and other matters over and above amounts already provided for in the financial statements or disclosed elsewhere in these notes are not considered material in relation to the Company’s financial position or the results of its operations.

 

31

SIGNATURES

          Pursuant to the requirements of the Securities Act of 1933, the registrant, TIAA Real Estate Account, has duly caused this Amendment to this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on the 30^th day of April, 2009.

TIAA REAL ESTATE ACCOUNT
By:	TEACHERS INSURANCE AND
	ANNUITY ASSOCIATION OF AMERICA
By:	/s/ Roger W. Ferguson, Jr.
	Roger W. Ferguson, Jr.
	President and Chief Executive Officer
	and Trustee

          Pursuant to the requirements of the Securities Act of 1933, this Amendment to this Registration Statement has been signed by the following trustees and officers of Teachers Insurance and Annuity Association of America, in the capacities and on the dates indicated.

Signature	Title	Date
/s/ Roger W. Ferguson, Jr.	President and Chief Executive Officer	April 30, 2009
	(Principal Executive Officer) and Trustee
Roger W. Ferguson, Jr.
/s/ Georganne C. Proctor	Executive Vice President and	April 30, 2009
	Chief Financial Officer
Georganne C. Proctor	(Principal Financial and Accounting Officer)
*	Chairman of the Board of Trustees	April 30, 2009
Ronald L. Thompson
*	Trustee	April 30, 2009
Elizabeth E. Bailey
*	Trustee	April 30, 2009
Glenn A. Britt
*	Trustee	April 30, 2009
Robert C. Clark
*	Trustee	April 30, 2009
Edward M. Hundert, M.D.
*	Trustee	April 30, 2009
Marjorie Fine Knowles
*	Trustee	April 30, 2009
Donald K. Peterson
*	Trustee	April 30, 2009
Sidney A. Ribeau
*	Trustee	April 30, 2009
Dorothy K. Robinson
*	Trustee	April 30, 2009
David L. Shedlarz

II-4

*	Trustee	April 30, 2009
David F. Swensen
*	Trustee	April 30, 2009
Marta Tienda
*	Trustee	April 30, 2009
Rosalie J. Wolf
/s/ Stewart P. Greene

* Signed by Stewart P. Greene as attorney-in-fact pursuant to powers of attorney filed herewith.

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