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, 1997

[ ] 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, 1997

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

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF ASSETS AND LIABILITIES

March 31, December 31,
1997 1996
------------ ------------
(Unaudited)

ASSETS

Investments, at value:
Real estate properties
(Cost: $173,269,832 and $130,849,444) .................................. $174,332,912 $131,803,204
Marketable securities
(Amortized cost: $376,825,584 and $233,872,445) ........................ 378,891,484 236,127,523

Cash ..................................................................... 7,960,567 3,981,740

Receivable from securities transactions .................................. 176,471,000 47,480,000

Other .................................................................... 12,694,916 6,979,540
------------ ------------
TOTAL ASSETS 750,350,879 426,372,007
------------ ------------

LIABILITIES

Payable for securities transactions ...................................... 184,809,616 51,354,619

Other .................................................................... 11,015,746 5,322,335
------------ ------------
TOTAL LIABILITIES 195,825,362 56,676,954
------------ ------------
NET ASSETS

Accumulation Fund ........................................................ 549,017,975 366,197,755

Annuity Fund ............................................................. 5,507,542 3,497,298
------------ ------------
TOTAL NET ASSETS $554,525,517 $369,695,053
============ ============

NUMBER OF ACCUMULATION UNITS
OUTSTANDING--Notes 6 and 7 ............................................... 4,863,977 3,295,786
========= =========
NET ASSET VALUE,
PER ACCUMULATION UNIT--Note 6 ............................................ $112.87 $111.11
======= =======

See notes to consolidated financial statements.

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)

For the For the
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
---------- ----------

INVESTMENT INCOME
Real estate income, net:
Rental income ................................................................... $5,328,964 $1,661,865
---------- ----------
Real estate property level expenses and taxes:
Operating expenses ............................................................ 937,670 317,871
Real estate taxes ............................................................. 571,989 192,519
---------- ----------
Total real estate property level expenses and taxes 1,509,659 510,390
---------- ----------
Real estate income, net 3,819,305 1,151,475
Interest .......................................................................... 3,720,927 1,146,347
Dividends ......................................................................... 478,729 10,000
---------- ----------
TOTAL INCOME 8,018,961 2,307,822
---------- ----------
Expenses--Note 3:
Investment advisory ............................................................. 283,270 44,321
Administrative and distribution ................................................. 265,407 75,176
Mortality and expense risk charges .............................................. 66,710 3,407
Liquidity guarantee charges ..................................................... 10,275 1,704
---------- ----------
TOTAL EXPENSES 625,662 124,608
---------- ----------
INVESTMENT INCOME, NET 7,393,299 2,183,214
---------- ----------

REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
Net realized gain on marketable securities ........................................ 37,906 40,605
---------- ----------
Net change in unrealized appreciation on:
Real estate properties .......................................................... 109,320 84,681
Marketable securities ........................................................... (189,178) (93,235)
---------- ----------
Net change in unrealized appreciation (79,858) (8,554)
---------- ----------
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS (41,952) 32,051
---------- ----------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS $7,351,347 $2,215,265
========== ==========

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,
1997 1996
------------ ------------

FROM OPERATIONS
Investment income, net .............................................................. $ 7,393,299 $ 2,183,214
Net realized gain on marketable securities .......................................... 37,906 40,605
Net change in unrealized appreciation on investments ................................ (79,858) (8,554)
------------ ------------

NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 7,351,347 2,215,265
------------ ------------

FROM PARTICIPANT TRANSACTIONS
Premiums ............................................................................ 11,498,550 1,316,540
TIAA seed money withdrawn -- Note 1 ................................................. (5,608,202) --
Net transfers from TIAA ............................................................. 18,817,930 1,841,054
Net transfers from CREF Accounts .................................................... 153,843,141 20,205,764
Annuity and other periodic payments ................................................. (175,716) (1,334)
Withdrawals ......................................................................... (895,014) (49,219)
Death benefits ...................................................................... (1,572) (26,678)
------------ ------------

NET INCREASE IN NET ASSETS RESULTING
FROM PARTICIPANT TRANSACTIONS 177,479,117 23,286,127
------------ ------------

NET INCREASE IN NET ASSETS 184,830,464 25,501,392

NET ASSETS
Beginning of year ................................................................... 369,695,053 120,258,345
------------ ------------
End of period ....................................................................... $554,525,517 $145,759,737
============ ============

See notes to consolidated financial statements.

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

For the For the
Three Months Three Months
Ended Ended
March 31, March 31,
1997 1996
------------ ------------

CASH FLOWS FROM OPERATING ACTIVITIES
Net increase in net assets resulting from operations ............................ $ 7,351,347 $ 2,215,265
Adjustments to reconcile net increase in net assets resulting
from operations to net cash used in operating activities:
Increase in investments ....................................................... (185,293,668) (27,416,838)
Decrease (Increase) in receivable from securities transactions ................ (128,991,000) 4,920,000
Decrease (Increase) in other assets ........................................... (5,715,377) 37,894
Decrease (Increase) in payable for securities transactions .................... 133,454,997 (4,503,083)
Increase in other liabilities ................................................. 5,693,411 1,063,848
------------ ------------
NET CASH USED IN
OPERATING ACTIVITIES (173,500,290) (23,682,914)
------------ ------------

CASH FLOWS FROM PARTICIPANT TRANSACTIONS
Premiums ........................................................................ 11,498,550 1,316,540
TIAA seed money withdrawn -- Note 1 ............................................. (5,608,202) --
Net transfers from TIAA ......................................................... 18,817,930 1,841,054
Net transfers from CREF Accounts ................................................ 153,843,141 20,205,764
Annuity and other periodic payments ............................................. (175,716) (1,334)
Withdrawals ..................................................................... (895,014) (49,219)
Death benefits .................................................................. (1,572) (26,678)
------------ ------------

NET CASH PROVIDED BY
PARTICIPANT TRANSACTION 177,479,117 23,286,127
------------ ------------

NET INCREASE (DECREASE) IN CASH 3,978,827 (396,787)

CASH
Beginning of year ............................................................... 3,981,740 396,787
------------ ------------
End of period ................................................................... $ 7,960,567 $ --
============ ============

See notes to consolidated financial statements.

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, Inc., a wholly-owned subsidiary
of the Account, began operations in July 1996 and holds one property in
Virginia.

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 starting 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, TIAA began to redeem its seed money Accumulation Units in
monthly installments beginning in September, 1996. These withdrawals are made at
prevailing daily net asset values and are reflected in the accompanying
consolidated financial statements. At March 31, 1997, TIAA retained 883,333
Accumulation Units, with a total value of $99,705,594.

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 and 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 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.

Note 2--Significant Accounting Policies

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 and its wholly-owned subsidiary, Teachers REA, Inc. All
significant intercompany accounts and transactions have been eliminated in
consolidation.

Note 2--Significant Accounting Policies - (Continued)

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 that the Account uses. 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 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.
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
paid 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.

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 2--Significant Accounting Policies - (Concluded)

Reclassifications: Certain 1996 amounts in the statement of operations have been
reclassified to conform to the 1997 presentation.

Note 3--Management Agreements

All 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. 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 properties which were purchased during the three
months ended March 31, 1997 been acquired at the beginning of the period
(January 1, 1997), rental income and real estate property level expenses and
taxes for the three months ended March 31, 1997 would have increased by
approximately $271,000 and $87,000, respectively. In addition, interest income
for the three months ended March 31, 1997 would have decreased by approximately
$125,000. Accordingly, the total proforma effect on the Account's net investment
income for the three months ended March 31, 1997 would have been an increase of
approximately $59,000, if the real estate properties acquired during the three
months ended March 31, 1997 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,
------------
1997 $ 9,443,000
1998 8,974,000
1999 8,056,000
2000 7,475,000
2001 5,418,000
Thereafter 34,067,000
------------
Total $ 73,433,000
============

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

Note 6--Condensed Consolidated Financial Information

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

For the Period
For the For the July 3, 1995
Three Months Year (Commencement
Ended Ended of Operations) to
March 31, 1997 December 31, 1996 December 31, 1995
-------------- ----------------- -----------------
(Unaudited)

Per Accumulation Unit Data:
Rental income ............................... $ 1.194 $ 6.012 $ 0.159
Real estate property
level expenses and taxes .................. 0.338 1.850 0.042
--------- --------- ---------
Real estate income, net 0.856 4.162 0.117
Dividends and interest ..................... 0.941 3.309 2.716
--------- --------- ---------
Total income 1.797 7.471 2.833
Expense charges (1) ........................ 0.140 0.635 0.298
--------- --------- ---------
Investment income, net 1.657 6.836 2.535
Net realized and unrealized
gain on investments ....................... 0.106 1.709 0.031
--------- --------- ---------
Net increase in
Accumulation Unit Value .................... 1.763 8.545 2.566

Accumulation Unit Value:
Beginning of period ........................ 111.111 102.566 100.000
--------- --------- ---------
End of period .............................. $ 112.874 $ 111.111 $ 102.566
========= ========= =========

Total return ................................ 1.59% 8.33% 2.57%
Ratios to Average Net Assets:
Expenses (1) ............................... 0.13% 0.61% 0.30%
Investment income, net ..................... 1.55% 6.57% 2.51%
Portfolio turnover rate:
Real estate properties ................. 0% 0% 0%
Securities ............................. 1.35% 15.04% 0%
Thousands of Accumulation Units
outstanding at end of period ............... 4,864 3,296 1,172

(1) Expense charges per Accumulation Unit and the Ratio of Expenses to Average
Net Assets exclude real estate property level operating expenses and
taxes. If included, the expense charge per Accumulation Unit for the three
months ended March 31, 1997 would be $0.478 ($2.485 for the year ended
December 31, 1996 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, 1997 would be 0.45% (2.39% for the year ended
December 31, 1996 and 0.34% for the period July 3, 1995 through December
31, 1995).

Note 7--Accumulation Units

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

Accumulation Units:

Credited for premiums and
TIAA seed money investment ............... 102,539 89,841 1,004,905
Credited for transfers, net of
disbursements and amounts
applied to the Annuity Fund .............. 1,465,652 2,033,447 167,593

Outstanding:
Beginning of period ....................... 3,295,786 1,172,498 --
--------- --------- ---------
End of period ............................. 4,863,977 3,295,786 1,172,498
========= ========= =========

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, 1997, the
Account had outstanding commitments to purchase eleven real estate properties
(subject to various closing conditions) totaling approximately $201.3 million.
Of that amount, purchases of eight real estate properties totaling approximately
$150 million, were closed in April, 1997.

TIAA REAL ESTATE ACCOUNT
CONSOLIDATED STATEMENT OF INVESTMENTS (Unaudited)
MARCH 31, 1997

REAL ESTATE PROPERTIES--31.51%
Location Description Value
-------- ----------- -----
Arizona:
Phoenix Office building.......................... $ 10,600,000
California:
Westlake Village Apartments............................... 13,510,215
Colorado:
Boulder Industrial building...................... 9,930,000
Littleton Apartments............................... 17,750,000
Florida:
Coral Springs Industrial building...................... 6,097,279
Ocoee Shopping center.......................... 7,400,000
Orlando Apartments............................... 12,800,000
West Palm Beach Apartments............................... 16,072,275
Georgia:
Atlanta Apartments............................... 16,000,000
Iowa:
Urbandale Industrial building...................... 13,629,009
Minnesota:
Eagan Industrial building...................... 6,455,249
Fridley Industrial building...................... 4,175,000
North Carolina:
Raleigh Shopping center.......................... 6,400,000
Raleigh Shopping center.......................... 6,600,000
Texas:
El Paso(1) Industrial building...................... 4,600,000
El Paso Apartments............................... 9,213,885
Virginia:
Woodbridge Shopping center.......................... 13,100,000
------------
TOTAL REAL ESTATE PROPERTIES (Cost $173,269,832)..... 174,332,912
------------

(1) Leasehold interest only

MARKETABLE SECURITIES--68.49%

Shares Issuer
------ ------
REAL ESTATE INVESTMENT TRUSTS--7.73%
45,000 Associated Estates Realty Corporation.... 1,006,875
45,000 Avalon Properties, Inc................... 1,237,500
30,000 Avalon Properties, Inc. Pfd.............. 750,000
100,000 BrandyWine Realty Trust.................. 2,025,000
49,000 Cali Realty Corporation.................. 1,568,000
45,000 Camden Property Trust.................... 1,226,250
90,000 CBL & Associates Properties, Inc......... 2,205,000
65,000 Colonial Properties Trust Co............. 1,885,000
50,000 Excel Realty Trust, Inc. Pfd............. 1,340,625
150,000 Health and Retirement Property Trust..... 2,700,000
60,000 Hospitality Properties Trust............. 1,837,500
145,000 Innkeepers USA Trust .................... 2,120,625
92,000 Patriot American Hospitality............. 2,231,000
100,000 Public Storage, Inc...................... 2,900,000

See notes to consolidated financial statements.

Shares Issuer Value
------ ------ -----

REAL ESTATE INVESTMENT TRUSTS- (Concluded)
60,000 Security Capital Atlantic, Inc............. $ 1,335,000
19,900 Security Capital Industrial Trust.......... 502,475
85,000 Simon Debarfolo Group Inc.................. 2,571,250
80,000 Spieker Properties Inc..................... 3,120,000
55,000 Starwood Lodging Trust..................... 2,145,000
75,000 Storage USA, Inc........................... 2,765,625
80,000 Trinet Corporate Realty Trust, Inc......... 2,530,000
80,000 Weeks Corporation.......................... 2,750,000
-----------
TOTAL REAL ESTATE INVESTMENT TRUSTS (Cost $40,567,725)... 42,752,725
-----------

Principal Issuer, Coupon and Maturity Date
--------- --------------------------------
CORPORATE BONDS--1.26%
$ 4,000,000 Associates Corporation of North America
5.25% 09/01/98.............................. 3,927,800
3,000,000 Pepsico, Inc.
7.625% 11/01/98............................. 3,044,460
-------------
TOTAL CORPORATE BONDS (Amortized cost $7,025,910)....... 6,972,260
-------------

GOVERNMENT AGENCIES--59.50%
2,825,000 Federal Home Loan Bank
5.40% 04/01/97.............................. 2,824,494
181,535,000 Federal Home Loan Bank
5.40% 04/02/97.............................. 181,479,033
47,120,000 Federal Home Loan Bank
5.46% 04/03/97.............................. 47,098,207
2,000,000 Federal Home Loan Bank
5.22% 06/06/97.............................. 1,979,602
2,000,000 Federal Home Loan Bank
5.23% 07/02/97.............................. 1,971,686
26,150,000 Federal Home Loan Mortgage Corporation
5.47% 04/04/97.............................. 26,133,873
18,870,000 Federal Home Loan Mortgage Corporation
5.23% 04/29/97.............................. 18,786,547
23,320,000 Federal Home Loan Mortgage Corporation
5.22% 05/07/97.............................. 23,188,417
2,000,000 Federal National Mortgage Association
5.19% 04/03/97.............................. 1,999,075
12,000,000 Federal National Mortgage Association
5.46% 04/15/97.............................. 11,972,550
6,700,000 Federal National Mortgage Association
5.25% 04/22/97.............................. 6,677,522
2,000,000 Federal National Mortgage Association
5.23% 05/02/97.............................. 1,990,240
2,000,000 Federal National Mortgage Association
5.22% 05/08/97.............................. 1,988,410
1,100,000 United States Treasury Bill
5.56% 08/21/97.............................. 1,076,843
-------------
TOTAL GOVERNMENT AGENCIES (Amortized cost $329,231,949)... 329,166,499
-------------

TOTAL MARKETABLE SECURITIES (Amortized cost $376,825,584)........ 378,891,484
-------------

TOTAL INVESTMENTS--100.00% (Cost $550,095,416)................... $ 553,224,396
=============

See notes to consolidated financial statements.

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

The TIAA Real Estate Account began operating on July 3, 1995 and
interests in the Account began being offered to participants on October 2, 1995.

Through March 31, 1997, the Account had acquired a total of 17 real
estate properties, including six industrial properties, six apartment complexes,
four neighborhood shopping centers and one office property. As of March 31,
1997, these properties represented 31.51% of the Account's total investment
portfolio. Net transfers and total premiums into the Account during the quarter
represented 33.2% of the Account's total net assets at the end of the quarter.
This high volume of premiums and transfers into the Account had a negative
impact on the level of real estate properties held as a percentage of total
investments at March 31, 1997.

In April 1997, the Account purchased eight suburban office buildings
in joint venture with Pegasus Partners, Inc., a subsidiary of USF&G Corporation,
for a combined total purchase price of approximately $164.5 million. (TIAA has a
90% interest in the joint venture.) As a result of this purchase, as of April
30, 1997 the Account had 59% of its total investment portfolio invested in real
estate. 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.

As of March 31, 1997, the Account also held investments in short-term
obligations of U.S. government agencies, representing 59.50% of the portfolio,
22 real estate investment trusts (REITs), representing 7.73% of the portfolio,
and two corporate bonds, representing 1.26% of the portfolio.

Results of Operations-Three Months Ended March 31, 1997 Compared
- ----------------------------------------------------------------
to Three Months Ended March 31, 1996
- ------------------------------------

The Account's total net return was 1.59% for the three months ended
March 31, 1997 and 1.68% for the same quarter in 1996. The Account's performance
in the first quarter of 1997 was slightly lower since the Account had a lower
percentage of its portfolio invested in real estate during the first quarter of
1997 than during the first quarter of 1996.

The Account's net investment income, after deduction of all expenses,
was $7,393,299 for the three months ended March 31, 1997 and $2,183,214 for the
three months ended March 31, 1996, a 239% increase. This increase was the result
of a growing base of

net assets from March 31, 1996 to March 31, 1997. Net assets increased 280%
during that period. In addition, the Account had net realized and unrealized
gains (losses) on investments of $(41,952) and $32,051 for the three months
ended March 31, 1997 and March 31, 1996, respectively. While the Account posted
net unrealized gains on its real estate investments in the first quarter of both
1997 and 1996, during the same periods it posted net unrealized losses on
marketable securities of $189,178 and $93,235, respectively, resulting primarily
from the decline in price of the Account's REIT holdings.

The Account's real estate holdings generated approximately 48% and 50%
of the Account's total investment income (before deducting Account level
expenses) during the three months ended March 31, 1997 and March 31, 1996,
respectively. The remaining portion of the Account's total investment income was
generated by marketable securities investments. As the Account approaches its
target of being approximately 70% to 80% invested in real estate, future
investment income is expected to be affected to a greater degree by its real
estate holdings. While the future performance of the Account's investments can't
be predicted, assuming little change in current economic conditions, this
anticipated increase in real estate holdings is expected to have a positive
impact on the Account's total return.

Gross real estate rental income was $5,328,964 for the three months
ended March 31, 1997 and $1,661,865 for the same period in 1996. As of March 31,
1996, the Account owned eight properties, and, as of March 31, 1997, the Account
owned 17 properties. This increase in the number of properties owned by the
Account was a major factor in the higher real estate income for the first
quarter of 1997 over the same period of the previous year. Interest income on
the Account's short- and intermediate-term investments for the three months
ended March 31, 1997 and March 31, 1996 totaled $3,720,927 and $1,146,347,
respectively. This increase resulted from the more than threefold increase in
the Account's net assets from March 31, 1996 to March 31, 1997. Dividend income
on the Account's investments in REITs totaled $478,729 and $10,000,
respectively, for the same periods. Shares of REITs totaled 7.73% of the Account
investments as of March 31, 1997 and 1.45% as of March 31, 1996. This increased
percentage accounted for the increased dividend income for first three months of
1997, as compared with the same period in 1996.

Total property level expenses for the three months ended March 31,
1997 were $1,509,659, of which $571,989 was attributable to real estate taxes
and $937,670 represented operating expenses. Total property level expenses for
the three months ended March 31, 1996 were $510,390, of which $192,519 was
attributable to real estate taxes and $317,871 was attributable to operating
expenses. Property level expenses increased in the first three months of 1997 as
a result of the increased number of properties in the Account.

The Account also incurred expenses for the three months ended March
31, 1997 and 1996 of $283,270 and $44,321, respectively, for investment advisory
services provided by TIAA, $265,407 and $75,176, respectively, for
administrative and distribution services provided by TIAA-CREF Individual and
Institutional Services, Inc. and $76,985 and $5,111, respectively, for the
mortality and expense risks assumed and the liquidity guarantee provided by
TIAA. Such expenses increased as a result of the larger net asset base in the
Account for the first quarter of 1997 over the first quarter of 1996.

Liquidity and Capital Resources
- -------------------------------

On September 16, 1996, in accordance with a five-year repayment
schedule approved by the New York Insurance Department, TIAA began to redeem its
seed money accumulation units related to its initial $100 million seed money
investment. TIAA will continue to redeem a pro rata portion of the accumulation
units it holds over a 60 month period (16,666.667 units per month). As of March
31, 1997, the Account had redeemed 116,667 accumulation units at prevailing
daily unit values, amounting to $12,902,336 in total redemption payments to
TIAA, leaving it holding 883,333 units at March 31, 1997 with a value of
$99,705,594.

For the three months ended March 31, 1997 and 1996, the Account earned
$7,393,299 and $2,183,214, respectively, in net investment income. During those
same three month periods in 1997 and 1996, the Account received $11,498,550 and
$1,316,540, respectively, in premiums and $172,661,071 and $22,046,818,
respectively, in net participant transfers from other TIAA and CREF accounts.
Real estate properties costing $42,420,388 and $23,552,729 were purchased during
the first three months of 1997 and 1996, respectively. At March 31, 1997 and
March 31, 1996, the Account's liquid assets (i.e., its cash, REITs, short- and
intermediate-term investments, and government securities) had a value of
$386,852,051 and $77,716,150, respectively. It is anticipated that much of the
Account's liquid assets as of March 31, 1997, exclusive of the REITs, will be
used by the Account 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.

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 *
(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, 1997

- ----------

* - 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-K Annual Report for the year ended December 31, 1996 (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 15,
1997 under Item 5 of the form with respect to the acquisition of properties
for its portfolio.

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 14, 1997
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 14, 1997
By: /s/ Richard L. Gibbs
------------------------------
Richard L. Gibbs
Executive Vice President
(Principal Accounting Officer)

EXHIBIT INDEX
-------------

(27) Financial Data Schedule