SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10 - Q

(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1999

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________________ to _____________________

Commission File Numbers 33-92990, 333-13477 and 333-22809

TIAA REAL ESTATE ACCOUNT
(Exact name of registrant as specified in its charter)

NEW YORK
(State or other jurisdiction of
incorporation or organization)

NOT APPLICABLE
(IRS Employer Identification No.)

C/O TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NEW YORK
(address of principal executive offices)

10017-3206
(Zip code)

(212) 490-9000
(Registrant's telephone number including area code)

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 [ ]

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

INDEX TO UNAUDITED FINANCIAL STATEMENTS
OF THE TIAA REAL ESTATE ACCOUNT
MARCH 31, 1999

Page
----

Consolidated Statements of Assets and Liabilities............................ 3

Consolidated Statements of Operations........................................ 4

Consolidated Statements of Changes in Net Assets............................. 5

Consolidated Statements of Cash Flows........................................ 6

Notes to Consolidated Financial Statements................................... 7

Consolidated Statement of Investments........................................ 12

2
3

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

MARCH 31, DECEMBER 31,
1999 1998
------------- -------------
(UNAUDITED)

ASSETS

Investments, at value:
Real estate properties
(Cost: $788,704,572 and $775,801,883)...................................... $828,231,089 $820,211,240
Marketable securities
(Amortized cost: $530,823,524 and $402,041,089)............................ 517,029,045 391,033,557

Cash........................................................................... 57,982 572,343

Other.......................................................................... 19,521,375 17,786,291
------------- -------------

TOTAL ASSETS 1,364,839,491 1,229,603,431
------------- -------------

LIABILITIES

Payable for securities transactions............................................ 57,240 -

Accrued real estate property level expenses and taxes.......................... 12,450,844 11,432,529

Security deposits held......................................................... 1,745,864 1,890,423
------------- -------------

TOTAL LIABILITIES 14,253,948 13,322,952
------------- -------------

MINORITY INTEREST 16,933,387 19,913,592
------------- -------------

NET ASSETS

Accumulation Fund.............................................................. 1,298,056,752 1,167,591,317

Annuity Fund................................................................... 35,595,404 28,775,570
------------- -------------

TOTAL NET ASSETS $1,333,652,156 $1,196,366,887
============== ==============

NUMBER OF ACCUMULATION UNITS OUTSTANDING--Notes 6 and 7......................... 9,669,074 8,833,911
========= =========

NET ASSET VALUE, PER ACCUMULATION UNIT--Note 6................................. $134.25 $132.17
======= =======

See notes to consolidated financial statements.

3
4

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

FOR THE FOR THE
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1999 1998
------------ ------------

INVESTMENT INCOME

Real estate income, net:

Rental income................................................................................. $26,198,891 $17,653,332
----------- -----------

Real estate property level expenses and taxes:

Operating expenses.......................................................................... 5,580,625 4,076,118

Real estate taxes........................................................................... 2,673,051 2,218,102
----------- -----------

Total real estate property level expenses and taxes 8,253,676 6,294,220
----------- -----------

Real estate income, net 17,945,215 11,359,112

Interest........................................................................................ 4,364,165 3,218,082

Dividends....................................................................................... 2,044,302 1,769,522
----------- -----------

TOTAL INCOME 24,353,682 16,346,716
----------- -----------

Expenses--Note 3:

Investment advisory........................................................................... 1,044,886 698,265

Administrative and distribution............................................................... 805,090 506,996

Mortality and expense risk charges............................................................ 218,383 129,856

Liquidity guarantee charges................................................................... 92,520 25,936
----------- -----------

TOTAL EXPENSES 2,160,879 1,361,053
----------- -----------

INVESTMENT INCOME, NET 22,192,803 14,985,663
----------- -----------

REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS

Net realized gain (loss) on:

Real estate properties........................................................................ 6,205,560 -

Marketable securities......................................................................... (599,143) 259,883
----------- -----------

Net realized gain on investments 5,606,417 259,883
----------- -----------

Net change in unrealized appreciation (depreciation) on:

Real estate properties........................................................................ (4,882,840) 3,642,113

Marketable securities......................................................................... (2,786,947) (1,258,760)
----------- -----------

Net change in unrealized appreciation (depreciation) on investments (7,669,787) 2,383,353
----------- -----------

NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS (2,063,370) 2,643,236

----------- -----------

NET INCREASE IN NET ASSETS RESULTING FROM

OPERATIONS BEFORE MINORITY INTEREST 20,129,433 17,628,899

Minority interest in net increase in net assets
resulting from operations................................................................... (403,153) (523,696)
----------- -----------

NET INCREASE IN NET ASSETS

RESULTING FROM OPERATIONS $19,726,280 $17,105,203
=========== ===========

See notes to consolidated financial statements.

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF CHANGES IN NET ASSETS (UNAUDITED)

FOR THE FOR THE
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1999 1998
------------ ------------

FROM OPERATIONS

Investment income, net........................................................................... $ 22,192,803 $ 14,985,663

Net realized gain on investments................................................................. 5,606,417 259,883

Net change in unrealized appreciation on investments............................................. (7,669,787) 2,383,353

Minority interest in net increase in net assets
resulting from operations..................................................................... (403,153) (523,696)
-------------- ------------

NET INCREASE IN NET ASSETS

RESULTING FROM OPERATIONS 19,726,280 17,105,203
-------------- ------------

FROM PARTICIPANT TRANSACTIONS

Premiums......................................................................................... 29,544,538 23,864,307

TIAA seed money withdrawn -- Note 1.............................................................. - (29,842,393)

Net transfers from TIAA.......................................................................... 8,988,259 15,121,873

Net transfers from CREF Accounts................................................................. 87,899,065 92,373,397

Annuity and other periodic payments.............................................................. (1,077,854) (483,646)

Withdrawals...................................................................................... (7,214,370) (2,884,370)

Death benefits................................................................................... (580,649) (46,576)
-------------- ------------

NET INCREASE IN NET ASSETS RESULTING

FROM PARTICIPANT TRANSACTIONS 117,558,989 98,102,592
-------------- ------------

NET INCREASE IN NET ASSETS 137,285,269 115,207,795

NET ASSETS

Beginning of year................................................................................ 1,196,366,887 785,818,715
-------------- ------------

End of period.................................................................................... $1,333,652,156 $901,026,510
============== ============

See notes to consolidated financial statements.

5
6

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

FOR THE FOR THE
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, MARCH 31,
1999 1998
------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES

Net increase in net assets resulting from operations............................................. $ 19,726,280 $ 17,105,203

Adjustments to reconcile net increase in net assets resulting from operations
to net cash used in operating activities:

Increase in investments........................................................................ (134,015,337) (115,114,632)

Increase in other assets....................................................................... (1,735,084) (589,980)

Increase (decrease) in payable for securities transactions..................................... 57,240 (10,463)

Increase in accrued real estate property level expenses and taxes.............................. 1,018,315 506,939

Increase (decrease) in security deposits held.................................................. (144,559) 119,710

Decrease in minority interest.................................................................. (2,980,205) (277,721)
------------- --------------

NET CASH USED IN
OPERATING ACTIVITIES (118,073,350) (98,260,944)
------------- --------------

CASH FLOWS FROM PARTICIPANT TRANSACTIONS

Premiums......................................................................................... 29,544,538 23,864,307

TIAA seed money withdrawn -- Note 1.............................................................. - (29,842,393)

Net participant transfers from TIAA - General Account............................................ 8,988,259 15,121,873

Net participant transfers from CREF Accounts..................................................... 87,899,065 92,373,397

Annuity and other periodic payments.............................................................. (1,077,854) (483,646)

Withdrawals...................................................................................... (7,214,370) (2,884,370)

Death benefits................................................................................... (580,649) (46,576)
------------- --------------

NET CASH PROVIDED BY

PARTICIPANT TRANSACTIONS 117,558,989 98,102,592
------------- --------------

NET DECREASE IN CASH (514,361) (158,352)

CASH

Beginning of year................................................................................ 572,343 407,598
------------- --------------

End of period.................................................................................... $ 57,982 249,246
============= ==============

See notes to consolidated financial statements.

6
7

TIAA REAL ESTATE ACCOUNT
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

NOTE 1--ORGANIZATION

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. Teachers REA, LLC, a wholly-owned
subsidiary of the Account, began operations in July 1996 and holds one property
in Virginia. Light Street Partners, L.P. ("Light Street"), a partnership in
which the Account holds a 90% interest, began operations in March 1997 and holds
eight office buildings throughout the United States. Teachers REA II, Inc., a
wholly-owned subsidiary of the Account, began operations in October 1997 and
holds one property in Pennsylvania. Teachers REA III, LLC, a wholly-owned
subsidiary of the Account, began operations in July 1998 and holds one property
in Florida.

The Account commenced operations on July 3, 1995 with a $100,000,000 seed money
investment by TIAA. TIAA purchased 1,000,000 Accumulation Units in the Account
and such Units share in the prorata investment experience of the Account and are
subject to the same valuation procedures and expense deductions as all other
Accumulation Units of the Account. The initial registration statement of the
Account filed by TIAA with the Securities and Exchange Commission ("Commission")
under the Securities Act of 1933 became effective on October 2, 1995. The
Account began to offer Accumulation Units and Annuity Units to participants
other than TIAA on October 2, and November 1, 1995, respectively. In August
1996, the Account's net assets first reached $200 million and, as required under
a five year repayment schedule approved by the New York State Insurance
Department ("NYID"), TIAA began to redeem its seed money Accumulation Units in
monthly installments of 16,667 Units beginning in September 1996. Since the
Account's assets have been growing rapidly, TIAA in October 1997, with NYID
approval, modified the seed money redemption schedule by increasing the monthly
redemption of Units at a level equal to the value of 25% of the Account's net
asset growth for the prior month, with no fewer than 16,667 Units and no more
than 100,000 Units to be redeemed each month. These withdrawals are made at
prevailing daily net asset values and are reflected in the accompanying
consolidated financial statements. At March 31, 1998, TIAA retained 368,576
Accumulation Units, with a total value of $45,978,308. At December 31, 1998, all
of TIAA's Accumulation Units have been withdrawn.

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.

TIAA employees, under the direction of TIAA's Board of Trustees and its
Investment Committee, manage the investment of the Account's assets 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, Institutional Property Consultants, Inc.
TIAA also provides all portfolio accounting and related services for the
Account. TIAA-CREF Individual & Institutional Services, Inc. ("Services"), a
subsidiary of TIAA, which is registered with the Commission as a broker-dealer
and is a member of the National Association of Securities Dealers, Inc.,
provides administrative and distribution services pursuant to a Distribution and
Administrative Services Agreement with the Account.

7
8

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES

The preparation of financial statements may require management to make estimates
and assumptions that affect the reported amounts of assets, liabilities, income,
expenses and related disclosures. Actual results may differ from those
estimates. The following is a summary of the significant accounting policies
followed by the Account, which are in conformity with generally accepted
accounting principles.

BASIS OF PRESENTATION: The accompanying consolidated financial statements
include the Account, Teachers REA, LLC, Teachers REA II, Inc. and Teachers REA
III, LLC, its wholly-owned subsidiaries, and Light Street, in which the Account
holds a 90% interest. The 10% minority interest in Light Street is reflected
separately in the accompanying financial statements. 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 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 MARKETABLE SECURITIES: Equity securities listed or traded on any
United States national securities exchange are valued at the last sales 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. Short-term money market instruments are stated at market value.
Portfolio securities 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, for
short-term money market instruments, 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.

8
9

NOTE 2--SIGNIFICANT ACCOUNTING POLICIES - (CONCLUDED)

FEDERAL INCOME TAXES: Based on provisions of the Internal Revenue Code, no
federal income taxes are attributable to the net investment experience of the
Account.

NOTE 3--MANAGEMENT AGREEMENTS

Under established management agreements, various services necessary for the
operation of the Account are provided, at cost, by TIAA and Services. TIAA
provides investment management services for the Account while distribution and
administrative services are provided by Services in accordance with a
Distribution and Administrative Services Agreement between the Account and
Services. An affiliate of the minority partner in Light Street provides certain
management services for the properties owned by Light Street. The charges for
such services, for the three months ended March 31, 1999 amounted to $186,808
($180,265 for the three months ended March 31, 1998) for investment advisory
expenses which are recorded accordingly in the accompanying consolidated
statement of operations. 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.

Fee payments are made from the Account on a daily basis to TIAA and Services
according to formulas established each year with the objective of keeping the
fees as close as possible to the Account's actual expenses. Any differences
between actual expenses and daily charges are adjusted quarterly.

NOTE 4--REAL ESTATE PROPERTIES

Had the Account's real estate property which was purchased during the three
months ended March 31, 1999 been acquired at the beginning of the period
(January 1, 1999), rental income and real estate property level expenses and
taxes for the three months ended March 31, 1999 would have increased by
approximately $721,000 and $232,000, respectively. In addition, interest income
for the three months ended March 31, 1999 would have decreased by approximately
$304,000. Accordingly, the total proforma effect on the Account's net investment
income for the three months ended March 31, 1999 would have been an increase of
approximately $185,000, if the real estate property acquired during the three
months ended March 31, 1999 had been acquired at the beginning of the period.

NOTE 5--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,
------------

1999 $ 57,065,000
2000 54,391,000
2001 46,275,000
2002 40,691,000
2003 33,002,000
Thereafter 114,104,000
------------

Total $345,528,000
============

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

9
10

NOTE 6--CONDENSED CONSOLIDATED FINANCIAL INFORMATION

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

JULY 3, 1995
FOR THE FOR THE YEARS ENDED (COMMENCEMENT
THREE MONTHS DECEMBER 31, OF OPERATIONS) TO
ENDED -------------------------------------- DECEMBER 31,
MARCH 31, 1999 (1) 1998 1997 1996 1995 (1)
------------------ ---- ---- ---- --------
(Unaudited)

Per Accumulation Unit Data:
Rental income..................................... $ 2.578 $ 10.425 $ 7.288 $ 6.012 $ 0.159
Real estate property
level expenses and taxes........................ 0.812 3.403 2.218 1.850 0.042
-------- -------- -------- -------- --------
Real estate income, net 1.766 7.022 5.070 4.162 0.117
Dividends and interest............................ 0.630 3.082 2.709 3.309 2.716
-------- -------- -------- -------- --------
Total income 2.396 10.104 7.779 7.471 2.833
Expenses charges (2).............................. 0.213 0.808 0.580 0.635 0.298
-------- -------- -------- -------- --------
Investment income, net 2.183 9.296 7.199 6.836 2.535
Net realized and unrealized
gain (loss) on investments...................... ( 0.107) 0.579 3.987 1.709 0.031
-------- -------- -------- -------- --------
Net increase in
Accumulation Unit Value......................... 2.076 9.875 11.186 8.545 2.566
Accumulation Unit Value:
Beginning of period............................. 132.172 122.297 111.111 102.566 100.000
-------- -------- -------- -------- --------
End of period................................... $134.248 $132.172 $122.297 $111.111 $102.566
======== ======== ======== ======== ========

Total return....................................... 1.57% 8.07% 10.07% 8.33% 2.57%
Ratios to Average Net Assets:
Expenses (2).................................... 0.17% 0.64% 0.58% 0.61% 0.30%
Investment income, net.......................... 1.75% 7.34% 7.25% 6.57% 2.51%
Portfolio turnover rate:
Real estate properties.......................... 3.49% 0% 0% 0% 0%
Securities...................................... 3.79% 24.54% 7.67% 15.04% 0%
Thousands of Accumulation Units
outstanding at end of period.................... 9,669 8,834 6,313 3,296 1,172

(1) The percentages shown for this period are not annualized.

(2) Expense charges per Accumulation Unit and the Ratio of Expenses to
Average Net Assets include the portion of expenses related to the 10%
minority interest in Light Street 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 three
months ended March 31, 1999 would be $1.025 ($4.211, $2.798 and $2.485
for the years ended December 31, 1998, 1997 and 1996, respectively, and
$0.340 for the period July 3, 1995 through December 31, 1995) and the
Ratio of Expenses to Average Net Assets for the three months ended March
31, 1999 would be 0.82% (3.32%, 2.82% and 2.39% for the years ended
December 31, 1998, 1997 and 1996, respectively, and 0.34% for the period
July 3, 1995 through December 31, 1995).

10
11

NOTE 7--ACCUMULATION UNITS

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

FOR THE FOR THE
THREE MONTHS YEAR
ENDED ENDED
MARCH 31, 1999 DECEMBER 31, 1998
-------------- -----------------
(Unaudited)

Accumulation Units:
Credited for premiums........................ 226,806 511,462
Credited for transfers, net disbursements and
amounts applied to the Annuity Fund........ 608,357 2,009,434

Outstanding:
Beginning of year.......................... 8,833,911 6,313,015
--------- ---------
End of period.............................. 9,669,074 8,833,911
========= =========

NOTE 8--COMMITMENTS

During the normal course of business, the Account enters into discussions and
agreements to purchase or sell real estate properties. As of March 31, 1999, the
Account had three outstanding commitments to purchase real estate properties
totaling approximately $94.4 million.

During April and May of 1999, the Account purchased real estate properties for
$62.0 million and purchased through a wholly-owned subsidiary the 10% minority
interest in Light Street for $16.7 million.

11
12

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENT OF INVESTMENTS
MARCH 31, 1999

REAL ESTATE PROPERTIES--61.57%
LOCATION / DESCRIPTION VALUE
- ---------------------- -----

ARIZONA:
Biltmore Commerce Center - Office building................................. $37,364,526
Southbank Building - Office building ...................................... 13,000,000
CALIFORNIA:
IDI California Portfolio - Industrial building............................. 35,668,791
Ontario Industrial Property - Industrial building.......................... 24,433,584
Eastgate Distribution Center - Industrial building......................... 12,700,000
Westcreek - Apartments .................................................... 15,000,000
COLORADO:
Araphoe Park East - Industrial building.................................... 11,500,000
Lodge at Willow Creek - Apartments ........................................ 29,000,000
Monte Vista - Apartments .................................................. 19,500,000
FLORIDA:
Westinghouse - Industrial building ........................................ 6,200,000
Plantation Grove - Shopping center ........................................ 7,300,000
The Greens at Metrowest - Apartments ...................................... 14,000,000
Golfview - Apartments ..................................................... 28,010,000
Corporate Center at Sawgrass - Office building............................. 14,000,000
Royal St. George - Apartments ............................................. 16,500,000
GEORGIA:
Brixworth - Apartments .................................................... 16,800,000
ILLINOIS:
Woodcreek Business Park - Industrial building.............................. 6,800,000
Glenpointe Business park - Industrial building............................. 15,700,000
Rockrun Business Park - Industrial building................................ 9,350,000
Parkview Plaza - Office building .......................................... 52,100,000 (2)
Rolling Meadows - Shopping center ......................................... 12,650,000
Columbia Center III - Office building ..................................... 41,000,000
KENTUCKY:
IDI Kentucky Portfolio - Industrial building............................... 24,651,154
IOWA:
Interstate Acres - Industrial building .................................... 14,314,097
MARYLAND:
Saks Distribution Center - Industrial building............................ 30,000,000
Fedex Distribution Facility - Industrial building.......................... 7,800,000
Longview Executive Park - Office building.................................. 27,400,000 (2)
MASSACHUSETTS:
Two Newton Center - Office building ....................................... 19,592,690 (2)
MICHIGAN:
Indian Creek - Apartments ................................................. 17,100,000
MINNESOTA:
Interstate Crossing - Industrial building.................................. 6,300,000
River Road Distribution Center - Industrial building....................... 4,200,000
NEW JERSEY:
371 Hoes Lane - Office building ........................................... 15,600,000
NEVADA:
UPS Distribution Facility - Industrial building............................ 11,000,000
NORTH CAROLINA:
Lynwood Collection - Shopping center ...................................... 7,500,000
Millbrook Collection - Shopping center .................................... 7,300,000

12
13

OHIO:
Northmark Business Center - Office building................................ $ 12,400,000 (2)
Bent Tree - Apartments 14,500,000
OREGON:
Five Centerpointe - Office building........................................ 18,000,000 (2)
PENNSYLVANIA:
Lincoln Woods - Apartments................................................. 22,750,000
TEXAS:
Butterfield Industrial Park - Industrial building.......................... 4,850,000 (1)
The Crest at Shadow Mountain - Apartments.................................. 9,700,000
The Legends at Chase Oaks - Apartments..................................... 29,197,360
UTAH:
USF&G Building - Office building........................................... 8,698,887 (2)
VIRGINIA:
Fairgate at Ballston - Office building..................................... 29,100,000 (2)
River Oaks - Shopping center............................................... 12,600,000
WASHINGTON:
The Bay Court at Harbour Pointe - Apartments............................... 35,100,000
-------------
TOTAL REAL ESTATE PROPERTIES (Cost $788,704,572)....................... 828,231,089
-------------

(1) Leasehold interest only.

(2) The full fair value of this property is reflected; however, the Account only
has a 90% interest in the property. The minority partner in Light Street has the
remaining 10% interest in the property.

MARKETABLE SECURITIES--38.43%

REAL ESTATE INVESTMENT TRUSTS--8.13%

SHARES ISSUER VALUE
- ------ ------ -----

89,900 AMB Property Corporation Series A...................................................... 2,073,319
150,000 Archstone Commnities Tr (Series C) Pf.................................................. 3,731,250
100,000 Avalon Bay Communities, Inc............................................................ 3,162,500
30,000 Avalon Bay Communities, Inc. Pfd Series F.............................................. 748,125
50,000 Boston Properties, Inc................................................................. 1,581,250
170,000 Bradley Real Estate, Inc............................................................... 3,081,250
150,000 Brandywine Realty Trust................................................................ 2,437,500
80,000 Camden Property Trust.................................................................. 1,980,000
200,000 Carramerica Realty Corporation, Pfd Series B........................................... 4,250,000
110,000 Centerpoint Properties Corp............................................................ 3,437,500
95,000 Colonial Properties Trust.............................................................. 2,422,500
260,000 Cornerstone Properties, Inc............................................................ 3,802,500
113,100 Corporate Office Properties Trust, Inc................................................. 728,081
90,000 Developers Diversified Realty.......................................................... 2,160,000
50,000 Duke Realty Investments, Inc........................................................... 1,075,000
140,000 Equity Office Properties Trust......................................................... 3,561,250
200,000 Equity Office Properties Trust Pfd Series A............................................ 5,275,000
130,000 Equity Residential Properties Trust.................................................... 5,362,500
100,000 Equity Residential, Pfd Series G....................................................... 2,150,000
100,000 Equity Residential Properties Trust, Pfd Series L...................................... 2,281,250
77,966 Excel Legacy Corp...................................................................... 268,008
25,000 Federal Realty Investment Trust Pfd.................................................... 584,375
100,000 First Industrial Realty Trust, Inc. Pfd .............................................. 2,356,250
100,000 Gables Residential Trust, Pfd Series A. ............................................... 2,443,750
80,000 Hospitality Properties Trust........................................................... 2,165,000
68,000 Lasalle Hotel Properties............................................................... 901,000
95,000 Macerich Company....................................................................... 2,155,313
69,559 New Plan Excel Realty Trust............................................................ 1,334,663
100,000 Post Properties, Inc................................................................... 3,600,000
19,900 Prologis Trust-Pfd Series A............................................................ 490,037
136,400 Public Storage, Inc.................................................................... 3,410,000
50,000 Rouse Company.......................................................................... 1,109,375

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14

SHARES ISSUER VALUE
- ------ ------ -----

210,000 Simon Property Group, Inc............................................................... $5,761,875
100,000 Spieker Properties, Inc................................................................. 3,525,000
80,000 Starwood Hotels & Resorts Trust......................................................... 2,285,000
70,000 Storage USA, Inc........................................................................ 1,986,250
150,000 Taubman Centers, Inc.................................................................... 1,837,500
35,000 Taubman Centers, Inc Pfd Series A....................................................... 756,875
162,000 Trinet Corporation Realty Trust, Inc.................................................... 4,110,750
26,000 Trinet Corporate Realty Trust, Inc., Pfd Series B....................................... 596,375
100,000 United Dominion Realty Trust, Inc....................................................... 2,468,750
130,400 Urban Shopping Centers, Inc............................................................. 3,740,850
47,000 Vornado Realty Trust, Pfd Series A...................................................... 2,303,000
135,000 Weeks Corp.............................................................................. 3,855,938
-------------

TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $123,052,180)......................................... 109,346,709
-------------

CORPORATE BONDS-- 0.22%

PRINCIPAL ISSUER, COUPON AND MATURITY DATE
- --------- --------------------------------

$3,000,000 International Paper
6.87% 06/17/99....................................................... 3,010,020
--------------

TOTAL CORPORATE BONDS (Cost $3,040,800)..................................................... 3,010,020
--------------

GOVERNMENT AGENCIES--13.04%

PRINCIPAL ISSUER, COUPON AND MATURITY DATE VALUE
- --------- -------------------------------- -----

50,000,000 Federal Home Loan Banks
4.75% 04/07/99....................................................... 49,953,820
13,050,000 Federal Home Loan Banks
4.72% 04/09/99....................................................... 13,034,601
8,000,000 Federal Home Loan Mortgage Corporation
4.78% 04/06/99....................................................... 7,993,666
3,150,000 Federal Home Loan Mortgage Corporation
4.80% 04/06/99....................................................... 3,147,506
5,000,000 Federal Home Loan Mortgage Corporation
4.77% 04/12/99....................................................... 4,992,134
10,000,000 Federal Home Loan Mortgage Corporation
4.72% 04/14/99....................................................... 9,981,644
6,025,000 Federal Home Loan Mortgage Corporation
4.78% 04/14/99....................................................... 6,013,941
27,800,000 Federal Home Loan Mortgage Corporation
4.74% 04/15/99....................................................... 27,745,559
10,200,000 Federal Home Loan Mortgage Corporation
4.75% 04/22/99....................................................... 10,170,704
10,000,000 Federal Home Loan Mortgage Corporation
4.76% 04/26/99....................................................... 9,966,056
9,632,000 Federal Home Loan Mortgage Corporation
4.75% 05/05/99....................................................... 9,587,800
12,250,000 Federal Home Loan Mortgage Corporation
4.74% 05/17/99....................................................... 12,174,833
10,000,000 Federal Home Loan Mortgage Corporation
4.76% 06/07/99....................................................... 9,910,844
722,000 Federal National Mortgage Association
4.64% 08/13/99....................................................... 709,329
-------------

TOTAL GOVERNMENT AGENCIES (Amortized cost $175,402,441)..................................... 175,382,437
-------------

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COMMERCIAL PAPER--17.04%

PRINCIPAL ISSUER, COUPON AND MATURITY DATE VALUE
- --------- -------------------------------- -----

$9,050,000 Abbot Laboratories
4.84% 04/27/99....................................................... $ 9,016,945
15,000,000 Campbell Soup Company
4.76% 05/03/99....................................................... 14,933,037
15,000,000 Ciesco LP
4.83% 05/26/99....................................................... 14,887,067
14,400,000 Corporate Asset Funding Corporation, Inc.
4.85% 04/26/99....................................................... 14,349,352
6,700,000 Delaware Funding Corporation
4.87% 04/09/99....................................................... 6,691,792
14,000,000 Dupont De Nemours & Company
4.80% 04/16/99....................................................... 13,969,698
7,000,000 Equilon Enterprises LLC
4.84% 06/09/99....................................................... 6,934,122
15,000,000 General Electric Capital Corporation
4.84% 05/13/99....................................................... 14,912,746
9,000,000 General Motors Acceptance Corporation
4.87% 05/06/99....................................................... 8,956,170
15,000,000 Gillette Company
5.00% 04/01/99....................................................... 14,997,813
15,000,000 Motorola, Incorporated
4.77% 04/01/99....................................................... 14,997,813
15,000,000 Motorola, Incorporated
4.81% 04/29/99....................................................... 14,941,153
3,850,000 National Rural Utilities Coop Finance
4.82% 05/17/99....................................................... 3,825,672
5,950,000 National Rural Utilities Coop Finance
4.82% 06/24/99....................................................... 5,882,005
5,000,000 Paccar Financial Corporation
4.77% 04/26/99....................................................... 4,982,414
10,000,000 Paccar Financial Corporation
4.82% 06/17/99....................................................... 9,895,133
15,000,000 Park Avenue Receivables Corporation
4.88% 04/19/99....................................................... 14,961,446
10,000,000 Saint Paul Companies
4.84% 04/05/99....................................................... 9,992,833
15,000,000 Shell Oil Company
4.80% 04/29/99....................................................... 14,941,154
10,000,000 Southern California Edison Company
4.83% 04/06/99....................................................... 9,991,400
5,250,000 The Stanley Works
4.83% 04/28/99....................................................... 5,230,114
--------------

TOTAL COMMERCIAL PAPER (Amortized cost $229,328,103) ............................... 229,289,879
--------------

TOTAL MARKETABLE SECURITIES (Cost $530,823,524)......................................... 517,029,045
--------------

TOTAL INVESTMENTS--100.00% (Cost $1,319,528,096)........................................ $1,345,260,134
==============

See notes to consolidated financial statements.

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.

At March 31, 1999, the TIAA Real Estate Account owned a total of 46 real
estate properties, including 12 office properties, 16 industrial properties, 5
neighborhood shopping centers and 13 apartment complexes, representing 61.57% of
the Account's total investment portfolio. The Account also held investments in
commercial paper, representing 17.04% of the portfolio, U.S. government
agencies, representing 13.04% of the portfolio, real estate investment trusts
(REITs), representing 8.13% of the portfolio, and corporate bonds, representing
.22% of the portfolio.

During the first quarter of 1999, the Account purchased one office
property and sold another office property. Since the end of that quarter, the
Account also has purchased an apartment building. The Account continues to
pursue suitable property acquisitions, and is currently in various stages of
negotiations with a number of prospective sellers. While attractive acquisition
prospects are available in the current market, significant competition exists
for the most desirable properties.

At March 31, 1999, the Account owned a controlling 90% interest in a
partnership which owns office buildings throughout the U.S. Consistent with
generally accepted accounting principles (GAAP), the Account's consolidated
financial statements and all financial data discussed in this report reflect
100% of the value of the partnership's assets. The 10% interest of the other
partner in the partnership is reflected as a minority interest in the Account's
consolidated financial statements. On April 30, 1999, this minority interest was
purchased by the Account, through a wholly-owned subsidiary.

RESULTS OF OPERATIONS

THREE MONTHS ENDED MARCH 31, 1999 COMPARED TO THREE MONTHS ENDED MARCH 31, 1998:

The Account's total net return was 1.57% for the three months ended March
31, 1999 and 2.00% for the same quarter in 1998. This decrease was due to the
decline in value of the Account's REIT holdings, the decline in short-term
interest rates, and the fact that the Account's properties taken together
appreciated in value significantly in the first quarter of 1998, compared with
the appreciation in the same period of 1999. The Account's net investment
income, after deduction of all expenses, was $22,192,803 for the three months
ended March 31, 1999 and $14,985,663 for the three months ended March 31, 1998,
a 48% increase. This increase was the result of an 11.5% increase in net assets
and a 49% increase in the Account's real estate holdings during the period.

The Account had a net realized and unrealized loss on investments of
$2,063,370 for the three month period ended March 31, 1999 compared with a net
realized and unrealized gain of $2,643,236 for the same period in 1998. This
difference was due, in part, to the decline in price of the Account's REITs and
other marketable securities, and losses incurred

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17

from the sale of certain of those investments. Also, the Account experienced
more appreciation of its real estate holdings during the first quarter of 1998
than it did in the same period of 1999. During the first quarter of 1999, the
Account sold the Metro Center office property and realized a gain of $6,205,560;
in realizing the gain, however, unrealized appreciation on the Account's
properties was reduced by $5,297,605. The Account's other properties appreciated
in value by $414,765 during the first quarter of 1999, compared to a $3,642,113
increase in unrealized property appreciation during the first quarter of 1998.

The Account's real estate holdings generated approximately 74% and 69% of
the Account's total investment income (before deducting Account level expenses)
during the three months ended March 31, 1999 and March 31, 1998, respectively.
The remaining portion of the Account's total investment income was generated by
investments in marketable securities.

Gross real estate rental income was $26,198,891 for the three months
ended March 31, 1999 and $17,653,332 for the same period in 1998. This increase
was primarily due to the increase in the number of properties owned by the
Account -- from 34 properties at the end of the first quarter of 1998 to 46
properties at the end of the first quarter of 1999. Interest and dividend income
on the Account's marketable securities investments increased from $4,987,604 for
the first quarter of 1998 to $6,408,467 for the first quarter of 1999. This
increase was due to the fact that the actual amount of money the Account had
invested in marketable securities went up as the Account's net asset base grew.

Total property level expenses for the three months ended March 31, 1999
were $8,253,676 of which $5,580,625 were attributable to operating expenses and
$2,673,051 were attributable to real estate taxes. Total property level expenses
for the three months ended March 31, 1998 were $6,294,220 of which $4,076,118
represented operating expenses and $2,218,102 was attributable to real estate
taxes. The increase in property level expenses reflected the increased number of
properties in the Account.

The Account also incurred expenses for the three months ended March 31,
1999 and 1998 of $1,044,886 and $698,265, respectively, for investment advisory
services, $805,090 and $506,996, respectively, for administrative and
distribution services, and $310,903 and $155,792, respectively, for mortality
and expense risk charges and liquidity guarantee charges. Such expenses
increased as a result of the larger net asset base of the Account.

LIQUIDITY AND CAPITAL RESOURCES

Since September 16, 1996, TIAA had been redeeming the accumulation units
related to its $100 million seed money investment in the Account in accordance
with a repayment schedule approved by the New York Insurance Department. In the
first quarter of 1998, the Account redeemed $29,842,393 of its seed money
investment. By the end of 1998, the Account had redeemed its entire seed money
investment.

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18

At March 31, 1999 and 1998, the Account's liquid assets (i.e., its cash,
REITs, short- and intermediate-term investments, and government securities) had
a value of $517,087,027 and $360,736,891, respectively. We plan to use much of
the Account's liquid assets, exclusive of the REITs, to purchase additional
suitable real estate properties. The remaining liquid assets, exclusive of the
REITs, will continue to be primarily invested in marketable securities to meet
expense needs and redemption requests (e.g., cash withdrawals or transfers).

If 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.

YEAR 2000 ISSUES

TIAA and the Account depend on the smooth functioning of computer systems
to operate. The Account, the Account's properties, and participant services
could be affected if TIAA's computer systems, the Account's property computer
systems, or those of its external service providers fail or incorrectly process
or calculate date-related information on or after January 1, 2000.

TIAA is dedicated to providing uninterrupted, high-quality service
before, during, and after the Year 2000. To achieve this goal, we have developed
and have been actively carrying out an extensive Year 2000 plan to remediate,
test and certify all internal computer systems, and to verify, to the extent
possible, that external service providers will be ready for the Year 2000. We
currently expect to complete Year 2000 testing and initial certification of our
internal corporate systems by mid-1999. We are also in the process of testing
the critical interfaces we have with our major service providers, vendors, and
suppliers. In particular, TIAA has been actively working with all those
responsible for property computer systems, i.e., management companies and
certain tenants, to assure that they have developed and are implementing plans
to remediate and test property systems in a timely manner. In addition, we are
making contingency plans intended to lessen the effect unexpected systems
failures (internal and external) may have on operations.

While we have taken steps we believe reasonably address the Year 2000
problem, we can't guarantee complete success or eliminate the possibility that
interaction with outside computer systems could affect Account operations. If
the systems the Account relies upon do fail or produce faulty data, there could
be delays in properly processing transactions, or we may be unable temporarily
to engage in normal business activities. Also, the Account's performance could
be affected if the properties, companies or government entities in which the
Account invests are negatively affected by the Year 2000.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

There are no material current or pending legal proceedings that the
Account is a party to, or to which the Account's assets are subject.

ITEM 2. CHANGES IN SECURITIES.

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS.

Not applicable.

ITEM 5. OTHER INFORMATION.

Not applicable.

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.

(a) EXHIBITS

(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
Endorsements *
(B) Forms of Income-Paying Contracts *

(10) (A) Independent Fiduciary Agreement by and among TIAA, the
Registrant, and Institutional Property Consultants, Inc. ***
(B) Custodial Services Agreement by and between TIAA and Morgan
Guaranty Trust Company of New York with respect to the Real
Estate Account *

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20

(C) Distribution and Administrative Services Agreement by and
between TIAA and TIAA-CREF Individual & Institutional
Services, Inc. (as amended) (filed previously as Exhibit
(1)) *

(27) Financial Data Schedule of the Account's Financial Statements
for the three months ended March 31, 1999

- --------------------

* - Previously filed and incorporated herein by reference to Post-Effective
Amendment No. 2 to the Account's 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 (File No. 33-92990).

*** - 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).

(b) REPORTS ON 8-K. The Account filed a report on Form 8-K on January 5, 1999
under Item 5 of the form with respect to the acquisition of properties for its
portfolio.

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21

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.

DATE: May 12, 1999

TIAA REAL ESTATE ACCOUNT

By: TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA

By: /s/ Peter C. Clapman

-------------------------------
Peter C. Clapman
Senior Vice President and
Chief Counsel, Investments

DATE: May 12, 1999

By: /s/ Richard L. Gibbs

-------------------------------
Richard L. Gibbs
Executive Vice President
(Principal Accounting Officer)