UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark One)
[x] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 For the fiscal year ended December 31, 2001
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from __________ to __________
Commission file numbers 33-92990, 333-13477, 333-22809, 333-59778, and 333-83964
TIAA REAL ESTATE ACCOUNT
(Exact name of registrant as specified in its charter)
New York Not Applicable
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
c/o Teachers Insurance and Annuity Association of America
730 Third Avenue
New York, New York 10017-3206
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (212) 490-9000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES _X_ NO ____
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: [X] -- Not Applicable
Aggregate market value of voting stock held by non-affiliates: Not Applicable
Documents Incorporated by Reference: None
PART I
ITEM 1. BUSINESS.
GENERAL. The TIAA Real Estate Account (the "Real Estate Account" or the
"Account") was established on February 22, 1995, as a separate investment
account of Teachers Insurance and Annuity Association of America ("TIAA"), a
nonprofit New York insurance company, by resolution of TIAA's Board of Trustees.
The Account, which invests mainly in real estate and real estate-related
investments, is a variable annuity investment option offered through individual,
group and tax-deferred annuity contracts available to employees of educational
and research institutions. The Account commenced operations on July 3, 1995,
when TIAA contributed $100 million of seed money to the Account, and interests
in the Account were first offered to eligible participants on October 2, 1995.
INVESTMENT OBJECTIVE. The Real Estate Account seeks favorable long term
returns primarily through rental income and appreciation of real estate
investments owned by the Account. The Account also will invest in
publicly-traded securities and other investments that are easily converted to
cash to make redemptions, purchase or improve properties or cover other
expenses.
INVESTMENT STRATEGY. The Account seeks to invest between 70 percent to 95
percent of its assets directly in real estate or real estate-related
investments. The Account's principal strategy is to purchase direct ownership
interests in income-producing real estate, such as office, industrial, retail,
and multi-family residential properties. The Account can also invest in other
real estate or real estate-related investments, through joint ventures, real
estate partnerships or real estate investment trusts (REITs). To a limited
extent, the Account can also invest in conventional mortgage loans,
participating mortgage loans, common or preferred stock of companies whose
operations involve real estate (i.e., that primarily own or manage real estate),
and collateralized mortgage obligations (CMOs).
The Account will invest the remaining portion of its assets in government
and corporate debt securities, money market instruments and other cash
equivalents, and, at times, stock of companies that don't primarily own or
manage real estate. In some circumstances, the Account can increase the portion
of its assets invested in debt securities or money market instruments. This
could happen if the Account receives a large inflow of money in a short period
of time, there is a lack of attractive real estate investments available on the
market, or the Account anticipates a need to have more cash available.
The amount the Account invests in real estate and real estate-related
investments at a given time will vary depending on market conditions and real
estate prospects, among other factors. At December 31, 2001, the Account had
83.0% percent of its portfolio invested in real estate and real estate-related
investments (including REITs).
2
NET ASSETS AND PORTFOLIO INVESTMENTS. As of December 31, 2001, the
Account's net assets totaled $3,213,667,177. Through December 31, 2001 the
Account held a total of 65 real estate properties, including 25 office
properties (one of which is held in joint venture), 18 industrial properties
(including one development project joint venture), 18 apartment complexes, and
four neighborhood shopping centers. As of December 31, 2001, these properties
represented 73.1% of the Account's total investment portfolio. As of that date,
the Account also held investments in commercial paper, representing 17.0% of the
portfolio, real estate investment trusts (REITs), representing 4.2% of the
portfolio, and other real estate-related investments, including commercial
mortgage backed securities (CMBS), a mortgage and one fund investment,
representing 5.7% of the portfolio.
PERSONNEL AND MANAGEMENT. The Real Estate Account does not directly
employ any persons nor does the Account have its own management or board of
directors. Rather, TIAA employees, under the direction and control of TIAA's
Board of Trustees and Investment Committee, manage the investment of the
Account's assets pursuant to investment management procedures adopted by TIAA
for the Account. TIAA and TIAA-CREF Individual & Institutional Services, Inc.
("Services"), a subsidiary of TIAA, provide all portfolio accounting, custodial,
distribution, administrative and related services for the Account at cost.
ITEM 2. PROPERTIES.
As of December 31, 2001, the Account had 65 properties in its real estate
portfolio. The following charts break down the Account's real estate assets by
region and property type.
EAST MIDWEST SOUTH WEST TOTAL
---- ------- ----- ---- -----
OFFICE 35.6% 6.3% 3.8% 7.1% 52.8%
INDUSTRIAL 4.7% 2.3% 6.3% 9.6% 22.9%
RESIDENTIAL 6.4% 1.3% 8.9% 6.3% 22.9%
RETAIL 0.6% 0.5% 0.3% 0 1.4%
TOTAL 47.3% 10.4% 19.3% 23.0% 100.0%
3
In the table below you will find general information about each of the
Account's portfolio properties as of December 31, 2001.
ANNUAL AVG.
RENTABLE BASE RENT
YEAR YEAR AREA PERCENT PER LEASED MARKET
PROPERTY LOCATION BUILT PURCHASED (SQ. FT.) LEASED SQ. FT.(1) VALUE(2)
- -------- -------- ----- --------- --------- ------ ---------- --------
OFFICE PROPERTIES
780 Third Avenue New York, NY 1984 1999 487,501 98% $46.18 $ 177,500,000
1801 K Street Washington, DC 1971(3) 2000 564,359 99% $32.31 $ 150,339,845
Ten & Twenty Westport Rd Wilton, CT 2001 2001 538,840 100% $25.34 $ 140,105,661
Morris Corporate Center III Parsippany, NJ 1990 2000 525,154 92% $22.21 $ 106,214,595
88 Kearny Street San Francisco, CA 1986 1999 228,470 89% $36.80 $ 82,116,702
Sawgrass Portfolio Sunrise, FL 1997-2000 1997, 344,009 100% $15.12 $ 50,800,000
1999-2000
Parkview Plaza(4) Oakbrook, IL 1990 1997 266,020 100% $19.11 $ 50,500,000
1015 15th Street Washington, DC 1978(3) 2001 189,681 100% $30.91 $ 48,736,575
Maitland Promenade One Maitland, FL 1999 2000 227,814 95% $21.18 $ 39,000,000
Columbia Centre III Rosemont, IL 1989 1997 238,696 89% $20.29 $ 37,500,000
One Monument Place Fairfax, VA 1990 1999 219,837 100% $22.26 $ 35,400,000
Biltmore Commerce Center Phoenix, AZ 1985 1999 262,875 38% $ 9.30 $ 32,295,058
10 Waterview Boulevard Parsippany, NJ 1984 1999 209,553 98% $22.70 $ 30,400,000
Fairgate at Ballston(4) Arlington, VA 1988 1997 143,457 99% $26.63 $ 30,300,000
Tysons Executive Plaza II(5) McLean, VA 1988 2000 252,552 100% $24.25 $ 28,538,029(5)
(held in joint venture)
Columbus Office Portfolio -- -- 259,626 100% $12.76 $ 28,400,000
Metro South Building Dublin, OH 1997 1999 90,726 -- $11.64 --
Vision Service Plan Building Eaton, OH 1997 1999 50,000 -- $11.88 --
One Metro Place Dublin, OH 1998 2001 118,900 -- 13.99 $ --
Needham Corporate Center Needham, MA 1987 2001 138,684 97% $27.68 $ 28,294,526
Longview Executive Park(4) Hunt Valley, MD 1988 1997 258,999 100% $11.84 $ 28,200,800
9 Hutton Centre Santa Ana, CA 1990 2001 148,265 91% $19.68 $ 20,448,764
BISYS Fund Services Building Eaton, OH 1995 1999 155,964 100% $12.32 $ 20,400,000
Five Centerpointe(4) Lake Oswego, OR 1988 1997 113,971 98% $22.65 $ 18,001,499
Batterymarch Park II Quincy, MA 1986 2001 104,718 96% $25.51 $ 17,990,854
371 Hoes Lane Piscataway, NJ 1986 1997 139,670 83% $12.35 $ 14,700,000
Southbank Building Phoenix, AZ 1995 1996 122,535 100% $ 8.75 $ 13,565,218
Northmark Business Center(4) Blue Ash, OH 1985 1997 108,561 95% $12.53 $ 12,200,000
--------- --------------
SUBTOTAL--OFFICE PROPERTIES 6,249,711 $1,241,948,126
INDUSTRIAL PROPERTIES
Ontario Portfolio 2,698,717 100% $ 3.40 $ 108,000,000
Timberland Building Ontario, CA 1998 1998 414,435 --
5200 Airport Drive Ontario, CA 1997 1998 404,500 --
1200 S. Etiwanda Ave. Ontario, CA 1998 1998 223,170 --
Park Mira Loma West Mira Loma, CA 1998 1998 557,500 --
Wineville Center Buildings Mira Loma, CA 1999 2000 1,099,112 --
Dallas Industrial Portfolio Dallas and 1997- 2000; 2,609,031 94% $ 2.72 $ 97,245,850
(formerly Parkwest Center) Coppell, TX 2000 2001
4
ANNUAL AVG.
RENTABLE BASE RENT
YEAR YEAR AREA PERCENT PER LEASED MARKET
PROPERTY LOCATION BUILT PURCHASED (SQ. FT.) LEASED SQ. FT.(1) VALUE(2)
- -------- -------- ----- --------- --------- ------ ---------- --------
INDUSTRIAL PROPERTIES (CONTINUED)
IDI Kentucky Portfolio 1,437,022 100% $ 2.80 $ 53,600,000
(formerly, Parkwest Int'l)
Building C Hebron, KY 1998 1998 520,000 -
Building D Hebron, KY 1998 1998 184,800 -
Building E Hebron, KY 2000 2000 207,222 -
Building J Hebron, KY 2000 2000 525,000 -
Chicago Industrial Portfolio Chicago and 1997- 1998; 866,064 100% $ 4.18 $ 42,591,186
(consolidation of Rockrun, Joliet, IL 2000 2000
Glen Pointe and Woodcreek
Business Parks)
Atlanta Industrial Portfolio Lawrenceville, GA 1996-99 2000 1,145,693 84% $ 2.79 $ 40,459,044
Northpointe Commerce Center Fullerton, CA 1990-94 2000 612,023 100% $ 5.90 $ 37,456,149
Cabot Industrial Portfolio Rancho 2001(6) 2000; 2001 641,475 100% $ 2.42 $ 34,363,752(6)
(under development and Cucamonga, CA
held in joint venture)
South River Road Industrial Cranbury, NJ 1999 2001 626,071 100%(7) $ 2.30 $ 32,688,565
Konica Photo Imaging Mahwah, NJ 1999 1999 168,000 100% $ 9.43 $ 17,700,000
Headquarters
Eastgate Distribution Center San Diego, CA 1996 1997 200,000 100% $ 5.21 $ 14,500,000
Landmark at Salt Lake City Salt Lake City, UT 2000 2000 328,508 100% $ 3.98 $ 13,600,000
Building #4
Arapahoe Park East Boulder, CO 1979-82 1996 129,425 100% $10.18 $ 13,100,000
UPS Distribution Facility Fernley, NV 1998 1998 256,000 100% $ 3.54 $ 11,100,000
FedEx Distribution Facility Crofton, MD 1998 1998 111,191 100% $ 6.39 $ 7,600,000
Westinghouse Facility Coral Springs, FL 1997 1997 75,630 100% $ 7.29 $ 5,300,000
Interstate Crossing Eagan, MN 1995 1996 131,380 100% $ 4.01 $ 6,504,740
Butterfield Industrial Park El Paso, TX 1980-81 1995 183,510 100% $ 2.96 $ 4,700,000
River Road Distribution Center Fridley, MN 1995 1995 100,456 100% $ 3.49 $ 4,131,571
---------- --------------
SUBTOTAL--INDUSTRIAL PROPERTIES 12,320,196 $ 544,640,857
RETAIL PROPERTIES
Rolling Meadows Rolling Meadows, IL 1957(3) 1997 130,909 99% $ 9.07 $ 12,390,000
Lynnwood Collection Raleigh, NC 1988 1996 86,362 96% $ 7.53 $ 7,900,000
Millbrook Collection Raleigh, NC 1988 1996 102,221 84% $ 6.04 $ 7,200,000
Plantation Grove Ocoee, FL 1995 1995 73,655 100% $10.01 $ 7,700,000
---------- --------------
SUBTOTAL--RETAIL PROPERTIES 393,147 $ 35,190,000
---------- --------------
SUBTOTAL--COMMERCIAL PROPERTIES 18,968,054 $1,821,778,983
RESIDENTIAL PROPERTIES(8)
Ashford Meadows Apartments Herndon, VA 1998 2000 NA 91% NA $ 64,195,500
The Colorado New York, NY 1987 1999 NA 93% NA $ 60,500,000
Larkspur Courts Apartments Larkspur, CA 1991 1999 NA 96% NA $ 53,200,000
South Florida Apartment Boca Raton and 1986 2001 NA 97% NA $ 46,700,000
Portfolio Plantation, FL
Doral Pointe Apartments Miami, FL 1990 2001 NA 97% NA $ 45,341,796
Lodge at Willow Creek Douglas County, CO 1997 1997 NA 88% NA $ 32,000,000
Golfview Apartments Lake Mary, FL 1998 1998 NA 87% NA $ 27,050,000
5
ANNUAL AVG.
RENTABLE BASE RENT
YEAR YEAR AREA PERCENT PER LEASED MARKET
PROPERTY LOCATION BUILT PURCHASED (SQ. FT.) LEASED SQ. FT.(1) VALUE(2)
- -------- -------- ----- --------- --------- ------ ---------- --------
RESIDENTIAL PROPERTIES(8) (CONTINUED)
The Legends at Chase Oaks Plano, TX 1997 1998 NA 96% NA $ 26,000,000
Lincoln Woods Lafayette Hill, PA 1991 1997 NA 92% NA $ 24,800,000
Kenwood Mews Apartments Burbank, CA 1991 2001 NA 97% NA $ 22,686,216
Monte Vista Littleton, CO 1995 1996 NA 98% NA $ 21,800,000
Westcreek Apartments Westlake Village, CA 1988 1997 NA 91% NA $ 17,900,000
Carolina Apartments Margate, FL 1993 2001 NA 94% NA $ 17,600,000
Indian Creek Apartments Farmington Hills, MI 1988 1998 NA 96% NA $ 16,800,000
Royal St. George W. Palm Beach, FL 1995 1996 NA 98% NA $ 16,400,000
Quiet Waters Apartments Deerfield Beach, FL 1995 2001 NA 96% NA $ 16,100,000
Bent Tree Apartments Columbus, OH 1987 1998 NA 85% NA $ 14,500,000
The Greens at Metrowest Orlando, FL 1990 1995 NA 91% NA $ 14,100,000
---------------
SUBTOTAL--RESIDENTIAL PROPERTIES NA $ 537,673,512
---------- ---------------
TOTAL--ALL PROPERTIES 18,968,055 $ 2,359,452,495
========== ===============
(1) Based on total contractual rent on leases existing at December 31, 2001. For
those properties purchased in 2001, the number was derived by annualizing the
rents charged by the Account since acquiring the property.
(2) Market value reflects the value determined in accordance with the procedures
described in the Account's prospectus.
(3) Undergone extensive renovations.
(4) Purchased through Light Street Partners, L.P. (now 100% owned by the
Account).
(5) Property held in 50%/50% joint venture with Tennessee Consolidated
Retirement System. Market value shown reflects the value of the Account's
interest in the property.
(6) The property is held in a 80%/20% joint venture with Cabot Industrial Trust,
and consists of one completed building and one under development. The existing
building is at market value and the property under development is currently
valued at cost. It is anticipated that the building under development will be
ready for occupancy in 2002.
(7) One tenant representing 17% of the space filed for bankruptcy protection and
has vacated its space.
(8) For the average unit size and annual average rent per unit for each
residential property, see "Residential Properties" below.
COMMERCIAL (NON-RESIDENTIAL) PROPERTIES
IN GENERAL. At December 31, 2001, the Account held 47 commercial
(non-residential) properties in its portfolio. None of these properties is
subject to a mortgage, and although the terms vary under each lease, certain
expenses, such as real estate taxes and other operating expenses, are paid or
reimbursed by the tenants.
At December 31, 2001, the Account's office property portfolio consisted
of 25 office properties located in metropolitan areas throughout the United
States (including one property held in a 50%/50% joint venture). The office
properties together are approximately 92 percent leased with 549 leases.
At December 31, 2001, the Account's industrial property portfolio
consisted of 18 properties (including one which is held in an 80%/20% joint
venture and is currently under development) used primarily for warehousing,
distribution, or light manufacturing activities. The Account's industrial
properties together are 99 percent leased with 107 leases.
At December 31, 2001, the Account's retail property portfolio consisted
of four neighborhood shopping centers, each of which is anchored by a
supermarket tenant. These retail properties together are approximately 95
percent leased with 57 leases.
6
RESIDENTIAL PROPERTIES
The Account's residential property portfolio currently consists of 17
first class or luxury multi-family garden apartment complexes and one high rise
apartment building for a total of 18 properties. None of the 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 use of 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 the properties.
In the following table you will find more detailed information regarding
the apartment complexes in the Account's portfolio as of December 31, 2001.
================================================================================================================================
AVERAGE AVG. RENT
NUMBER UNIT SIZE PER UNIT/ PERCENT
PROPERTY LOCATION OF UNITS (SQUARE FEET) PER MONTH LEASED
- --------------------------------------------------------------------------------------------------------------------------------
Ashford Meadows Apartments Herndon, VA 440 1,050 $1,315 91%
The Colorado New York, NY 256 632 $2,434 93%
Larkspur Courts Apartments Larkspur, CA 248 1,001 $2,247 96%
South Florida Apartment Portfolio Boca Raton and Plantation, FL 500 888 $ 980 97%
Lodge at Willow Creek Douglas County, CO 316 1,001 $1,055 88%
Golfview Apartments Lake Mary, FL 276 1,139 $1,116 87%
The Legends at Chase Oaks Plano, TX 346 972 $1,037 96%
Lincoln Woods Lafayette Hill, PA 216 773 $1,206 92%
Monte Vista Littleton, CO 219 888 $1,049 98%
Indian Creek Apartments Farmington Hills, MI 196 1,139 $ 999 96%
Westcreek Apartments Westlake Village, CA 126 948 $1,490 91%
Royal St. George West Palm Beach, FL 224 870 $ 884 98%
Bent Tree Apartments Columbus, OH 256 928 $ 745 85%
The Greens at Metrowest Orlando, FL 200 920 $ 857 91%
Carolina Apartments Margate, FL 208 1,026 $ 961 94%
Quiet Waters Apartments Deerfield Beach, FL 200 1,048 $1,019 96%
Doral Pointe Miami, FL 440 1,130 $1,101 97%
Kenwood Mews Burbank, CA 141 942 $1,283 97%
================================================================================================================================
RECENT PROPERTY PURCHASES AND SALES
On January 31, 2002, the Account sold one office building (the Southbank
Building) located in Phoenix, Arizona for approximately $13 million. The Account
had purchased the building in February, 1996 at a cost of approximately $10.1
million.
ITEM 3. LEGAL PROCEEDINGS. There are no material pending legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS. Not applicable.
7
PART II
ITEM 5. MARKET FOR THE REGISTRANT'S SECURITIES AND RELATED STOCKHOLDER
MATTERS.
(a) MARKET INFORMATION. There is no established public trading market
for participating interests in the TIAA Real Estate Account. Accumulation units
in the Account are sold to eligible participants at the Account's current
accumulation unit value, which is based on the value of the Account's then
current net assets. For the period from January 1, 2001 to December 31, 2001,
the high and low accumulation unit values for the Account were $168.7811 and
$158.2119, respectively.
(b) APPROXIMATE NUMBER OF HOLDERS. The number of contractowners at
February 28, 2002 was 367,694.
(c) DIVIDENDS. Not applicable.
ITEM 6. SELECTED FINANCIAL DATA.
The following selected financial data should be considered in conjunction
with the Account's consolidated financial statements and notes provided in this
report.
JULY 3, 1995
(COMMENCEMENT OF
OPERATIONS)
YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED TO
DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31, DECEMBER 31,
2001 2000 1999 1998 1997 1996 1995
------------ ------------ ------------ ------------ ------------ ------------ ------------
Investment income:
Real estate income, net:
Rental income .............. $256,755,315 $195,537,993 $132,316,878 $ 81,009,203 $ 44,342,342 $ 10,951,183 $ 165,762
------------ ------------ ------------ ------------ ------------ ------------ ------------
Real estate property level
expenses and taxes:
Operating expenses ......... 52,456,479 40,056,716 27,334,060 17,339,706 9,024,240 2,116,334 29,173
Real estate taxes .......... 29,670,456 22,851,890 15,892,736 9,103,637 4,472,311 1,254,163 14,659
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total real estate
property level expenses
and taxes ................ 82,126,935 62,908,606 43,226,796 26,443,343 13,496,551 3,370,497 43,832
------------ ------------ ------------ ------------ ------------ ------------ ------------
Real estate income, net .. 174,628,380 132,629,387 89,090,082 54,565,860 30,845,791 7,580,686 121,930
Income from real estate
joint venture ................ 2,251,593 756,133 -- -- -- -- --
Dividends and interest ......... 33,687,343 31,334,291 24,932,733 23,943,728 16,486,279 6,027,486 2,828,900
------------ ------------ ------------ ------------ ------------ ------------ ------------
Total investment income .. 210,567,316 164,719,811 114,022,815 78,509,588 47,332,070 13,608,172 2,950,830
Expenses ....................... 17,191,929 13,424,566 9,278,410 6,274,594 3,526,545 1,155,796 310,433
------------ ------------ ------------ ------------ ------------ ------------ ------------
Investment income, net ... 193,375,387 151,295,245 104,744,405 72,234,994 43,805,525 12,452,376 2,640,397
Net realized and unrealized
gain on investments .......... (23,344,613) 54,147,449 9,834,743 7,864,659 18,147,053 3,330,539 35,603
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets
resulting from operations
before minority interest ..... 170,030,774 205,442,694 114,579,148 80,099,653 61,952,578 15,782,915 2,676,000
Minority interest in net
increase in net assets
resulting from operations .... (811,789) -- 1,364,619 (3,487,991) (1,881,178) -- --
Net increase in net assets
resulting from participant
transactions ................. 657,326,121 486,196,949 383,171,774 333,936,510 356,052,262 233,653,793 117,582,345
------------ ------------ ------------ ------------ ------------ ------------ ------------
Net increase in net assets ..... $826,545,106 $691,639,643 $499,115,541 $410,548,172 $416,123,662 $249,436,708 $120,258,345
============ ============ ============ ============ ============ ============ ============
8
DECEMBER 31,
2001 2000 1999 1998 1997 1996 1995
-------------- -------------- -------------- -------------- ------------ ------------ ------------
Total assets ............. $3,270,384,450 $2,423,100,402 $1,719,457,715 $1,229,603,431 $815,760,825 $426,372,007 $143,177,421
Total liabilities and
minority interest ...... 56,717,273 35,978,331 23,975,287 33,236,544 29,942,110 56,676,954 22,919,076
-------------- -------------- -------------- -------------- ------------ ------------ ------------
Total net assets ......... $3,213,667,177 $2,387,122,071 $1,695,482,428 $1,196,366,887 $785,818,715 $369,695,053 $120,258,345
============== ============== ============== ============== ============ ============ ============
Accumulation units
outstanding ............ 18,456,445 14,604,673 11,487,360 8,833,911 6,313,015 3,295,786 1,172,498
========== ========== ========== ========= ========= ========= =========
Accumulation
unit value ............. $168.16 $158.21 $142.97 $132.17 $122.30 $111.11 $102.57
======= ======= ======= ======= ======= ======= =======
QUARTERLY SELECTED FINANCIAL INFORMATION
The following is selected financial information for the Account for each full
quarter within the past two calendar years:
2001
FOR THE THREE MONTHS ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------- ----------- ----------- -----------
Investment income, net $45,264,635 $47,931,306 $50,435,135 $49,744,311
Net realized gain (loss)
on investments 978,396 514,453 759,534 (3,522,087)
Net unrealized gain
on investments (4,436,522) 11,550,552 (8,059,992) (21,128,947)
----------- ----------- ----------- -----------
Minority interest in
net increase in net assets
resulting from operations -- (448,023) (213,578) (150,188)
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations $41,806,509 $59,548,288 $42,921,099 $24,943,089
=========== =========== =========== ===========
Total return 1.67% 2.21% 1.46% 0.82%
==== ==== ==== ====
2000
FOR THE THREE MONTHS ENDED
MARCH 31 JUNE 30 SEPTEMBER 30 DECEMBER 31
----------- ----------- ----------- -----------
Investment income, net $31,774,860 $36,145,064 $40,552,504 $42,822,817
Net realized gain (loss)
on investments (147,448) 58,263 (241,717) 8,606,836
Net unrealized gain
on investments 5,603,540 14,044,336 15,013,318 11,210,321
----------- ----------- ----------- -----------
Net increase in net assets
resulting from operations $37,230,952 $50,247,663 $55,324,105 $62,639,974
=========== =========== =========== ===========
Total return 2.15% 2.67% 2.67% 2.77%
==== ==== ==== ====
9
MANAGEMENT'S DISCUSSION AND ANALYSIS OF ACCOUNT'S
FINANCIAL CONDITION AND OPERATING RESULTS
The Account continued its positive growth in 2001, with approximately
$3.2 billion in net assets as of year-end 2001. As of December 31, 2001, the
Account owned a total of 65 real estate properties, including 25 office
properties (one held in joint venture), 18 industrial properties (including one
development project joint venture), 18 apartment complexes and four neighborhood
shopping centers. At December 31, 2001, these properties represented 73.1% of
the Account's total investment portfolio.
The Account closed 21 real estate transactions in 2001. It purchased 15
properties (seven office properties, including one development project, three
industrial properties, and five apartment properties) made one fund investment,
and sold five properties (one office, one retail, one apartment, and two
industrial properties). The Account continues to pursue suitable properties, and
is currently in various stages of negotiations with a number of prospective
sellers.
As of December 31, 2001, the Account also held investments in commercial
paper, representing 17.0% of the portfolio, real estate investment trusts
(REITs), representing 4.2% of the portfolio, and other real estate related
investments, including commercial mortgage backed securities (CMBS), a mortgage
and one fund investment, representing 5.7% of the portfolio.
The tragic events of September 11th did not directly affect the Account's
real estate holdings in New York City, which are holdings located in the midtown
and upper east side areas of Manhattan. While these events had a sobering effect
on the overall economy, it is not currently possible to quantify any long-term
impact on the real estate market.
RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 2001 COMPARED TO
YEAR ENDED DECEMBER 31, 2000
The Account's total net return was 6.29% for the year ended December 31,
2001 and 10.66% for 2000. The 2001 performance of each of the Account's asset
types, i.e., real estate, REITs and commercial paper, declined as compared to
2000, with the decline in the value of the Account's real estate having the
largest impact. The Account's net investment income, after deducting all
expenses, was $193,375,387 for the year ended December 31, 2001 and $151,295,245
for 2000, a 28% increase. This increase was the result of a 35% increase in net
assets and an increase in the Account's real estate holdings from December 31,
2000 to December 31, 2001. The Account had net realized and unrealized losses on
investments of $23,344,613 for the year ended December 31, 2001, compared with
the net realized and unrealized gains on its investments of $54,147,449 for
2000. This difference was primarily due to the decrease of $26,611,066 in the
aggregate market value of the Account's real estate holdings during 2001, as
compared to 2000, during which the Account's holdings experienced a $22,257,781
market value increase. The Account's net realized losses in 2001 were primarily
due to the sale of certain properties identified as sales candidates because
they no longer met the Account's investment objectives or were located in
markets which were experiencing
10
declining economic conditions. The unrealized losses in 2001 can be attributed
to the decline in market value of some of the Account's real estate properties.
The Account's marketable securities had modest realized and unrealized gains in
2001 totaling $5,231,736, as compared to the substantial net gains of
$22,145,715 in 2000.
The Account's real estate holdings generated approximately 83% of the
Account's total investment income (before deducting Account level expenses)
during 2001 compared with 81% during 2000. The remaining portion of the
Account's total investment income was generated by investments in marketable
securities.
Gross real estate rental income was $256,755,315 for the year ended
December 31, 2001 and $195,537,993 for the same period in 2000. This increase
was primarily due to the increase in the number of properties owned by the
Account, from 60 properties at the end of 2000 to 65 properties at the end of
2001. Interest income on the Account's short-term investments for 2001 and 2000
totaled $24,490,376 and $24,294,579, respectively. Dividend income on the
Account's REIT investments totaled $9,196,967 and $7,039,712, respectively, for
the same periods.
Total property level expenses for the year ended December 31, 2001 were
$82,126,935 of which $52,456,479 was attributable to operating expenses and
$29,670,456 was attributable to real estate taxes. Total property level expenses
for the year ended December 31, 2000 were $62,908,606, of which $40,056,716
represented operating expenses and $22,851,890 was attributable to real estate
taxes. The increase in property level expenses during 2001 reflected the
increased number of properties in the Account.
The Account incurred expenses for the years ended December 31, 2001 and
2000 of $5,896,729 and $6,924,202, respectively, for investment advisory
services, $8,470,496 and $4,392,882, respectively, for administrative and
distribution services, and $2,824,704 and $2,107,482, respectively, for
mortality and expense risk charges and liquidity guarantee charges. Such
expenses generally increased as a result of the larger net asset base in the
Account. The expenses for investment advisory services in 2001, however,
decreased because they included an expense adjustment credit in the first
quarter of 2001 to reflect a change in the way certain investment expenses are
allocated to the Account.
YEAR ENDED DECEMBER 31, 2000 COMPARED TO
YEAR ENDED DECEMBER 31, 1999
The Account's total net return was 10.66% for the year ended December 31,
2000 and 8.17% for 1999. The Account's net investment income, after deducting
all expenses, was $151,295,245 for the year ended December 31, 2000 and
$104,744,405 for 1999, a 44% increase. This increase was the result of a 41%
increase in net assets and a 45% increase in the market value of the Account's
real estate holdings from December 31, 1999 to December 31, 2000. The Account
had net realized and unrealized gains on investments of $54,147,449 for the year
ended December 31, 2000 compared with $9,834,743 for 1999. This difference was
due in part to the increase in realized and unrealized gains on the Account's
real estate properties from
11
$23,232,711 in 1999 to $32,001,734 for 2000, and, significantly, to the
Account's gain of $22,145,715 on its marketable securities in 2000, compared
with its loss of $13,397,968 on its marketable securities in 1999.
The Account's real estate holdings generated approximately 81% of the
Account's total investment income (before deducting Account level expenses)
during 2000 compared with 78% during 1999. The remaining portion of the
Account's total investment income was generated by investments in marketable
securities.
Gross real estate rental income was $195,537,993 for the year ended
December 31, 2000 and $132,316,878 for the same period in 1999. This increase
was primarily due to the increase in the number of properties owned by the
Account -- from 54 properties at the end of 1999 to 60 properties at the end of
2000. (The total number of properties in 2000 reflects the consolidation of
certain groups of properties into single portfolios.) Interest and dividend
income on the Account's marketable securities investments increased from
$24,932,733 for 1999 to $31,334,291 in 2000.
Total property level expenses for the year ended December 31, 2000 were
$62,908,606 of which $40,056,716 was attributable to operating expenses and
$22,851,890 was attributable to real estate taxes. Total property level expenses
for the year ended December 31, 1999 were $43,226,796, of which $27,334,060
represented operating expenses and $15,892,736 was attributable to real estate
taxes. The increase in property level expenses during 2000 reflected the
increased number of properties in the Account.
The Account incurred expenses for the years ended December 31, 2000 and
1999 of $6,924,202 and $4,246,911, respectively, for investment advisory
services, $4,392,882 and $3,442,282, respectively, for administrative and
distribution services, and $2,107,482 and $1,589,217, respectively, for
mortality and expense risk charges and liquidity guarantee charges. These
expenses increased significantly as a result of the increased costs of managing
a growing account, including the costs of acquiring and managing additional
properties, and the increased staffing costs associated with administering a
larger account.
LIQUIDITY AND CAPITAL RESOURCES
During 2001, the Account received $254,149,962 in premiums and
$486,614,583 in net participant transfers from the TIAA Traditional account and
the CREF accounts, while in 2000 the Account received $161,668,073 in premiums
and $379,610,411 in net participant transfers from other TIAA and CREF accounts.
The unprecedented volume of net participants' transfers into the Account in 2001
can be attributed to the substantial decline in the equity markets. Real estate
properties costing $538,400,000 and $625,800,000 were purchased during 2001 and
2000, respectively. In 2001, the Account also received $94,800,000 in proceeds
from the sale of properties. By year end 2001, the Account's liquid assets
(i.e., its cash, REITs, short- and intermediate-term investments, and government
securities) had a value of $853,769,802, while at the end of 2000 those assets
were valued at $464,544,434.
12
We plan to use much of the Account's liquid assets as of December 31,
2001, exclusive of the REITs, to purchase additional suitable real estate
properties. The remaining liquid assets, exclusive of the REITs, will continue
to be available to meet expense needs and redemption requests (e.g., cash
withdrawals or transfers).
In the unlikely event that the Account's liquid assets and its cash flow
from operating activities and participant transactions are not sufficient to
meet its cash needs, including redemption requests, TIAA's general account will
purchase liquidity units in accordance with TIAA's liquidity guarantee to the
Account.
The Account spent approximately $21.9 million in 2001 for capital
(long-term) expenses, including ongoing tenant improvements and leasing
commissions at the commercial properties relating to the renewal of existing
tenants or re-leasing of space to new tenants during the normal course of
business. In 2002, it is estimated that the Account will expend approximately
$29.8 million in capital expenses. These expenditures will be for the costs
routinely incurred by the Account for painting, re-carpeting and minor
replacements to re-lease apartments as they become vacant and the costs
associated with the renewal of existing tenants or releasing of space to new
tenants in the commercial properties.
EFFECTS OF INFLATION - 2002
To the extent that inflation may increase property operating expenses in
the future, we anticipate that increases will generally be billed to tenants
either through contractual lease provisions in office, industrial, and retail
properties or through rent increases in apartment complexes. However, depending
on how long any vacant space in a property remains unleased, the Account may not
be able to recover the full amount of such increases in operating expenses.
13
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
TIAA REAL ESTATE ACCOUNT
================================================================================
PAGE
Report of Management Responsibility ......................................... 15
Report of Audit Committee ................................................... 16
Audited Consolidated Financial Statements:
Consolidated Statements of Assets and Liabilities ......................... 17
Consolidated Statements of Operations ..................................... 18
Consolidated Statements of Changes in Net Assets .......................... 19
Consolidated Statements of Cash Flows ..................................... 20
Notes to Consolidated Financial Statements ................................ 21
Report of Independent Auditors ............................................ 25
Consolidated Statement of Investments ..................................... 26
Schedule III - Real Estate Owned ............................................ 31
All other schedules are omitted since the required information is not present in
amounts sufficient to require submission of the schedule or because the
information is included in the financial statements and notes thereto.
14
================================================================================
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
and have been presented fairly and objectively in accordance with such
principles.
TIAA has established and maintains a strong system of internal controls designed
to provide reasonable assurance that assets are properly safeguarded and
transactions are properly executed in accordance with management's
authorization, and to carry out the ongoing responsibilities of management for
reliable financial statements. In addition, TIAA's internal audit personnel
provide a continuing review of the internal controls and operations of TIAA,
including its separate account operations.
The accompanying financial statements have been audited by the independent
auditing firm of Ernst & Young LLP. To maintain auditor independence and avoid
even the appearance of conflict of interest, it continues to be the Account's
policy that any non-audit services be obtained from a firm other than the
external financial audit firm. For the periods covered by these financial
statements, the Account did not engage Ernst & Young LLP for any management
advisory or consulting services. The independent auditors' report, which follows
the notes to financial statements, expresses an independent opinion on the
fairness of presentation of these financial statements.
The Audit Committee of the TIAA Board of Trustees, consisting entirely of
trustees who are not officers of TIAA, meets regularly with management,
representatives of Ernst & Young LLP and internal audit personnel to review
matters relating to financial reporting, internal controls and auditing.
/s/ John H. Biggs
-------------------------------
Chairman, President and
Chief Executive Officer
/s/ Richard L. Gibbs
-------------------------------
Executive Vice President and
Principal Accounting Officer
15
================================================================================
REPORT OF THE AUDIT COMMITTEE
To the Participants of the
TIAA Real Estate Account:
The TIAA Audit Committee oversees the financial reporting process of the TIAA
Real Estate Account ("Account") on behalf of TIAA's Board of Trustees. The Audit
Committee is a standing committee of the Board and operates in accordance with a
formal written charter (copies are available upon request) which describes the
Audit Committee's responsibilities. All members of the Audit Committee
("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 compliance with applicable laws and regulations. In fulfilling its oversight
responsibilities, the Committee reviewed and approved the audit plans of the
internal auditing group and the independent auditing firm in connection with
their respective audits. The Committee also meets regularly with the internal
and independent auditors, both with and without management present, to discuss
the results of their examinations, their evaluation of external controls, and
the overall quality of financial reporting. As required by its charter, the
Committee will evaluate rotation of the external financial audit firm whenever
circumstances warrant, but in no event 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 of
disclosures in the financial statements. The Committee has also discussed the
audited financial statements with Ernst & Young LLP, the independent auditing
firm responsible for expressing an opinion on the conformity of these audited
financial statements with generally accepted accounting principles.
The discussion with Ernst & Young LLP focused on their judgments concerning the
quality and appropriateness of the accounting principles and financial reporting
practices followed by the Account, the clarity of the financial statements and
related disclosures, and other significant matters, such as any significant
changes in accounting policies, management judgments and estimates, and the
nature of any uncertainties or unusual transactions. In addition, the Committee
discussed with Ernst & Young LLP the auditors' independence from management and
the Account, and has received a written disclosure regarding such independence,
as required by the Independence Standards Board.
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.
Willard T. Carleton, Audit Committee Chair
Frederick R. Ford, Audit Committee Member
Leonard S. Simon, Audit Committee Member
Rosalie J. Wolf, Audit Committee Member
February 20, 2002
16
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES
DECEMBER 31, DECEMBER 31,
2001 2000
-------------- --------------
ASSETS
Investments, at value:
Real estate properties
(cost: $2,276,414,478 and $1,818,143,290) .. $2,330,914,466 $1,899,254,344
Mortgages
(cost: $7,265,887 and $-) .................. 7,265,887 --
Other real estate related investments
(cost: $30,925,755 and $24,674,574) ........ 34,430,886 26,035,867
Marketable securities:
Real estate related
(cost: $301,967,699 and $134,898,725) .... 305,250,475 135,854,484
Other
(cost: $548,265,288 and $328,060,804) ...... 548,243,870 327,974,084
Cash ........................................... 275,457 715,866
Other .......................................... 44,003,409 33,265,757
-------------- --------------
TOTAL ASSETS 3,270,384,450 2,423,100,402
-------------- --------------
LIABILITIES
Accrued real estate property level expenses
and taxes .................................... 39,595,315 24,396,036
Security deposits held ......................... 8,767,676 6,817,972
Other .......................................... 618,289 1,736,106
-------------- --------------
TOTAL LIABILITIES 48,981,280 32,950,114
-------------- --------------
MINORITY INTEREST IN SUBSIDIARIES .............. 7,735,993 3,028,217
-------------- --------------
NET ASSETS
Accumulation Fund ............................. 3,103,639,556 2,310,540,978
Annuity Fund .................................. 110,027,621 76,581,093
-------------- --------------
TOTAL NET ASSETS $3,213,667,177 $2,387,122,071
============== ==============
NUMBER OF ACCUMULATION UNITS
OUTSTANDING--Notes 5 and 6 ..................... 18,456,445 14,604,673
============== ==============
NET ASSET VALUE, PER ACCUMULATION
UNIT--Note 5 ................................. $ 168.16 $ 158.21
============== ==============
See notes to consolidated financial statements.
17
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF OPERATIONS
YEARS ENDED DECEMBER 31,
------------------------------------------------
2001 2000 1999
------------ ------------ ------------
INVESTMENT INCOME
Real estate income, net:
Rental income ......................................... $256,755,315 $195,537,993 $132,316,878
------------ ------------ ------------
Real estate property level expenses and taxes:
Operating expenses .................................. 52,456,479 40,056,716 27,334,060
Real estate taxes ................................... 29,670,456 22,851,890 15,892,736
------------ ------------ ------------
Total real estate property level expenses and taxes 82,126,935 62,908,606 43,226,796
------------ ------------ ------------
Real estate income, net 174,628,380 132,629,387 89,090,082
Income from real estate joint venture .................. 2,251,593 756,133 --
Interest ............................................... 24,490,376 24,294,579 17,117,917
Dividends .............................................. 9,196,967 7,039,712 7,814,816
------------ ------------ ------------
TOTAL INCOME 210,567,316 164,719,811 114,022,815
------------ ------------ ------------
Expenses -- Note 2:
Investment advisory charges ........................... 5,896,729 6,924,202 4,246,911
Administrative and distribution charges ............... 8,470,496 4,392,882 3,442,282
Mortality and expense risk charges .................... 1,987,604 1,414,888 1,027,707
Liquidity guarantee charges ........................... 837,100 692,594 561,510
------------ ------------ ------------
TOTAL EXPENSES 17,191,929 13,424,566 9,278,410
------------ ------------ ------------
INVESTMENT INCOME, NET 193,375,387 151,295,245 104,744,405
------------ ------------ ------------
REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain (loss) on:
Real estate properties .............................. (4,109,121) 8,382,660 8,788,795
Marketable securities ............................... 2,839,417 (106,726) (3,022,098)
------------ ------------ ------------
Net realized gain (loss) on investments (1,269,704) 8,275,934 5,766,697
------------ ------------ ------------
Net change in unrealized appreciation (depreciation) on:
Real estate properties .............................. (26,611,066) 22,257,781 14,443,916
Real estate joint venture ........................... 2,143,838 1,361,293 --
Marketable securities ............................... 2,392,319 22,252,441 (10,375,870)
------------ ------------ ------------
Net change in unrealized appreciation
(depreciation) on investments (22,074,909) 45,871,515 4,068,046
------------ ------------ ------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
ON INVESTMENTS (23,344,613) 54,147,449 9,834,743
------------ ------------ ------------
NET INCREASE IN NET ASSETS RESULTING FROM
OPERATIONS BEFORE MINORITY INTEREST 170,030,774 205,442,694 114,579,148
Minority interest in net increase in net assets
resulting from operations ........................... (811,789) -- 1,364,619
------------ ------------ ------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $169,218,985 $205,442,694 $115,943,767
============ ============ ============
See notes to consolidated financial statements.
18
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS
YEARS ENDED DECEMBER 31,
--------------------------------------------------
2001 2000 1999
-------------- -------------- --------------
FROM OPERATIONS
Investment income, net ................................. $ 193,375,387 $ 151,295,245 $ 104,744,405
Net realized gain (loss) on investments ................ (1,269,704) 8,275,934 5,766,697
Net change in unrealized appreciation (depreciation)
on investments ........................................ (22,074,909) 45,871,515 4,068,046
Minority interest in net increase in net assets
resulting from operations ............................. (811,789) -- 1,364,619
-------------- -------------- --------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 169,218,985 205,442,694 115,943,767
-------------- -------------- --------------
FROM PARTICIPANT TRANSACTIONS
Premiums ............................................... 254,149,962 161,668,073 126,200,561
Net transfers from (to) TIAA ........................... (6,241,427) 36,271,547 24,155,178
Net transfers from CREF Accounts ....................... 492,856,010 343,338,864 269,199,426
Annuity and other periodic payments .................... (13,710,081) (9,924,802) (6,330,436)
Withdrawals and death benefits ......................... (69,728,343) (45,156,733) (30,052,955)
-------------- -------------- --------------
NET INCREASE IN NET ASSETS RESULTING
FROM PARTICIPANT TRANSACTIONS 657,326,121 486,196,949 383,171,774
-------------- -------------- --------------
NET INCREASE IN NET ASSETS 826,545,106 691,639,643 499,115,541
NET ASSETS
Beginning of year ...................................... 2,387,122,071 1,695,482,428 1,196,366,887
-------------- -------------- --------------
End of year ............................................ $3,213,667,177 $2,387,122,071 $1,695,482,428
============== ============== ==============
See notes to consolidated financial statements.
19
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31,
------------------------------------------------
2001 2000 1999
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations ... $169,218,985 $205,442,694 $115,943,767
Adjustments to reconcile net increase in net assets
resulting from operations to net cash used in
operating activities:
Increase in investments .............................. (836,986,805) (702,336,424) (475,537,558)
Increase in other assets ............................. (10,737,652) (1,207,996) (14,271,470)
Increase in accrued real estate property level
expenses and taxes ................................. 15,199,279 5,970,708 6,992,799
Increase in security deposits held ..................... 1,949,704 1,268,013 3,659,536
Increase (decrease) in other liabilities ............... (1,117,817) 1,736,106 --
Increase (decrease) in minority interest ............... 4,707,776 3,028,217 (19,913,592)
------------ ------------ ------------
NET CASH USED IN
OPERATING ACTIVITIES (657,766,530) (486,098,682) (383,126,518)
------------ ------------ ------------
CASH FLOWS FROM PARTICIPANT TRANSACTIONS
Premiums ............................................... 254,149,962 161,668,073 126,200,561
Net transfers from (to) TIAA ........................... (6,241,427) 36,271,547 24,155,178
Net transfers from CREF Accounts ....................... 492,856,010 343,338,864 269,199,426
Annuity and other periodic payments .................... (13,710,081) (9,924,802) (6,330,436)
Withdrawals and death benefits ......................... (69,728,343) (45,156,733) (30,052,955)
------------ ------------ ------------
NET CASH PROVIDED BY
PARTICIPANT TRANSACTIONS 657,326,121 486,196,949 383,171,774
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH (440,409) 98,267 45,256
CASH
Beginning of year ....................................... 715,866 617,599 572,343
------------ ------------ ------------
End of year ............................................. $ 275,457 $ 715,866 $ 617,599
============ ============ ============
See notes to consolidated financial statements.
20
TIAA REAL ESTATE ACCOUNT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1--SIGNIFICANT ACCOUNTING POLICIES
The TIAA Real Estate Account ("Account") is a segregated investment account of
Teachers Insurance and Annuity Association of America ("TIAA") and was
established by resolution of TIAA's Board of Trustees on February 22, 1995,
under the insurance laws of the State of New York, for the purpose of funding
variable annuity contracts issued by TIAA. The Account holds various properties
in wholly-owned and majority-owned subsidiaries which are consolidated for
financial statement purposes. 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 also
invests in publicly-traded securities and other instruments to maintain adequate
liquidity for operating expenses, capital expenditures and to make benefit
payments. The financial statements were prepared in accordance with accounting
principles generally accepted in the United States 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 consistently
followed by the Account.
BASIS OF PRESENTATION: The accompanying consolidated financial statements
include the Account and its subsidiaries. All significant intercompany accounts
and transactions have been eliminated in consolidation.
VALUATION OF REAL ESTATE PROPERTIES: Investments in real estate properties are
stated at fair value, as determined in accordance with procedures approved by
the Investment Committee of the Board of Trustees and in accordance with the
responsibilities of the Board as a whole; accordingly, the Account does not
record depreciation. Fair value for real estate properties is defined as the
most probable price for which a property will sell in a competitive market under
all conditions requisite to a fair sale. Determination of fair value involves
subjective judgement because the actual market value of real estate can be
determined only by negotiation between the parties in a sales transaction. Real
estate properties owned by the Account are initially valued at their respective
purchase prices (including acquisition costs). Subsequently, independent
appraisers value each real estate property at least once a year. The independent
fiduciary, The Townsend Group, must approve all independent appraisers used by
the Account. The independent fiduciary can also require additional appraisals if
it believes that a property's value has changed materially or otherwise to
assure that the Account is valued correctly. TIAA's appraisal staff performs a
valuation review of each real estate property on a quarterly basis and updates
the property value if it believes that the value of the property has changed
since the previous valuation review or appraisal. The independent fiduciary
reviews and approves any such valuation adjustments which exceed certain
prescribed limits. TIAA continues to use the revised value to calculate the
Account's net asset value until the next valuation review or appraisal.
VALUATION OF REAL ESTATE JOINT VENTURES: Real estate joint ventures are stated
at the Account's equity in the net assets of the underlying entity, which values
its real estate holdings at fair value.
VALUATION OF MORTGAGES: Mortgages are initially valued at their face amount.
Fixed rate mortgages are, thereafter, valued quarterly by discounting payments
of principal and interest to their present value using a rate at which
commercial lenders would make similar mortgage loans. Floating variable rate
mortgages are generally valued at their face amount, although the value may be
adjusted as market conditions dictate.
VALUATION OF MARKETABLE SECURITIES: Equity securities listed or traded on any
United States national securities 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.
21
Short-term money market instruments are stated at market value. Portfolio
securities, including 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 of Trustees and in
accordance with the responsibilities of the Board as a whole.
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). Rent from real estate properties consists of all
amounts earned under tenant operating leases, including base rent, recoveries of
real estate taxes and other expenses and charges for miscellaneous services
provided to tenants. Rental income is recognized in accordance with the billing
terms of the lease agreements. The Account bears the direct expenses of the real
estate properties owned. These expenses include, but are not limited to, fees to
local property management companies, property taxes, utilities, maintenance,
repairs, insurance and other operating and administrative costs. An estimate of
the net operating income earned from each real estate property is accrued by the
Account on a daily basis and such estimates are adjusted as soon as actual
operating results are determined. Realized gains and losses on real estate
transactions are accounted for under the specific identification method.
Securities transactions are accounted for as of the date the securities are
purchased or sold (trade date). Interest income is recorded as earned and
includes accrual of discount and amortization of premium. Dividend income is
recorded on the ex-dividend date. Realized gains and losses on securities
transactions are accounted for on the average cost basis.
FEDERAL INCOME TAXES: Based on provisions of the Internal Revenue Code, the
Account is taxed as a segregated asset account of TIAA. The Account should incur
no material federal income tax attributable to the net investment experience of
the Account.
NOTE 2--MANAGEMENT AGREEMENTS
Investment advisory services for the Account are provided by TIAA employees,
under the direction of TIAA's Board of Trustees and its Investment Committee,
pursuant to investment management procedures adopted by TIAA for the Account.
TIAA's investment management decisions for the Account are also subject to
review by the Account's independent fiduciary. TIAA also provides all portfolio
accounting and related services for the Account.
Distribution and administrative services for the Account are provided by
TIAA-CREF Individual & Institutional Services, Inc. ("Services") pursuant to a
Distribution and Administrative Services Agreement with the Account. Services, a
wholly-owned subsidiary of TIAA, is a registered broker-dealer and member of the
National Association of Securities Dealers, Inc.
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 also receives a fee for
assuming certain mortality and expense risks.
The services provided by TIAA and Services are provided at cost. TIAA and
Services receive payments from the Account on a daily basis according to
formulas established each year with the objective of keeping the payments as
close as possible to the Account's actual expenses. Any differences between
actual expenses and the amounts paid are adjusted quarterly.
22
NOTE 3--REAL ESTATE PROPERTIES
Had the Account's real estate properties which were purchased during the year
ended December 31, 2001 been acquired at the beginning of the period (January 1,
2001), rental income and real estate property level expenses and taxes for the
year ended December 31, 2001 would have increased by approximately $36,395,000
and $12,691,000, respectively. In addition, interest income for the year ended
December 31, 2001 would have decreased by approximately $18,520,000.
Accordingly, the total proforma effect on the Account's net investment income
for the year ended December 31, 2001 would have been an increase of
approximately $5,184,000, if the real estate properties acquired during the year
ended December 31, 2001 had been acquired at the beginning of the year.
NOTE 4--LEASES
The Account's real estate properties are leased to tenants under operating lease
agreements which expire on various dates through 2021. Aggregate minimum annual
rentals for the properties owned, excluding short-term residential leases, are
as follows:
Years Ending
December 31,
------------
2002 $ 192,814,000
2003 180,210,000
2004 159,868,000
2005 137,375,000
2006 104,650,000
Thereafter 313,328,000
--------------
Total $1,088,245,000
==============
Certain leases provide for additional rental amounts based upon the recovery of
actual operating expenses in excess of specified base amounts.
23
NOTE 5--CONDENSED CONSOLIDATED FINANCIAL INFORMATION
Selected condensed consolidated financial information for an Accumulation Unit
of the Account is presented below.
FOR THE YEARS ENDED DECEMBER 31,
-------------------------------------------------------------
2001 2000 1999 1998 1997
-------- -------- -------- -------- --------
Per Accumulation Unit data:
Rental income .................................... $ 14.862 $ 14.530 $ 12.168 $ 10.425 $ 7.288
Real estate property
level expenses and taxes ....................... 4.754 4.674 3.975 3.403 2.218
-------- -------- -------- -------- --------
Real estate income, net 10.108 9.856 8.193 7.022 5.070
Income from real estate joint venture ............ 0.130 0.056 -- -- --
Dividends and interest ........................... 1.950 2.329 2.292 3.082 2.709
-------- -------- -------- -------- --------
Total income 12.188 12.241 10.485 10.104 7.779
Expense charges (1) .............................. 0.995 0.998 0.853 0.808 0.580
-------- -------- -------- -------- --------
Investment income, net 11.193 11.243 9.632 9.296 7.199
Net realized and unrealized
gain (loss) on investments ..................... (1.239) 3.995 1.164 .579 3.987
-------- -------- -------- -------- --------
Net increase in
Accumulation Unit Value ........................ 9.954 15.238 10.796 9.875 11.186
Accumulation Unit Value:
Beginning of year .............................. 158.206 142.968 132.172 122.297 111.111
-------- -------- -------- -------- --------
End of year .................................... $168.160 $158.206 $142.968 $132.172 $122.297
======== ======== ======== ======== ========
Total return ..................................... 6.29% 10.66% 8.17% 8.07% 10.07%
Ratios to Average Net Assets:
Expenses (1) ................................... 0.61% 0.67% 0.63% 0.64% 0.58%
Investment income, net ........................... 6.81% 7.50% 7.13% 7.34% 7.25%
Portfolio turnover rate:
Real estate properties ......................... 4.61% 3.87% 4.46% 0% 0%
Securities ..................................... 40.62% 32.86% 27.68% 24.54% 7.67%
Thousands of Accumulation Units
outstanding at end of year ..................... 18,456 14,605 11,487 8,834 6,313
(1) Expense charges per Accumulation Unit and the Ratio of Expenses to
Average Net Assets include the portion of expenses related to the
minority interests and exclude real estate property level expenses and
taxes. If the real estate property level expenses and taxes were
included, the expense charge per Accumulation Unit for the year ended
December 31, 2001 would be $5.749 ($5.672, $4.828, $4.211 and $2.798 for
the years ended December 31, 2000, 1999, 1998 and 1997, respectively),
and the Ratio of Expenses to Average Net Assets for the year ended
December 31, 2001 would be 3.50% (3.79%, 3.58%, 3.32% and 2.82% for the
years ended December 31, 2000, 1999, 1998 and 1997, respectively).
24
NOTE 6--ACCUMULATION UNITS
Changes in the number of Accumulation Units outstanding were as follows:
FOR THE YEARS ENDED DECEMBER 31,
--------------------------------------
2001 2000 1999
---------- ---------- ----------
Accumulation Units:
Credited for premiums .............. 1,542,511 1,074,708 918,728
Credited for transfers, net
disbursements and amounts
applied to the Annuity Fund ...... 2,309,261 2,042,605 1,734,721
Outstanding:
Beginning of year ................ 14,604,673 11,487,360 8,833,911
---------- ---------- ----------
End of year ...................... 18,456,445 14,604,673 11,487,360
========== ========== ==========
- --------------------------------------------------------------------------------
REPORT OF INDEPENDENT AUDITORS
To the Participants of the TIAA Real Estate Account and the
Board of Trustees of Teachers Insurance and Annuity Association of America:
We have audited the accompanying consolidated statements of assets and
liabilities, including the statement of investments as of December 31, 2001, of
the TIAA Real Estate Account ("Account") of Teachers Insurance and Annuity
Association of America ("TIAA") as of December 31, 2001 and 2000, and the
related consolidated statements of operations, changes in net assets and cash
flows for each of the three years in the period ended December 31, 2001. Our
audits also included the financial statement schedule listed in the Index at
item 14(a). These financial statements and schedule are the responsibility of
TIAA's management. Our responsibility is to express an opinion on these
financial statements and schedule based on our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the 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. Our
procedures included confirmation of securities owned as of December 31, 2001, by
correspondence with the custodian and brokers. 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 audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of the Account at
December 31, 2001 and 2000, and the consolidated results of its operations and
the changes in its net assets and its cash flows for each of the three years in
the period ended December 31, 2001, in conformity with accounting principles
generally accepted in the United States. Also, in our opinion, the related
financial statement schedule, when considered in relation to the basic financial
statements taken as a whole, presents fairly in all material respects the
information set forth therein.
New York, New York /s/ Ernst & Young LLP
February 1, 2002
- --------------------------------------------------------------------------------
25
TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENT OF INVESTMENTS
DECEMBER 31, 2001
REAL ESTATE PROPERTIES--72.25%
LOCATION / DESCRIPTION VALUE
- ---------------------- -----
ARIZONA:
Biltmore Commerce Center - Office building ............. $ 32,295,058
Southbank Building - Office building ................... 13,565,218
CALIFORNIA:
9 Hutton Centre - Office building ...................... 20,448,764
88 Kearny Street - Office building ..................... 82,116,702
Cabot Industrial Portfolio - Industrial building ....... 34,363,752
Eastgate Distribution Center - Industrial building ..... 14,500,000
Kenwood Mews - Apartments .............................. 22,686,216
Larkspur Courts - Apartments ........................... 53,200,000
Northpoint Commerce Center - Industrial building ....... 37,456,149
Ontario Industrial Properties - Industrial building .... 108,000,000
Westcreek - Apartments ................................. 17,900,000
COLORADO:
Arapahoe Park East - Industrial building ............... 13,100,000
The Lodge at Willow Creek - Apartments ................. 32,000,000
Monte Vista - Apartments ............................... 21,800,000
CONNECTICUT:
Ten & Twenty Westport Road - Office building ........... 140,105,661
FLORIDA:
Carolina Apartments - Apartments ....................... 17,600,000
Doral Pointe- Apartments ............................... 45,341,796
Golfview - Apartments .................................. 27,050,000
The Greens at Metrowest - Apartments ................... 14,100,000
Maitland Promenade One - Office building ............... 39,000,000
Plantation Grove - Shopping center ..................... 7,700,000
Quiet Waters - Apartments .............................. 16,100,000
Royal St. George - Apartments .......................... 16,400,000
Sawgrass Portfolio - Office building ................... 50,800,000
South Florida Apartment Portfolio - Apartments ......... 46,700,000
Westinghouse Facility - Industrial building ............ 5,300,000
GEORGIA:
Atlanta Industrial Portfolio - Industrial building ..... 40,459,044
ILLINOIS:
Chicago Industrial Portfolio - Industrial building ..... 42,591,186
Columbia Center III - Office building .................. 37,500,000
Parkview Plaza - Office building ....................... 50,500,000
Rolling Meadows - Shopping center ...................... 12,390,000
KENTUCKY:
IDI Kentucky Portfolio - Industrial building .......... 53,600,000
MARYLAND:
FedEx Distribution Facility - Industrial building ...... 7,600,000
Longview Executive Park - Office building .............. 28,200,800
MASSACHUSETTS:
Batterymarch Park II - Office building ................. 17,990,854
Needham Corporate Center - Office building ............. 28,294,526
26
LOCATION / DESCRIPTION VALUE
- ---------------------- -----
MICHIGAN:
Indian Creek - Apartments .............................. $ 16,800,000
MINNESOTA:
Interstate Crossing - Industrial building .............. 6,504,740
River Road Distribution Center - Industrial building ... 4,131,571
NEVADA:
UPS Distribution Facility - Industrial building ........ 11,100,000
NEW JERSEY:
10 Waterview Boulevard - Office building ............... 30,400,000
371 Hoes Lane - Office building ........................ 14,700,000
Konica Photo Imaging Headquarters - Industrial
building ............................................. 17,700,000
Morris Corporate Center III - Office building .......... 106,214,595
South River Road Industrial - Industrial building ...... 32,688,565
NEW YORK:
780 Third Avenue - Office building ..................... 177,500,000
The Colorado - Apartments .............................. 60,500,000
NORTH CAROLINA:
The Lynnwood Collection - Shopping center .............. 7,900,000
The Millbrook Collection - Shopping center ............. 7,200,000
OHIO:
Bent Tree - Apartments ................................. 14,500,000
Bisys Fund Services Building - Office building ......... 20,400,000
Columbus Portfolio - Office building ................... 28,400,000
Northmark Business Center III - Office building ........ 12,200,000
OREGON:
Five Centerpointe - Office building .................... 18,001,499
PENNSYLVANIA:
Lincoln Woods - Apartments ............................. 24,800,000
TEXAS:
Butterfield Industrial Park - Industrial building ...... 4,700,000(1)
Dallas Industrial Portfolio - Industrial building ...... 97,245,850
The Legends at Chase Oaks - Apartments ................. 26,000,000
UTAH:
Landmark at Salt Lake City - Industrial building ....... 13,600,000
VIRGINIA:
Ashford Meadows - Apartments ........................... 64,195,500
Fairgate at Ballston - Office building ................. 30,300,000
Monument Place - Office building ....................... 35,400,000
WASHINGTON DC:
1015 15th Street - Office building ..................... 48,736,575
1801 K Street N W - Office building .................... 150,339,845
--------------
TOTAL REAL ESTATE PROPERTIES (Cost $2,276,414,478) ..... 2,330,914,466
--------------
(1) Leasehold interest only
MORTGAGES--0.23%
The Georgetown Company - a 90% participation in
a construction loan with a total commitment of
$13 million, bearing interest payable monthly at
LIBOR plus 200 basis points, currently 3.90%,
due April 1, 2003 with an option to extend to
April 1, 2004 .......................................... 7,265,887
--------------
TOTAL MORTGAGES (Cost $7,265,887) ..................... 7,265,887
--------------
27
VALUE
-----
OTHER REAL ESTATE RELATED INVESTMENTS--1.07%
REAL ESTATE JOINT VENTURE--0.89%
Teachers REA IV, LLC, which owns Tyson's
Executive Plaza II (50% Account Interest) ............ $ 28,538,029
--------------
TOTAL REAL ESTATE JOINT VENTURE (Cost $25,032,898) ..... 28,538,029
--------------
LIMITED PARTNERSHIP--0.18%
MONY/Transwestern Mezzanine Realty Partners L.P. ....... 5,892,857
--------------
TOTAL LIMITED PARTNERSHIP (Cost $5,892,857) ............ 5,892,857
--------------
TOTAL OTHER REAL ESTATE RELATED INVESTMENTS
(Cost $30,925,755) ........................................ 34,430,886
--------------
MARKETABLE SECURITIES--26.45%
REAL ESTATE RELATED--9.46%
REAL ESTATE INVESTMENT TRUSTS--4.20%
SHARES ISSUER
-------- ------
50,600 Alexandria Real Estate Equities, Inc. ........ 2,079,660
205,000 AMB Property Corporation ..................... 5,330,000
170,000 Apartment Investment & Management Co ......... 7,774,100
260,325 Archstone-Smith Trust ........................ 6,846,548
100,400 Avalonbay Communities, Inc. .................. 4,749,924
296,800 Boston Properties, Inc ....................... 11,278,400
230,400 Brandywine Realty Trust ...................... 4,854,528
130,000 Carramerica Realty Series B Pfd .............. 3,186,300
84,400 Centerpoint Properties Corp. ................. 4,203,120
83,300 Chateau Communities, Inc ..................... 2,490,670
266,900 Cousins Properties, Inc ...................... 6,501,684
271,300 Duke Realty Corp. ............................ 6,600,729
499,033 Equity Office Properties Trust ............... 15,010,913
213,400 Equity Residential Properties Trust Co. ...... 6,126,714
114,700 Hilton Hotels Corp ........................... 1,252,524
40,000 Hospitality Properties Trust ................. 1,180,000
222,800 Host Marriott Corp (New) ..................... 2,005,200
125,250 Kimco Realty Corp. ........................... 4,094,422
51,650 Macerich Company ............................. 1,373,890
82,100 Manufactured Home Communities, Inc. .......... 2,562,341
240,500 Mission West Properties Inc. ................. 3,059,160
331,600 Prologis Trust ............................... 7,132,716
130,600 Public Storage, Inc. ......................... 4,362,040
232,400 Reckson Associates Realty Corp ............... 5,428,864
260,900 Simon Property Group, Inc. ................... 7,652,197
8,600 SL Green Realty Corp. ........................ 264,106
153,000 Starwood Hotels & Resorts Worldwide .......... 4,567,050
95,000 Sun Communities, Inc ......................... 3,538,750
------------
TOTAL REAL ESTATE INVESTMENT TRUSTS
(Cost $130,502,519) ................................. 135,506,550
------------
28
COLLATERALIZED MORTGAGE BACKED SECURITIES--5.26%
PRINCIPAL ISSUER, CURRENT RATE AND MATURITY DATE VALUE
--------- -------------------------------------- -----
$11,000,000 Ball 2001-116A B
2.490% 09/17/05 ............................. $ 10,936,706
20,000,000 COMM 2.35
2.350% 11/15/13 ............................. 19,996,660
20,000,000 CSFB 2001-TFLA
2.350% 11/13/13 ............................. 19,996,620
10,000,000 GGPMP 3.20
3.200% 02/15/14 ............................. 9,981,970
20,000,000 GGPMP 2.60
2.600% 02/15/14 ............................. 19,961,680
10,000,000 GSMS 2001-Rock A2FL
2.500% 05/03/11 ............................. 9,641,070
10,000,000 JPMCC 2001-FL1A B
2.320% 06/13/13 ............................. 9,955,960
10,000,000 MSDW Capital
2.500% 02/03/11 ............................. 9,826,920
10,000,000 MSDWC 2001 - XLF A1
2.610% 10/07/13 ............................. 9,999,990
8,000,000 MSDWC 2001 - FRMA C
2.470% 07/12/16 ............................. 7,756,312
7,500,000 MSDWC 2001 - SGMA B
2.450% 07/11/11 ............................. 7,434,885
10,000,000 Opryland Hotel Trust
2.600% 04/01/04 ............................. 9,953,540
7,484,348 Strategic Hotel Cap
2.330% 04/17/06 ............................. 7,240,276
7,484,348 Strategic Hotel Cap
3.090% 04/17/06 ............................. 7,197,226
5,000,000 Trize 2001 - TZHA A3FL
2.270% 03/15/13 ............................. 4,898,260
5,000,000 USC Oakbrook Trust
2.340% 11/01/05 ............................. 4,965,850
------------
TOTAL COLLATERALIZED MORTGAGE BACKED SECURITIES
(Cost $171,465,180) .................................... 169,743,925
------------
TOTAL REAL ESTATE RELATED (Cost $301,967,699) ............ 305,250,475
------------
OTHER--16.99%
COMMERCIAL PAPER--16.99%
PRINCIPAL ISSUER, CURRENT RATE AND MATURITY DATE
--------- --------------------------------------
15,950,000 Abbot Laboratories
1.780% 01/03/02 ............................. 15,947,607
25,000,000 Abbot Laboratories
1.740% 01/10/02 ............................. 24,987,360
25,000,000 American Honda Finance Corp
1.770% 01/17/02 ............................. 24,978,632
25,000,000 Beta Finance Inc
2.05% 01/25/02 .............................. 24,968,578
18,065,000 BMW US Capital Corp
1.83% 01/03/02 .............................. 18,062,290
29
PRINCIPAL ISSUER, CURRENT RATE AND MATURITY DATE VALUE
--------- -------------------------------------- -----
$ 5,400,000 Ciesco LP
1.85% 01/04/02 .............................. $ 5,398,920
9,300,000 Ciesco LP
1.82% 02/07/02 .............................. 9,282,231
8,150,000 Coca-Cola Enterprises Inc
1.80% 01/03/02 .............................. 8,148,778
4,750,000 Coca-Cola Enterprises Inc
2.02% 02/15/02 .............................. 4,739,075
15,000,000 Corporate Asset Funding Corp, Inc
2.07% 01/04/02 .............................. 14,997,000
23,000,000 Delaware Funding Corp
1.88% 01/22/02 .............................. 22,974,560
26,700,000 Edison Asset Securitization LLC
1.82% 01/11/02 .............................. 26,685,152
20,000,000 Equilon Enterprises LLC
1.76% 01/14/02 .............................. 19,985,844
12,400,000 Federal Home Loan Mortgage Corp
1.81% 01/02/02 .............................. 12,398,781
25,000,000 Gannett Inc
1.83% 01/24/02 .............................. 24,969,832
25,000,000 Goldman Sachs Group LP
1.75% 01/14/02 .............................. 24,982,305
25,000,000 Govco Incorporated
1.80% 02/25/02 .............................. 24,930,000
24,700,000 International Business Machine Corp
1.88% 01/07/02 .............................. 24,691,355
25,000,000 Kitty Hawk Funding Corp
1.77% 01/15/02 .............................. 24,981,145
25,000,000 Park Avenue Receivables Corp
1.83% 01/11/02 .............................. 24,986,098
21,700,000 Parker Hannifin Corp
2.00% 01/02/02 .............................. 21,697,830
11,500,000 Pfizer Inc
1.75% 01/31/02 .............................. 11,482,076
26,475,000 Pitney Bowes Inc
1.90% 01/11/02 .............................. 26,460,277
7,500,000 Preferred Receivables Funding Corp
1.78% 01/09/02 .............................. 7,496,588
25,000,000 Receivables Capital Corp
1.90% 01/23/02 .............................. 24,971,090
25,000,000 Salomon Smith Barney Holdings Inc
1.90% 01/02/02 .............................. 24,997,500
8,400,000 SBC Communications Inc
2.00% 01/10/02 .............................. 8,395,753
25,000,000 United Parcel Service of America Inc
1.78% 02/01/02 .............................. 24,959,778
14,700,000 Verizon Global Funding
1.85% 01/17/02 .............................. 14,687,435
--------------
TOTAL COMMERCIAL PAPER (Amortized cost $548,265,288) ..... 548,243,870
--------------
TOTAL OTHER (Cost $548,265,288) .......................... 548,243,870
--------------
TOTAL MARKETABLE SECURITIES (Cost $850,232,987) .......... 853,494,345
--------------
TOTAL INVESTMENTS--100.00% (Cost $3,164,839,107) ......... $3,226,105,584
==============
See notes to consolidated financial statements.
30
TIAA REAL ESTATE ACCOUNT
SCHEDULE III - REAL ESTATE OWNED
DECEMBER 31, 2001
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
River Road Distribution Center $-0- $ 4,174,182 ($ 42,611) $ 4,131,571 1995 11/22/95
Industrial Building
Fridley, Minnesota
The Greens At Metrowest -0- 12,522,047 1,577,953 14,100,000 1990 12/15/95
Apartments
Orlando, Florida
Butterfield Industrial Park -0- 4,456,125 243,875 4,700,000 1981 12/22/95
Industrial Building
El Paso, Texas (1)
Plantation Grove Shopping Center -0- 7,350,129 349,871 7,700,000 1995 12/28/95
Shopping Center
Ocoee, Florida
Southbank Business Park -0- 10,069,898 3,495,320 13,565,218 1995 02/27/96
Office Building
Phoenix, Arizona
Millbrook Collection -0- 6,774,711 425,289 7,200,000 1988 03/29/96
Shopping Center
Raleigh, North Carolina
Lynnwood Collection -0- 6,708,120 1,191,880 7,900,000 1988 03/29/96
Shopping Center
Raleigh, North Carolina
31
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
Monte Vista Apartments $-0- $ 17,663,849 $ 4,136,151 $ 21,800,000 1995 06/21/96
Apartments
Littleton, Colorado
Arapahoe Park East -0- 9,933,485 3,166,515 13,100,000 1982 10/31/96
Industrial Building
Boulder, Colorado
Royal St. George Apartments -0- 16,072,612 327,388 16,400,000 1995 12/20/96
Apartments
West Palm Beach, Florida
Interstate Crossing -0- 6,454,888 49,851 6,504,739 1995 12/31/96
Industrial Building
Eagan, Minnesota
West Creek Apartments -0- 13,488,279 4,411,721 17,900,000 1988 01/02/97
Apartments
Westlake Village, California
Westinghouse Facility -0- 6,089,473 (789,473) 5,300,000 1997 02/05/97
Industrial Building
Coral Springs, Florida
Rolling Meadows -0- 12,930,463 (540,463) 12,390,000 1957 05/28/97
Shopping Center
Rolling Meadows, Illinois
Eastgate Distribution Center -0- 11,952,402 2,547,598 14,500,000 1996 05/29/97
Industrial Building
San Diego, California
32
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
Five Centerpointe $-0- $ 15,656,341 $ 2,345,158 $ 18,001,499 1988 04/21/97
Office Building
Lake Oswego, Oregon
Longview Executive Park -0- 23,628,567 4,572,233 28,200,800 1988 04/21/97
Office Building
Longview, Maryland
Northmark Business Center III -0- 8,812,644 3,387,356 12,200,000 1985 04/21/97
Office Building
Blue Ash, Ohio
Fairgate at Ballston -0- 26,977,436 3,322,564 30,300,000 1988 04/21/97
Office Building
Arlington, Virginia
Parkview Plaza -0- 49,412,494 1,087,506 50,500,000 1990 04/29/97
Office Building
Oakbrook Terrace, Illinois
Lincoln Woods Apartments -0- 21,464,483 3,335,517 24,800,000 1991 10/20/97
Apartments
Lafayette Hill, Pennsylvania
371 Hoes Lane -0- 15,499,306 (799,306) 14,700,000 1986 12/15/97
Office Building
Piscataway, New Jersey
Columbia Centre III -0- 38,580,069 (1,080,069) 37,500,000 1989 12/23/97
Office Building
Rosemont, Illinois
33
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
The Lodge at Willow Creek $-0- $ 27,562,882 $ 4,437,118 $ 32,000,000 1997 12/24/97
Apartments
Douglas County, Colorado
The Legends at Chase Oaks -0- 29,701,668 (3,701,668) 26,000,000 1997 03/31/98
Apartments
Plano, Texas
Chicago Industrial Portfolio -0- 41,953,686 637,500 42,591,186 1997 06/30/98
Industrial Building
Joliet, Illinois
Golfview Apartments -0- 28,066,591 (1,016,591) 27,050,000 1998 07/31/98
Apartments
Lake Mary, Florida
Indian Creek Apartments -0- 17,002,932 (202,932) 16,800,000 1988 10/08/98
Apartments
Farmington Hills, Michigan
Bent Tree Apartments -0- 14,420,590 79,410 14,500,000 1987 10/22/98
Apartments
Columbus, Ohio
UPS Distribution Center -0- 10,989,393 110,607 11,100,000 1998 11/13/98
Industrial Building
Fernly, Nevada
Ontario Industrial Properties -0- 105,364,400 2,635,600 108,000,000 1997 12/17/98
Industrial Building
Ontario, California
34
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
IDI Kentucky Portfolio $-0- $ 53,083,000 $ 517,000 $ 53,600,000 1998 12/17/98
Industrial Building
Hebron, Kentucky
Fedex Distribution Center -0- 7,828,025 (228,025) 7,600,000 1998 12/18/98
Industrial Building
Crofton, Maryland
Biltmore Commerce Center -0- 37,323,058 (5,028,000) 32,295,058 1985 02/23/99
Office Building
Phoenix, Arizona
The Colorado -0- 52,687,840 7,812,160 60,500,000 1987 04/14/99
Apartments
New York, New York
Sawgrass Portfolio -0- 52,963,368 (2,163,368) 50,800,000 1998 05/11/99
Office Building
Sunrise, Florida
780 Third Avenue -0- 161,511,019 15,988,981 177,500,000 1984 07/08/99
Office Building
New York, New York
Monument Place -0- 34,597,698 802,302 35,400,000 1990 07/15/99
Office Building
Fairfax, Virginia
88 Kearny Street -0- 65,795,171 16,321,531 82,116,702 1986 07/22/99
Office Building
San Francisco, California
35
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
10 Waterview Boulevard $-0- $ 31,063,636 ($ 663,636) $ 30,400,000 1984 07/27/99
Office Building
Parsippany, New Jersey
Larkspur Courts -0- 53,038,988 161,012 53,200,000 1991 08/17/99
Apartments
Larkspur, California
Columbus Portfolio -0- 30,238,233 (1,838,233) 28,400,000 1997 11/30/99
Office Building
Columbus, Ohio
Konica Photo Imaging Headquarters -0- 17,049,875 650,125 17,700,000 1999 12/21/99
Industrial Building
Mahwah, New Jersey
Atlanta Industrial Portfolio -0- 39,855,509 603,536 40,459,045 1999 04/04/00
Industrial Building
Atlanta, Georgia
1801 K Street -0- 140,719,040 9,620,806 150,339,846 1971 05/15/00
Office Building
Washington, DC
Northpoint Commerce Center -0- 38,818,013 (1,361,864) 37,456,149 1994 06/15/00
Industrial Building
Fullerton, California
Morris Corporate Center III -0- 103,119,739 3,094,856 106,214,595 1990 07/12/00
Office Building
Parsippany, New Jersey
36
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
Ashford Meadows Apartments $-0- $ 64,171,626 $ 23,874 $ 64,195,500 1998 09/28/00
Apartments
Herndon, Virginia
Landmark at Salt Lake City -0- 14,434,653 (834,653) 13,600,000 2000 11/03/00
Industrial Building
Salt Lake City, Utah
Cabot Industrial Portfolio -0- 32,155,307 2,208,445 34,363,752 2000 11/17/00
Industrial Building
Rancho Cucamonga, California
Maitland Promenade One -0- 36,520,162 2,479,838 39,000,000 1999 12/14/00
Office Building
Maitland, Florida
Dallas Industrial Portfolio -0- 96,904,758 341,092 97,245,850 1997 12/19/00
Industrial Building
Coppell, Texas
Bisys Fund Service Building -0- 19,070,377 1,329,623 20,400,000 2001 11/30/99
Office Building
Columbus, Ohio
Batterymarch Park 11 -0- 17,816,460 174,393 17,990,853 1986 05/31/01
Office Building
Quincy, Massachusetts
South River Road Industrial -0- 33,700,429 (1,011,864) 32,688,565 1999 06/25/01
Industrial Building
Cranbury, New Jersey
37
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
Needham Corporate Center $-0- $ 28,150,986 $ 143,540 $ 28,294,526 1987 07/30/01
Office Building
Needham, Massachusetts
South Florida Apt Portfolio -0- 44,114,457 2,585,543 46,700,000 1986 08/24/01
Apartments
Boca Raton, Florida
Carolina Apartments -0- 17,286,931 313,069 17,600,000 1993 08/24/01
Apartments
Margate, Florida
Quiet Waters Apartments -0- 19,094,415 (2,994,415) 16,100,000 1995 08/24/01
Apartments
Deerfield Beach, Florida
9 Hutton Centre -0- 20,448,764 0 20,448,764 1981 10/30/01
Office Building
Santa Ana, California
Doral Pointe Apartments -0- 45,341,796 0 45,341,796 1990 11/06/01
Apartments
Miami, Florida
1015 15th Street -0- 48,736,575 0 48,736,575 1978 11/09/01
Office Building
Washington D.C.
Kenwood Mews Apartments -0- 22,686,216 0 22,686,216 1991 11/30/01
Apartments
Burbank, California
38
COSTS CAPITALIZED
SUBSEQUENT TO
ACQUISITION
INITIAL COST (INCLUDING VALUE AT YEAR
ENCUM- TO ACQUIRE UNREALIZED GAINS DECEMBER 31, CONSTRUCTION DATE
DESCRIPTION BRANCES PROPERTY AND LOSSES) 2001 COMPLETED ACQUIRED
- ---------------------------------- ------- -------------- ----------------- -------------- ------------ --------
Ten & Twenty Westport Road $-0- $ 140,105,661 $ 0 $ 140,105,661 2001 12/28/01
Office Building
Wilton, Connecticut ----- -------------- ----------- --------------
$ -0- $2,242,165,930 $88,748,536 $2,330,914,466
===== ============== =========== ==============
(1) Leasehold interest only
Reconciliation of investment
property owned:
Balance at beginning of period $1,899,254,344
Acquisitions 538,396,767
Dispositions (94,797,368)
(Initial Cost $95,125,231,
costs capitalized ($327,863))
Capital improvements and carrying
costs (including unrealized
gains and losses) (11,939,277)
--------------
Balance at end of period $2,330,914,466
==============
39
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
Not applicable.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT.
The Account has no officers or directors. The Trustees and principal
executive officers of TIAA, and their principal occupations during the last five
years, are as follows:
TRUSTEES
- --------
DAVID ALEXANDER, 69.
President Emeritus, Pomona College. Formerly, Trustees' Professor, Pomona
College and American Secretary, Rhodes Scholarship Trust.
MARCUS ALEXIS, 70.
Board of Trustees Professor of Economics and Professor of Management and
Strategy, J.L. Kellogg Graduate School of Management, Northwestern University,
and Visiting Professor of Economics, Stanford University.
WILLARD T. CARLETON, 67.
Donald R. Diamond Professor of Finance Emeritus, College of Business and Public
Administration, University of Arizona.
ROBERT C. CLARK, 58.
Dean and Royall Professor of Law, Harvard Law School, Harvard University.
ESTELLE A. FISHBEIN, 67.
Vice President and General Counsel, The Johns Hopkins University.
FREDERICK R. FORD, 66.
Executive Vice President and Treasurer Emeritus, Purdue University. Formerly,
Executive Vice President and Treasurer, Purdue University.
RUTH SIMMS HAMILTON, 64.
Professor, Department of Sociology, and Director, African Diaspora Research
Project, Michigan State University.
ROCHELLE B. LAZARUS, 54.
Chairman and Chief Executive Officer, Ogilvy & Mather Worldwide. Formerly,
President and Chief Operating Officer, Ogilvy & Mather Worldwide.
40
ROBERT M. O'NEIL, 67.
Professor of Law, University of Virginia and Director, The Thomas Jefferson
Center for the Protection of Free Expression.
LEONARD S. SIMON, 65.
Vice Chairman, Charter One Financial Inc. Formerly, Chairman, President and
Chief Executive Officer, RCSB Financial, Inc. and Chairman and Chief Executive
Officer, The Rochester Community Savings Bank.
RONALD L. THOMPSON, 52.
Chairman and Chief Executive Officer, Midwest Stamping Co.
PAUL R. TREGURTHA, 66.
Chairman and Chief Executive Officer, Mormac Marine Group, Inc. and Moran
Transportation Company, Inc.; Formerly, Chairman, Meridian Aggregates, L.P.;
Vice Chairman, The Interlake Steamship Company and Lakes Shipping Company.
WILLIAM H. WALTRIP, 64.
Chairman, Technology Solutions Company. Formerly, Chairman and Chief Executive
Officer, Bausch & Lomb Inc.
ROSALIE J. WOLF, 60.
Managing Director, Laurel Management, LLC. Formerly, Treasurer and Chief
Investment Officer, The Rockefeller Foundation.
OFFICER-TRUSTEES
JOHN H. BIGGS, 65.
Chairman, President and Chief Executive Officer, TIAA and CREF.
MARTIN L. LEIBOWITZ, 65.
Vice Chairman and Chief Investment Officer, TIAA and CREF.
OTHER OFFICERS
RICHARD J. ADAMSKI, 59.
Vice President and Treasurer, TIAA and CREF.
RICHARD L. GIBBS, 54.
Executive Vice President, Finance and Planning, TIAA and CREF.
E. LAVERNE JONES, 53.
Vice President and Corporate Secretary, TIAA and CREF.
41
ITEM 11. EXECUTIVE COMPENSATION.
Not applicable.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.
Not applicable.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
TIAA's general account plays a significant role in operating the Real
Estate Account, including providing a liquidity guarantee, and investment
management and other services.
LIQUIDITY GUARANTEE. If the Account's cash flow is insufficient to fund
redemption requests, TIAA's general account has agreed to fund them by
purchasing accumulation units. TIAA thereby guarantees that a participant can
redeem accumulation units at their then current daily net asset value. For the
year ended December 31, 2001, the Account paid TIAA $837,100 for this liquidity
guarantee through a daily deduction from the net assets of the Account.
INVESTMENT MANAGEMENT AND ADMINISTRATIVE SERVICES/CERTAIN RISKS BORNE BY
TIAA. 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, and to cover mortality and expense risks borne by
TIAA. These services are performed at cost by TIAA and Services.
For the year ended December 31, 2001, the Account paid TIAA $5,896,729
for investment management services and $1,987,604 for mortality and expense
risks. For the same period, the Account paid Services $8,470,496 for its
administrative and distribution services.
42
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
(a) 1. Financial Statements. See Item 8 for required financial
statements.
(a) 2. Financial Statement Schedules. See Item 8 for required
financial statement schedules.
(a) 3. Exhibits.
(1) Distribution and Administrative Services Agreement by and between
TIAA and TIAA-CREF Individual & Institutional Services, Inc. (as
amended)*
(3) (A) Charter of TIAA (as amended)****
(B) Bylaws of TIAA (as amended)**
(4) (A) Forms of RA, GRA, GSRA, SRA, and IRA Real Estate Account
Contract Endorsements*
(B) Forms of Income-Paying Contracts*
(10) (A) Independent Fiduciary Agreement by and among TIAA, the
Registrant, and Institutional Property Consultants, Inc.
(as amended)***
(B) Custodial Services Agreement by and between TIAA and Morgan
Guaranty Trust Company of New York with respect to the Real
Estate Account*
(b) Reports on 8-K. No reports on Form 8-K have been filed during the
last quarter of the period covered by this report. The Account filed a report on
Form 8-K on January 8, 2002 under Item 5 of the form with respect to the
acquisition of properties for its portfolio.
- ----------
* - Previously filed and incorporated herein by reference to Post-Effective
Amendment No. 2 to the Account's previous Registration Statement on Form S-1
filed April 30, 1996 (File No. 33-92990).
** - Previously filed and incorporated herein by reference to the Account's Form
10-Q Quarterly Report for the period ended September 30, 1997, filed November
13, 1997.
*** - Previously filed and incorporated herein by reference to Pre-Effective
Amendment No. 1 to the Account's Registration Statement on Form S-1 filed April
29, 1997 (File No. 333-22809).
**** - Previously filed and incorporated herein by reference to the Account's
Form 10-K Annual Report for the period ended December 31, 2000, filed March 27,
2001.
43
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned, thereunto duly authorized.
TIAA REAL ESTATE ACCOUNT
By: TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By: /s/ Lisa Snow
--------------------------------
Lisa Snow
Vice President and
Chief Counsel, Corporate Law
March 15, 2002
-----------------------------------
Date
Pursuant to the requirements of the Securities Exchange Act of 1934, this
Report has been signed by the following persons, trustees and officers of
Teachers Insurance and Annuity Association of America, in the capacities and on
the dates indicated.
SIGNATURE TITLE DATE
- --------- ----- ----
/s/ John H. Biggs Chairman of the Board, President, 3/15/02
- -------------------------- and Chief Executive Officer
John H. Biggs (Principal Executive and
Financial Officer)
/s/ Martin L. Leibowitz Vice Chairman and 3/15/02
- -------------------------- Chief Investment Officer
Martin L. Leibowitz (Principal Investment Officer)
/s/ Richard L. Gibbs Executive Vice President 3/15/02
- -------------------------- (Principal Accounting Officer)
Richard L. Gibbs
44
SIGNATURE OF TRUSTEE DATE SIGNATURE OF TRUSTEE DATE
- -------------------- ---- -------------------- ----
/s/ David Alexander 3/15/02 /s/ Rochelle B. Lazarus 3/15/02
- ---------------------------- ---------------------------
David Alexander Rochelle B. Lazarus
/s/ Marcus Alexis 3/15/02 /s/ Robert M. O'Neil 3/15/02
- ---------------------------- ---------------------------
Marcus Alexis Robert M. O'Neil
/s/ Willard T. Carleton 3/15/02 /s/ Leonard S. Simon 3/15/02
- ---------------------------- ---------------------------
Willard T. Carleton Leonard S. Simon
/s/ Robert C. Clark 3/15/02 /s/ Ronald L. Thompson 3/15/02
- ---------------------------- ---------------------------
Robert C. Clark Ronald L. Thompson
/s/ Estelle A. Fishbein 3/15/02 /s/ Paul R. Tregurtha 3/15/02
- ---------------------------- ---------------------------
Estelle A. Fishbein Paul R. Tregurtha
/s/ Frederick R. Ford 3/15/02 /s/ William H. Waltrip 3/15/02
- ---------------------------- ---------------------------
Frederick R. Ford William H. Waltrip
/s/ Ruth Simms Hamilton 3/15/02 /s/ Rosalie J. Wolf 3/15/02
- ---------------------------- ---------------------------
Ruth Simms Hamilton Rosalie J. Wolf
45
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT
Because the Registrant has no voting securities, nor its own management
or board of directors, no annual report or proxy materials will be sent to
contractowners holding interests in the Account.
46
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