Portfolio Strategies

This variable annuity account seeks favorable long-term returns primarily through rental income and appreciation of real estate and real estate-related investments owned by the Account. The Account will also invest in non-real estate-related publicly traded securities and short-term higher quality liquid investments that are easily converted to cash to enable the Account to meet participant redemption requests, purchase or improve properties or cover other expenses. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related assets with the goal of producing favorable long-term returns. The Account’s principal strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail and multi-family residential properties. The Account may also make foreign real estate investments. Under the Account’s investment guidelines, investments in direct foreign real estate, together with foreign real estate-related securities and foreign non-real estate-related liquid investments may not comprise more than 25% of the Account’s net assets. The Account will invest the remaining portion of its assets (targeted between 15% and 25% of net assets) in publicly traded, liquid investments.

Learn More

For more information please contact:
800 842-2252
Weekdays 8 a.m. to 10 p.m. ET,
Saturdays 9 a.m. to 6 p.m. ET,
or visit tiaa-cref.org

The returns quoted represent past performance, which is no guarantee of future results. Returns and the principal value of your investment will fluctuate. Current performance may be higher or lower than that shown, and you may have a gain or a loss when you redeem your mutual fund shares. For current performance information, including performance to the most recent month-end, please visit tiaa-cref.org, or call 800 842-2252. Performance may reflect waivers or reimbursements of certain expenses. Absent these waivers or reimbursement arrangements, performance may be lower.

Hypothetical Growth of $10,000
The chart illustrates the performance of a hypothetical $10,000 investment on September 30, 2004 and redeemed on September 30, 2014.
— TIAA Real Estate Account	$15,884

The total returns are not adjusted to reflect sales charges, the effects of taxation or redemption fees, but are adjusted to reflect actual ongoing expenses, and assume reinvestment of dividends and capital gains, net of all recurring costs.

Please refer to the next page for important disclosure information.

Market Recap

US economy maintains momentum and real estate market fundamentals benefit

Labor market conditions remained strong during the third quarter of 2014 with the Bureau of Labor Statistics reporting that 671,000 jobs were created as compared to 800,000 in the second quarter. Job gains were broad-based with every major industry sector expanding during the quarter. Though job growth fell short of second quarter’s total, the 224,000 average monthly gain dropped the unemployment rate to 5.9% in September, marking the first time since mid-2008 that the unemployment rate has been less than 6%.

The financial services and professional and business services sectors have been the traditional drivers of office space demand. Financial services firms appear to have made adjustments to recent regulatory reforms and started hiring more aggressively. During the third quarter, 39,000 jobs were added, up from 36,000 during second quarter. This compares with less than 20,000 per quarter during 2013. Growth in professional and business services was strong as well with 194,000 new jobs created versus 199,000 previously. This growth combined with strong demand from the technology sector resulted to the largest decline in the office vacancy rate in recent quarters with the national office vacancy rate dropping to 14.1% from 14.5%, according to CB Richard Ellis Economic Advisors (CBRE-EA).

Industrial markets have also benefited from the stronger economic growth in recent quarters. During the third quarter, the national industrial availability rate declined to 10.6%, the lowest level since the first quarter of 2008. Improvements were broad based, with the availability rate declining in 43 of the 61 markets tracked by CBRE-EA.

Apartment markets remained tight as the national vacancy rate averaged 4.3% vs. 4.6% in third quarter 2013. (Apartment leasing patterns are seasonal and necessitate a year-over-year comparison.) Reflective of the tight market, effective rents, which include concessions such as free rent, grew 4% year-over-year in many markets. Areas with sizeable tech and energy sectors once again reported the strongest growth, while rent growth in New York slowed, and rent growth in Washington, DC remained among the weakest in the nation.

Moderate growth in US retail sales benefited retail market conditions. Retail sales excluding autos and auto parts increased 0.7% vs. the second quarter and 3.4% vs. third quarter 2013. Availability rates in neighborhood and community centers declined to 11.5% from 11.7% during second quarter. With retailers’ all-important holiday season approaching, rising costs of health care, child care and housing are likely to limit household spending and result in further gradual improvement in retail market conditions.