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 expense needs. 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

Performance

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 accumulation units. 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, 2005 and redeemed on September 30, 2015.
— TIAA Real Estate Account	$15,372

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.

Market Recap

Real Estate Market Conditions Continue to Improve Amid Slower Job Growth

Job growth moderated during the third quarter when the Bureau of Labor Statistics reported that 501,000 jobs were added as compared to 692,000 during the second quarter of 2015. Slower growth occurred across most of the major industry sectors while the manufacturing and mining sectors both shed jobs. Overall, monthly average job gains slowed to 167,000 per month while the unemployment rate ticked down to 5.1% in September from 5.3% in June.

Historically, financial services and professional and business services have been a significant source of office space demand. During the third quarter, the financial services sector added 27,000 jobs as compared to 37,000 in the second quarter. Professional and business services added 98,000 jobs in the third quarter and 202,000 in the second quarter. Demand has also been supplemented by robust demand from technology and entertainment companies in some markets. On the whole, office market conditions improved slightly during the third quarter. CB Richard Ellis Econometric Advisors (“CBRE-EA”) reported that the national vacancy rate ticked down to 13.4% from 13.5% previously, with vacancy rate declines in 37 of 62 markets. Gradual but steady improvement in office market conditions has brought the national vacancy rate to its lowest level since mid-2008.

Industrial market conditions are influenced by economic growth, industrial production and international trade. The ongoing economic recovery contributed to a decline in the national industrial availability rate to 9.6% in the third quarter from 9.8% in the second quarter. CBRE-EA expects further declines in the availability rate to slow or even reverse in some markets as construction begins to increase. However, improvements in industrial market conditions remained wide-spread in the third quarter with availability rates declining in 39 of 57 markets.

Apartment market conditions tightened further during the third quarter as the national vacancy rate inched down to 4.2% from 4.3% in the second quarter. However, low vacancy rates and strong rent growth have resulted in significant new supply nationally. Thus far, demand has generally kept pace with new supply in most markets, and CBRE-EA reports “no glaring risk of overbuilding”. Sixteen markets now have vacancy rates below 4.0% including many major East and West coast markets.

Retail sales continued to modestly grow in the third quarter. Preliminary data from the U.S. Census Bureau indicate that retail sales excluding autos and auto parts increased 1.0% versus second quarter 2015. Retail markets saw further modest improvement in the third quarter when the national availability rate ticked down to 11.3% from 11.4% in the second quarter. CBRE-EA expects that further improvement in retail market conditions should soon generate meaningful rent growth.