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EX-32 - EXHIBIT 32 - TIAA REAL ESTATE ACCOUNTexhibit32.htm
EX-31 - EXHIBIT 31 - TIAA REAL ESTATE ACCOUNTexhibit31.htm
EX-14 - EXHIBIT 14 - TIAA REAL ESTATE ACCOUNTexhibit14.htm
EX-4.(F)(2) - EXHIBIT 4.(F)(2) - TIAA REAL ESTATE ACCOUNTexhibit4f2.htm
EX-4.(F) - EXHIBIT 4.(F) - TIAA REAL ESTATE ACCOUNTexhibit4f1.htm
EX-4.(E)(2) - EXHIBIT 4.(E)(2) - TIAA REAL ESTATE ACCOUNTexhibit4e2.htm
EX-4.(E) - EXHIBIT 4.(E) - TIAA REAL ESTATE ACCOUNTexhibit4e1.htm
EX-4.(D)(2) - EXHIBIT 4.(D)(2) - TIAA REAL ESTATE ACCOUNTexhibit4d2.htm
EX-4.(D) - EXHIBIT 4.(D) - TIAA REAL ESTATE ACCOUNTexhibit4d1.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
(Mark One)

ý ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2016
OR
o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from  __________ to  _________
Commission file number: 33-92990; 333-210139
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
(I.R.S. Employer Identification No.)
C/O TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NEW YORK 10017-3206
(Address of principal executive offices, including zip code)
Registrant’s telephone number, including area code: (212) 490-9000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: None
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
YES o  NO ý
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange Act:
YES o  NO ý
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 ý  NO o
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 or regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K: Not Applicable
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
YES ý  NO o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer o
 
Accelerated filer o
Non-accelerated filer x
 
Smaller Reporting Company o
(Do not check if a smaller reporting company)
 
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o  NO ý




Aggregate market value of voting stock held by non-affiliates: Not Applicable
Documents Incorporated by Reference: None




TABLE OF CONTENTS
 
Item
 
Page
 
 
 
 
 
 
 
 
 
Market for the Registrant's Securities, Related Stockholder Matters, and Issuer Purchases of Equity Securities
 
 
Management's Discussion and Analysis of the Account's Financial Condition and Results of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
Form 10-K Summary


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PART I
ITEM 1. BUSINESS.
General. The TIAA Real Estate Account (the “Real Estate Account”, the “Account” or the “Registrant”) was established on February 22, 1995, as an insurance company separate account of Teachers Insurance and Annuity Association of America (“TIAA”), a New York insurance company, by resolution of TIAA’s Board of Trustees (the “Board”). The Account, which invests mainly in real estate and real estate-related investments, is a variable annuity investment option offered through individual, group and tax-deferred annuity contracts available to employees in the academic, medical, cultural and research fields. The Account commenced operations on July 3, 1995, and interests in the Account were first offered to eligible participants on October 2, 1995.
The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.
The Account is regulated by the New York Department of Financial Services (“NYDFS”), and the insurance departments of certain other jurisdictions in which the annuity contracts are offered. Although TIAA owns the assets of the Real Estate Account and the Account’s obligations are obligations of TIAA, the Account’s income, investment gains and investment losses are credited to or charged against the assets of the Account without regard to TIAA’s other income, gains, or losses. Under New York insurance law, the Account cannot be charged with liabilities incurred by any other TIAA business activities or any other TIAA separate account.
The Real Estate Account is designed as an option for retirement and tax-deferred savings plans for employees of non-profit and governmental institutions. TIAA currently offers the Real Estate Account under the following annuity contracts:
RAs and GRAs (Retirement Annuities and Group Retirement Annuities)
SRAs (Supplemental Retirement Annuities)
GSRAs (Group Supplemental Retirement Annuities)
Retirement Choice and Retirement Choice Plus Annuities
GAs (Group Annuities) and Institutionally Owned GSRAs
Classic and Roth IRAs (Individual Retirement Annuities) including SEP IRAs (Simplified Employee Pension Plans)
Keoghs
ATRAs (After-Tax Retirement Annuities)
Real Estate Account Accumulation Contract
Note that state regulatory approval may be pending for certain of these contracts and these contracts may not currently be available in every state. TIAA may also offer the Real Estate Account as an investment option under additional contracts, both at the individual and plan sponsor level, in the future.
Investment Objective. The Real Estate 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.

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Investment Strategy
Real Estate-Related Investments. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. These investments may consist of:
Direct ownership interests in real estate;
Direct ownership of real estate through interests in joint ventures;
Indirect interests in real estate through real estate-related securities, such as:
public and/or privately placed registered and unregistered equity investments in real estate investment trusts (“REITs”), which investments may consist of registered or unregistered common or preferred stock interests;
real estate limited partnerships and limited liability companies;
investments in equity or debt securities of companies whose operations involve real estate (i.e., that primarily own or manage real estate) which may not be REITs; and
conventional commercial mortgage loans, participating mortgage loans, secured mezzanine loans and collateralized mortgage obligations, including commercial mortgage-backed securities (“CMBS”) and other similar investments.
The Account’s principal strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail and multi-family properties. The Account is targeted to hold between 65% and 80% of the Account’s net assets in such direct ownership interests at any time. Historically, at least 70% of the Account’s net assets have comprised such direct ownership interests in real estate.
In addition, while the Account is authorized to hold up to 25% of its net assets in liquid real estate-related securities, such as publicly traded REITs and CMBS, management intends that the Account will not hold more than 10% of its net assets in such securities on a long-term basis. Traditionally, less than 10% of the Account’s net assets have comprised interests in these securities; although, the Account has held approximately 10% of its net assets in equity REIT securities at times. In addition, under the Account’s current investment guidelines, the Account is authorized to hold up to 10% of its net assets in CMBS. As of December 31, 2016, REIT securities comprised approximately 4.4% of the Account’s net assets, and the Account held no CMBS as of such date.
Non-Real Estate-Related Investments. The Account will invest the remaining portion of its assets (targeted to be between 15% and 25% of its net assets) in publicly traded, liquid investments; namely:
Short-term government related instruments, including U.S. Treasury bills;
Long-term government related instruments, such as securities issued by U.S. government agencies or U.S. government-sponsored entities;
Short-term non-government related instruments, such as money market instruments and commercial paper;
Long-term non-government related instruments, such as corporate debt securities; and
Stock of companies that do not primarily own or manage real estate.
However, from time to time, the Account’s non-real estate-related liquid investments may comprise less than 15% (and possibly less than 10%) of its assets (on a net basis and/or a gross basis), especially during and immediately following periods of significant net participant outflows, in particular due to significant participant transfer activity. In addition, the Account, from time to time and on a temporary basis, may hold in excess of 25% of its net assets in non-real estate-related liquid investments, particularly during times of significant inflows into the Account and/or a lack of attractive real estate-related investments available in the market.
Liquid Securities Generally. Primarily due to management’s need to manage fluctuations in cash flows, in particular during and immediately following periods of significant participant net transfer activity into or out of the Account, the Account may, on a temporary basis (i) exceed the upper end of its targeted holdings (currently 35% of the Account’s net assets) in liquid securities of all types, including both publicly traded non-real estate-related liquid investments and liquid real estate-related securities, such as REITs and CMBS, or (ii) be below the low end of its targeted holdings in such liquid securities (currently 15% of the Account’s net assets).

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The portion of the Account’s net assets invested in liquid investments of all types may exceed the upper end of its target, for example, if (i) the Account receives a large inflow of money in a short period of time, in particular due to significant participant transfer activity into the Account, (ii) the Account receives significant proceeds from sales or financings of direct real estate assets, (iii) there is a lack of attractive direct real estate investments available on the market, and/or (iv) the Account anticipates more near-term cash needs, including to apply to acquire direct real estate investments, pay expenses or repay indebtedness.
Foreign Investments. The Account from time to time will 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. However, through the date of this report, such foreign real estate-related investments have never represented more than 7.5% of the Account’s net assets and management does not intend such foreign investments to exceed 10% of the Account’s net assets. As of December 31, 2016, the Account did not hold any foreign real estate investments.
Investments Summary. At December 31, 2016, the Account’s net assets totaled $24.3 billion. As of that date, the Account’s investments in real estate properties, real estate joint ventures, limited partnerships, loans receivable and real estate-related marketable securities, net of the fair value of mortgage loans payable on real estate, represented 83.3% of the Account’s net assets.
At December 31, 2016, the Account held a total of 129 real estate investments (including its interests in 24 real estate-related joint ventures), representing 79.1% of the Account’s total investments, measured on a gross asset value basis (“Total Investments”). As of that date, the Account also held investments in government agency notes (representing 8.7% of Total Investments), U.S. Treasury securities (representing 6.5% of Total Investments), REIT equity securities (representing 4.1% of Total Investments), loans receivable (representing 1.1% of Total Investments) and real estate limited partnerships (representing 0.5% of Total Investments). See the Account’s audited consolidated financial statements for more information as to the Account’s investments as of December 31, 2016.
Borrowing. The Account is authorized to borrow money and assume or obtain a mortgage on a property (i.e., make leveraged real estate investments). Under the Account’s current investment guidelines, management intends to maintain the Account’s loan-to-value ratio (as defined below) at or below 30% (measured at the time of incurrence and after giving effect thereto). Forms of borrowing may include:
placing new debt on properties;
refinancing outstanding debt;
assuming debt on the Account’s properties; or
extending the maturity date of outstanding debt.
The Account’s loan-to-value ratio at any time is based on the ratio of the outstanding principal amount of the Account’s debt to the Account’s total gross asset value. The Account’s total gross asset value, for these purposes, is equal to the total fair value of the Account’s assets (including the fair value of the Account’s interest in joint ventures), with no reduction associated with any indebtedness on such assets. In calculating outstanding indebtedness, we include only the Account’s actual percentage interest in any borrowings on a joint venture investment and not that of any joint venture partner. Also, at the time the Account (or a joint venture in which the Account is a partner) enters into a revolving line of credit, management deems the maximum amount which may be drawn under that line of credit as fully incurred, regardless of whether the maximum amount available has been drawn from time to time.
As of December 31, 2016, the aggregate principal amount of the Account’s outstanding debt (including the Account’s share of debt on its joint venture investments) was $4.4 billion and the Account’s loan-to-value ratio was approximately 15.0%.
In times of high net inflow activity, in particular during times of high net participant transfer inflows, management may determine to apply a portion of such cash flows to make prepayments of indebtedness prior to scheduled maturity, which would have the effect of reducing the Account’s loan-to-value ratio. Such prepayments may require the Account to pay fees or ‘yield maintenance’ amounts to lenders.

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In addition, the Account may obtain a line of credit to meet short-term cash needs, if needed. Management expects the proceeds from any such short-term borrowing would be used to meet the cash flow needs of the Account’s properties and real estate-related investments.
The Account may only borrow up to 70% of the then-current value of a property, although construction loans may be for 100% of costs incurred in developing the property. Except for construction loans, any mortgage loans on a property will be non-recourse to the Account, meaning that if there is a default on a loan in respect to a specific property, the lender will have recourse to (i.e., be able to foreclose on) only the property encumbered (or the joint venture owning the property), or to other specific Account properties that may have been pledged as security for the defaulted loan, but not to any other assets of the Account. When possible, the Account will seek to have loans mature at varying times to limit the risks of borrowing.
Risk Factors. The Account’s assets and income can be affected by a variety of risk factors. These risks are more fully described under Item 1A of this report.
Personnel and Management. The Account has no officers, directors or employees. TIAA employees, under the direction and control of the Board, manage the investment of the Account’s assets, following investment management procedures TIAA has adopted for the Account. In addition, TIAA performs administration functions for the Account (which includes receiving and allocating premiums, calculating and making annuity payments and providing recordkeeping and other services). Distribution services for the Account (which include, without limitation, distribution of the annuity contracts, advising existing annuity contract owners in connection with their accumulations and helping employers implement and manage retirement plans) are performed by TIAA-CREF Individual & Institutional Services, LLC (“Services”), a wholly-owned subsidiary of TIAA and registered broker-dealer and member of the Financial Industry Regulatory Authority (“FINRA”). TIAA and Services provide investment advisory, administration, and distribution services, as applicable, to the Account on an “at-cost” basis.
Contracts. TIAA offers the Account as a variable option for the annuity contracts listed earlier in this Item 1, although some employer plans may not offer the Account as an option for certain contracts. Each payment to the Account buys a number of accumulation units. Similarly, any transfer or withdrawal from the Account results in the redemption of a number of accumulation units. The price paid for an accumulation unit, and the price received for an accumulation unit when redeemed, is the accumulation unit value (“AUV”) calculated for the business day on which the participant’s purchase, redemption or transfer request is received in good order (unless a participant asks for a later date for a redemption or transfer).
Subject to the terms of the contracts and a participant’s employer’s plan, a participant can move money to and from the Account in the following ways, among others:
from the Account to a CREF investment account, a TIAA Access variable account (if available), TIAA’s Traditional Annuity or a mutual fund (including TIAA-CREF affiliated mutual funds) or other options available under the plan;
to the Account from a CREF investment account, a TIAA Access variable account (if available), TIAA’s Traditional Annuity (transfers from TIAA’s Traditional Annuity under RA, GRA or Retirement Choice contracts are subject to restrictions), a TIAA-CREF affiliated mutual fund or from other companies/ plans;
by withdrawing cash; and/or
by setting up a program of automatic withdrawals or transfers.
Importantly, transfers out of the Account to a TIAA or CREF account or into another investment option can be executed on any business day, but are limited to once per calendar quarter, although some plans may allow systematic transfers that result in more than one transfer per calendar quarter. Other limited exceptions may apply. Also, transfers to CREF accounts or to certain other options may be restricted by an employer’s plan, current tax law or by the terms of a participant’s contract. In addition, individual participants are subject to certain limitations on making internal transfers into their Account accumulation if, after giving effect to such transfer, the total value of such participant’s Account accumulation (under all contracts issued to such participant) would exceed $150,000. Categories of transactions that TIAA deems “internal funding vehicle transfers” for purposes of this limitation are described in the applicable contract or endorsement form in the Account’s prospectus. The effective date of the limitation as applies to an individual

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participant will be reflected on his or her applicable contract or endorsement form. See the Account’s prospectus for more information.
Appraisals and Valuations. With respect to the Account’s real property investments or associated interest in the underlying property held by a joint venture investment (collectively "real properties"), following the initial purchase of a property or the making of a mortgage loan on a property by the Account (at which time the Account normally receives an independent appraisal on such property), each of the Account’s real properties are appraised, and mortgage loans are valued, at least once every calendar quarter or sooner as circumstances arise. Each of the Account’s real estate properties are appraised each quarter by an independent third-party state-certified (or its foreign equivalent) appraiser (which we refer to in this report as an “independent appraiser”) who is a member of a professional appraisal organization. In addition, TIAA’s internal appraisal staff performs a review of each of these quarterly appraisals, in conjunction with the Account’s independent fiduciary, and TIAA’s internal appraisal staff or the independent fiduciary may request an additional appraisal or valuation outside of this quarterly cycle. Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).
In general, the Account records appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments and thus adjustments to the valuations of its holdings (to the extent adjustments are made) happen regularly throughout each quarter and not on one specific day in each period. In addition, an estimated daily equivalent of net operating income is taken into consideration and is adjusted for actual transactional activity. The remaining assets in the Account are primarily marketable securities that are priced on a daily basis. See “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations—Critical Accounting Policies” in this Form 10-K for more information on how each class of the Account’s investments are valued.
Liquidity Guarantee. The TIAA General Account provides the Account with a liquidity guarantee enabling the Account to have funds available to meet participant redemption, transfer or cash withdrawal requests. The Account pays TIAA for the risk associated with providing the liquidity guarantee through a daily deduction from the Account’s net assets. If the Account cannot fund participant requests from the Account’s own cash flow and liquid investments, the TIAA General Account will fund them by purchasing accumulation units issued by the Account (accumulation units that are purchased by TIAA are generally referred to as “liquidity units”). This liquidity guarantee is required by the NYDFS. TIAA guarantees that participants can redeem their accumulation units at the accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. Liquidity units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s participants.
This liquidity guarantee is not a guarantee of the investment performance of the Account or a guarantee of the value of a participant’s units. Primarily as a result of significant net participant transfers in the second half of 2008 and the first half of 2009, pursuant to this liquidity guarantee obligation, the TIAA General Account purchased an aggregate of $1.2 billion of liquidity units issued by the Account between December 2008 and June 2009. Since July 1, 2009, and through the date of filing this Annual Report on Form 10-K, no further liquidity units have been purchased.
Redemption of Liquidity Units. The independent fiduciary is vested with oversight and approval over any redemption of TIAA’s liquidity units, acting in the best interests of Real Estate Account participants.
As of March 31, 2013, the independent fiduciary completed the systematic redemption of all of the liquidity units held by the TIAA General Account. Approximately one-quarter of such units were redeemed evenly over the business days in each of the months of June, September and December 2012, and March 2013, representing a total of $940.3 million and $325.4 million redeemed during 2012 and 2013, respectively.
To the extent liquidity units are held by the TIAA General Account, the independent fiduciary reserves the right to authorize or direct the redemption of all or a portion of liquidity units at any time. Upon termination and liquidation of the Account (wind-up), any liquidity units held by TIAA will be the last units redeemed, unless the independent fiduciary directs otherwise.
Independent Fiduciary. Because TIAA’s ability to purchase and sell liquidity units raises certain technical issues under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), TIAA applied for and received

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a prohibited transaction exemption from the U.S. Department of Labor in 1996 (PTE 96-76). In connection with the exemption, TIAA has appointed an independent fiduciary for the Account, with overall responsibility for reviewing the Account’s transactions to determine whether they are in accordance with the Account’s investment guidelines. RERC, LLC, a real estate consulting firm whose principal offices are located in West Des Moines, IA (“RERC”), was appointed as independent fiduciary effective March 1, 2006 and currently serves as the Account’s independent fiduciary, pursuant to an amended and restated letter agreement effective March 1, 2015, whose term expires on February 28, 2018. The independent fiduciary’s responsibilities include:
reviewing and approving the Account’s investment guidelines and monitoring whether the Account’s investments comply with those guidelines;
reviewing and approving valuation procedures for the Account’s properties;
approving adjustments to any property valuations that change the value of the property or the Account as a whole above or below certain prescribed levels, or that are made within three months of the annual independent appraisal;
reviewing and approving how the Account values accumulation and annuity units;
approving the appointment of all independent appraisers;
reviewing the purchase and sale of units by TIAA to ensure that the Account uses the correct unit values; and
requiring appraisals besides those normally conducted, if the independent fiduciary believes that any of the properties have changed materially, or that an additional appraisal is necessary to ensure the Account has correctly valued a property.
In addition, the independent fiduciary has certain responsibilities with respect to the Account that it had historically undertaken or is currently undertaking with respect to TIAA’s purchase and ownership of liquidity units, including among other things, reviewing the purchases and redemption of liquidity units by TIAA to ensure the Account uses the correct unit values. In connection therewith, as set forth in PTE 96-76, the independent fiduciary’s responsibilities include:
establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for changing the trigger point;
approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of liquidity units reaches the trigger point; and
once the trigger point has been reached, participating in any program to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. If the independent fiduciary were to determine that TIAA’s ownership should be reduced following the trigger point, its role in participating in any asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines, and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of liquidity units.
Available Information. The Account’s annual report on Form 10-K, quarterly reports on Form 10-Q, and any amendments to those reports, filed by the Account with the Securities and Exchange Commission on or after the date hereof, can be accessed free of charge at www.tiaa.org. Information contained on this website is expressly not incorporated by reference into this Annual Report on Form 10-K.


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ITEM 1A. RISK FACTORS.
The value of your investment in the Account will fluctuate based on the value of the Account’s assets, the income the assets generate and the Account’s expenses. Participants can lose money by investing in the Account. There is risk associated with an investor attempting to “time” an investment in the Account’s units, or effecting a redemption of an investor’s units. The Account’s assets and income can be affected by many factors, and you should consider the specific risks presented below before investing in the Account. In particular, for a discussion of how forward-looking statements contained in this annual report on Form 10-K are subject to uncertainties that are difficult to predict, which may be beyond management’s control and which could cause actual results to differ materially from historical experience or management’s present expectations, please refer to the subsection entitled “Forward-Looking Statements,” which is contained in the section entitled “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations.”
RISKS ASSOCIATED WITH REAL ESTATE INVESTING
General Risks of Acquiring and Owning Real Property. As referenced elsewhere in this report, the substantial majority of the Account’s net assets consist of direct ownership interests in real estate. As such, the Account is particularly subject to the risks inherent in acquiring and owning real property, including in particular the following:
Adverse Global and Domestic Economic Conditions. The economic conditions in the markets where the Account’s properties are located may be adversely impacted by factors which include:
adverse domestic or global economic conditions, particularly in the event of a deep recession which results in significant employment losses across many sectors of the economy and reduced levels of consumer spending;
a weak market for real estate generally and/or in specific locations where the Account may own property;
business closings, industry or sector slowdowns, employment losses and related factors;
the availability of financing (both for the Account and potential purchasers of the Account’s properties);
an oversupply of, or a reduced demand for, certain types of real estate properties;
natural disasters, flooding and other significant and severe weather-related events;
terrorist attacks and/or other man-made events; and
decline in population or shifting demographics.
The incidence of some or all of these factors could reduce occupancy, rental rates and the fair value of the Account’s real properties or interests in investment vehicles (such as limited partnerships) which directly hold real properties.
Concentration Risk. The Account may experience periods in which its investments are geographically concentrated, either regionally or in certain markets with similar demographics. Further, while the Account seeks diversification across its four primary property types: office, industrial, retail and multi-family properties, the Account may experience periods where it has concentration in one property type, increasing the potential exposure if there were to be an oversupply of, or a reduced demand for, certain types of real estate properties in the markets in which the Account operates.
Also, the Account may experience periods in which its tenant base is concentrated within a particular industry sector. For example, the Account owns and operates a number of industrial properties, which typically feature larger tenant concentration. The insolvency and/or closing of a single tenant in one of our industrial properties may significantly impair the income generated by an industrial property, and may also depress the value of such property.
In addition, the Account owns and operates a number of properties in the Washington, D.C. metropolitan area and a prolonged period of significantly diminished federal expenditures could have an adverse impact on demand for office space by the U.S. government and the sectors and industries dependent upon the U.S. government in such region or other regions where the government or such related businesses are large lessees.
If any or all of these events occur, the Account’s income and performance may be adversely impacted disproportionately by deteriorating economic conditions in those areas or industry sectors in which the Account’s investments are concentrated. Also, the Account could experience a more rapid negative change in the value of its real estate investments than would be the case if its real estate investments were more diversified.

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Leasing Risk. A number of factors could cause the Account’s rental income, a key source of the Account’s revenue and investment return, to decline, which would adversely impact the Account’s results and investment returns. These factors include the following:
A property may be unable to attract new tenants or retain existing tenants. This situation could be exacerbated if a concentration of lease expirations occurred during any one time period or multiple tenants exercise early termination at the same time.
The financial condition of our tenants may be adversely impacted, particularly in a prolonged economic downturn. The Account could lose revenue if tenants do not pay rent when contractually obligated, request some form of rent relief and/or default under a lease at one of the Account’s properties. Such a default could occur if a tenant declared bankruptcy, suffered from a lack of liquidity, failed to continue to operate its business or for other reasons. In the event of any such default, we may experience a delay in, or an inability to effect, the enforcement of our rights against that tenant, particularly if that tenant filed for bankruptcy protection. Further, any disputes with tenants could involve costly and time consuming litigation.
In the event a tenant vacates its space at one of the Account’s properties, whether as a result of a default, the expiration of the lease term, rejection of the lease in bankruptcy or otherwise, given current market conditions, we may not be able to re-lease the vacant space either (i) for as much as the rent payable under the previous lease or (ii) at all. Also, we may not be able to re-lease such space without incurring substantial expenditures for tenant improvements and other lease-up related costs, while still being obligated for any mortgage payments, real estate taxes and other expenditures related to the property.
In some instances, our properties may be specifically suited to and/or outfitted for the particular needs of a certain tenant based on the type of business the tenant operates. For example, many companies desire space with an open floor plan. We may have difficulty obtaining a new tenant for any vacant space in our properties, particularly if the floor plan limits the types of businesses that can use the space without major renovation, which may require us to incur substantial expense in re-planning the space. Also, upon expiration of a lease, the space preferences of our major tenants may no longer align with the space they previously rented, which could cause those tenants to not renew their lease, or may require us to expend significant sums to reconfigure the space to their needs.
The Account owns and operates retail properties, which, in addition to the risks listed above, are subject to specific risks, including the insolvency and/or closing of an anchor tenant. Many times, anchor tenants will be “big box” stores and other large retailers that can be particularly adversely impacted by a global recession and reduced consumer spending generally. Factors that can impact the level of consumer spending include increases in fuel and energy costs, residential and commercial real estate and mortgage conditions, labor and healthcare costs, access to credit, consumer confidence and other macroeconomic factors. Under certain circumstances, co-tenancy clauses in tenants’ leases may allow certain tenants in a retail property to terminate their leases or reduce or withhold rental payments when overall occupancy at the property falls below certain minimum levels. The insolvency and/or closing of an anchor tenant may also cause such tenants to terminate their leases, or to fail to renew their leases at expiration.
Competition. The Account may face competition for real estate investments from multiple sources, including individuals, corporations, insurance companies or other insurance company separate accounts, as well as real estate limited partnerships, real estate investment funds, commercial developers, pension plans, other institutional and foreign investors and other entities engaged in real estate investment activities. Some of these competitors may have similar financial and other resources as the Account, and/ or they may have investment strategies and policies (including the ability to incur significantly more leverage than the Account) that allow them to compete more aggressively for real estate investment opportunities, which could result in the Account paying higher prices for investments, experiencing delays in acquiring investments or failing to consummate such purchases. Any resulting delays in the acquisition of investments, or the failure to consummate acquisitions the Account deems desirable, may increase the Account’s costs or otherwise adversely affect the Account’s investment results.
In addition, the Account’s properties may be located close to properties that are owned by other real estate investors and that compete with the Account for tenants. These competing properties may be better located, more suitable for tenants than our properties or have owners who may compete more aggressively for tenants, resulting in a competitive advantage for these other properties. We may also face similar competition from other properties that may be developed

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in the future. This competition may limit the Account’s ability to lease space, increase its costs of securing tenants, and limit our ability to maximize our rents and/or require the Account to make capital improvements it otherwise would not, in order to make its properties more attractive to prospective tenants.
Operating Costs. A property’s cash flow could decrease if operating costs, such as property taxes, utilities, litigation expenses associated with a property, maintenance and insurance costs that are not reimbursed by tenants, increase in relation to gross rental income, or if the property needs unanticipated repairs and renovations. In addition, the Account’s expenses of owning and operating a property are not necessarily reduced when the Account’s income from a property is reduced.
Condemnation. A governmental agency may condemn and convert for a public use (i.e., through eminent domain) all or a portion of a property owned by the Account. While the Account would receive compensation in connection with any such condemnation, such compensation may not be in an amount the Account believes represents equivalent value for the condemned property. Further, a partial condemnation could impair the ability of the Account to maximize the value of the property during its operation, including making it more difficult to find new tenants or retain existing tenants. Finally, a property which has been subject to a partial condemnation may be more difficult to sell at a price the Account believes is appropriate.
Terrorism and Acts of War and Violence. Terrorist attacks may harm our property investments. The Account can provide no assurance that there will not be further terrorist attacks against the United States or U.S. businesses or elsewhere in the world. These attacks or armed conflicts may directly or indirectly impact the value of the property we own or that secure our loans. Losses resulting from these types of events may be uninsurable or not insurable to the full extent of the loss suffered. Moreover, any of these events could cause consumer confidence and spending to decrease or result in increased volatility in the United States, worldwide financial markets, and the global economy. Such events could also result in economic uncertainty in the United States or abroad. Adverse economic conditions resulting from terrorist activities could reduce demand for space in the Account’s properties and thereby reduce the value of the Account’s properties and therefore your investment return.
Risk of Limited Warranty. Purchasing a property “as is” or with limited warranties, which limit the Account’s recourse if due diligence fails to identify all material risks, can negatively impact the Account by reducing the value of such properties and increasing the Account’s cost to hold or sell properties.

General Risks of Selling Real Estate Investments. Among the risks of selling real estate investments are:
The sale price of an Account property might differ, perhaps significantly, from its estimated or appraised value, leading to losses or reduced profits to the Account.
The Account might not be able to sell a property at a particular time for a price which management believes represents its fair or full value. This illiquidity may result from the cyclical nature of real estate, general economic conditions impacting the location of the property, disruption in the credit markets or the availability of financing on favorable terms or at all, and the supply of and demand for available tenant space, among other reasons. This might make it difficult to raise cash quickly which could impair the Account’s liquidity position (particularly during any period of sustained significant net participant outflows) and also could lead to Account losses. Further, the liquidity guarantee does not serve as a working capital facility or credit line to enhance the Account’s liquidity levels generally, as its purpose is tied to participants having the ability to redeem their accumulation units upon demand (thus, alleviating the Account’s need to dispose of properties solely to increase liquidity levels in what management deems a suboptimal sales environment).
The Account may need to provide financing to a purchaser if no cash buyers are available, or if buyers are unable to receive financing on terms enabling them to consummate the purchase. Such seller financing introduces a risk that the counterparty may not perform its obligations to repay the amounts borrowed from the Account to complete the purchase.
For any particular property, the Account may be required to make expenditures for improvements to, or to correct defects in, the property before the Account is able to market and/or sell the property.
Interests in real estate limited partnerships tend to be, in particular, illiquid and the Account may be unable to dispose of such investments at opportune times.

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Seller Indemnities. When the Account sells property, it is often required to provide some amount of indemnity for loss to the buyer. While the Account takes steps to try to mitigate the impact of the indemnities, such indemnities could negatively impact the sale price or result in claims by the buyer for indemnity in the future, which could increase the Account’s expenses and thereby reduce the return on investment.
Valuation and Appraisal Risks. Investments in the Account’s assets are stated at fair value, which is defined as the price that would be received to sell the asset in an orderly transaction between market participants at the measurement date. Determination of fair value, particularly for real estate assets, involves significant judgment. Valuation of the Account’s real estate properties (which comprise a substantial majority of the Account’s net assets) are based on real estate appraisals, which are estimates of property values based on a professional’s opinion and may not be accurate predictors of the amount the Account would actually receive if it sold a property. Appraisals can be subjective in certain respects and rely on a variety of assumptions and conditions at that property or in the market in which the property is located, which may change materially after the appraisal is conducted. Among other things, market prices for comparable real estate may be volatile, in particular if there has been a lack of recent transaction activity in such market. Any future disruptions in the macroeconomy, real estate markets and the credit markets, such as those that occurred from 2008-2011, could lead to a significant decline in real estate transaction activity in most markets and sectors in which the Account is invested. The resulting lack of observable transaction data may make it more difficult for a property appraisal to determine the fair value of the Account’s investment in one or more real estate assets. In addition, a portion of the data used by appraisers is based on historical information at the time the appraisal is conducted, and subsequent changes to such data, after an appraiser has used such data in connection with the appraisal, may not be adequately captured in the appraised value. Also, to the extent that the Account uses a relatively small number of independent appraisers to value a significant portion of its properties, valuations may be subject to any institutional biases of such appraisers and their valuation procedures.
Further, as the Account generally obtains appraisals on a quarterly basis, there may be circumstances in the period between appraisals or interim valuation adjustments in which the true realizable value of a property is not reflected in the Account’s daily net asset value calculation or in the Account’s periodic consolidated financial statements. This disparity may be more apparent when the commercial and/or residential real estate markets experience an overall and possibly dramatic decline (or increase) in property values in a relatively short period of time between appraisals.
If the appraised values of the Account’s properties as a whole are too high, those participants who purchased accumulation units prior to (i) a downward valuation adjustment of a property or multiple properties or (ii) a property or properties being sold for a lower price than the appraised value will be credited with less of an interest than if the value had previously been adjusted downward. Also, those participants who redeem during any such period will have received more than their pro rata share of the value of the Account’s assets, to the detriment of other non-redeeming participants. In particular, appraised property values may prove to be too high (as a whole) in a rapidly declining commercial real estate market. Further, implicit in the Account’s definition of fair value is a principal assumption that there will be a reasonable time to market a given property and that the property will be exchanged between a willing buyer and willing seller in a non-distressed scenario. However, an appraised value may not reflect the actual realizable value that would be obtained in a rush sale where time was of the essence. Also, appraised values may lag actual realizable values to the extent there is significant and rapid economic deterioration in a particular geographic market or a particular sector within a geographic market.
If the appraised values of the Account’s properties as a whole are too low, those participants who redeem prior to (i) an upward valuation adjustment of a property or multiple properties or (ii) a property or properties being sold for a higher price than the appraised value will have received less than their pro rata share of the value of the Account’s assets, and those participants who purchase units during any such period will be credited with more than their pro rata share of the value of the Account’s assets.
Finally, the Account recognizes items of income (such as net operating income from real estate investments, distributions from real estate limited partnerships or joint ventures, or dividends from REIT stocks) and expense in many cases on an intermittent basis, where the Account cannot predict with certainty the magnitude or the timing of such items. As such, even as the Account estimates items of net operating income on a daily basis, the AUV for the Account may fluctuate, perhaps significantly, from day to day, as a result of adjusting these estimates for the actual recognized item of income or expense.

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Investment Risk Associated with Participant Transactions. The amount the Account has available to invest in new properties and other real estate-related assets will depend, in large part, on the level of net participant transfers into or out of the Account as well as participant premiums into the Account. As noted elsewhere in this report, the Account intends to hold between 15% and 25% of its net assets in publicly traded liquid investments (other than real estate and real estate-related investments), consisting of publicly traded, liquid investments. These liquid assets are intended to be available to purchase real estate-related investments in accordance with the Account’s investment objective and strategy and are also available to meet participant redemption requests and the Account’s expense needs (including, from time to time, obligations on debt). Significant participant transaction activity into or out of the Account’s units is generally not predictable, and wide fluctuations can occur as a result of macroeconomic or geopolitical conditions, the performance of equities or fixed income securities or general investor sentiment, regardless of the historical performance of the Account or of the performance of the real estate asset class generally.
In the second half of 2008 and in 2009, the Account experienced significant net participant transfers out of the Account, eventually causing the Account’s liquid assets to comprise less than 10% of the Account’s assets (on a net and total basis) throughout all of 2009 and into early 2010. Due in large part to this activity, the TIAA liquidity guarantee was initially executed in December 2008. See “Liquidity and Capital Resources—Liquidity Guarantee,” in the section of this report entitled "Management's Discussion and Analysis of the Account's Financial Conditions and Results of Operations." Among other things, this continued shortfall in the amount of liquid assets impaired management’s ability to consummate new transactions. If a significant amount of net participant transfers out of the Account were to recur, particularly in high volumes similar to those experienced in late 2008 and 2009, the Account may not have enough available liquid assets to pursue, or consummate, new investment opportunities presented to us that are otherwise attractive to the Account. This, in turn, could harm the Account’s returns. Even though net transfers out of the Account ceased in early 2010, there is no guarantee that redemption activity will not increase again, perhaps in a significant and rapid manner.
Alternatively, periods of significant net transfer activity into the Account can result in the Account holding a higher percentage of its net assets in publicly traded liquid non-real estate-related investments than the Account’s managers would target to hold under the Account’s long-term strategy. As of December 31, 2016, the Account’s non-real estate-related liquid assets comprised 16.7% of its net assets and the Account's real estate-related liquid assets comprised 4.4% of its net assets. At times, the portion of the Account’s net assets invested in these types of liquid instruments may exceed 25%, particularly if the Account receives a large inflow of money in a short period of time, coupled with a lack of attractive real estate-related investments on the market. Also, large inflows from participant transactions often occur in times of appreciating real estate values and pricing, which can render it challenging to execute on some transactions at ideal prices.
In an appreciating real estate market, generally, this large percentage of assets held in liquid investments and not in real estate and real estate-related investments may impair the Account’s overall returns. This scenario may be exacerbated in a low interest rate environment for U.S. Treasury securities and related highly liquid securities, such as has existed since 2009 and which may persist in the future. In addition, to manage cash flow, the Account may temporarily hold a higher percentage of its net assets in liquid real estate-related securities, such as REIT and CMBS securities, than its long-term targeted holdings in such securities, particularly during and immediately following times of significant net transfer activity into the Account. Such holdings could increase the volatility of the Account’s returns.
Risks of Borrowing. The Account acquires some of its properties subject to existing financing and from time to time borrows new funds at the time of purchase. Also, the Account may from time to time place new leverage on, increase the leverage already placed on, or refinance maturing debt on, existing properties the Account owns. Under the Account’s current investment guidelines, the Account intends to maintain its loan-to-value ratio at or below 30% (measured at the time of incurrence and after giving effect thereto). As of December 31, 2016, the Account’s loan-to-value ratio was approximately 15.0%. Also, the Account may borrow up to 70% of the then-current value of a particular property. Non-construction mortgage loans on a property will be non-recourse to the Account.
Among the risks of borrowing money or otherwise investing in a property subject to a mortgage are:
General Economic Conditions. General economic conditions, dislocations in the capital or credit markets generally or the market conditions then in effect in the real estate finance industry, may hinder the Account’s ability to obtain financing or refinancing for its property investments on favorable terms or at all, regardless of

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the quality of the Account’s property for which financing or refinancing is sought. Such unfavorable terms might include high interest rates, increased fees and costs and restrictive covenants applicable to the Account’s operation of the property. Longer term disruptions in the capital and credit markets as a result of uncertainty, changing or increased regulation, reduced alternatives, rising interest rates or failures of significant financial institutions could adversely affect our access to financing necessary to make profitable real estate investments. Our failure to obtain financing or refinancing on favorable terms due to the current state of the credit markets or otherwise could have an adverse impact on the returns of the Account. Also, the Account’s ability to secure financing may be impaired if negative marketplace effects, such as those which followed from the worldwide economic slowdown following the banking crisis of 2008 and the subsequent sovereign debt and banking difficulties recently experienced in parts of the eurozone, were to persist. These difficulties could include tighter lending standards instituted by banks and financial institutions, the reduced availability of credit facilities and project finance facilities from banks and the fall of consumer and/or business confidence.
Default Risk. The property or group of encumbered properties may not generate sufficient cash flow to support the debt service on the loan, the property may fail to meet certain financial or operating covenants contained in the loan documents and/or the property may have negative equity (i.e., the loan balance exceeds the value of the property) or inadequate equity. In any of these circumstances, we (or a joint venture in which we invest) may default on the loan, including due to the failure to make required debt service payments when due. If a loan is in default, the Account or the venture may determine that it is not economically desirable and/or in the best interests of the Account to continue to make payments on the loan (including accessing other sources of funds to support debt service on the loan), and/or the Account or venture may not be able to otherwise remedy such default on commercially reasonable terms or at all. In either case, the lender then could accelerate the outstanding amount due on the loan and/or foreclose on the underlying property, in which case the Account could lose the value of its investment in the foreclosed property. Further, any such default or acceleration could trigger a default under loan agreements in respect of other Account properties pledged as security for the defaulted loan or other loans. Finally, any such default could increase the Account’s borrowing costs, or result in less favorable terms, with respect to financing future properties.
Balloon Maturities. If the Account obtains a mortgage loan that involves a balloon payment, there is a risk that the Account may not be able to make the lump sum principal payment due under the loan at the end of the loan term, or otherwise obtain adequate refinancing on terms commercially acceptable to the Account or at all. The Account then may be forced to sell the property or other properties under unfavorable market conditions, restructure the loan on terms not advantageous to the Account, or default on its mortgage, resulting in the lender exercising its remedies, which may include repossession of the property, and the Account could lose the value of its investment in that property.
Variable Interest Rate Risk. If the Account obtains variable-rate loans, the Account’s returns may be volatile when interest rates are volatile. Further, to the extent that the Account takes out fixed-rate loans and interest rates subsequently decline, this may cause the Account to pay interest at above-market rates for a significant period of time. Any interest rate hedging activities the Account engages in to mitigate this risk may not fully protect the Account from the impact of interest rate volatility.
Variable Rate Demand Obligation (“VRDO”) Risk. To the extent the Account obtains financing pursuant to a variable rate demand obligation subject to periodic remarketing or similar mechanisms, the Account or the joint ventures in which it invests could face higher borrowing costs if the remarketing results in a higher prevailing interest rate. In addition, the terms of such variable rate obligations may allow the remarketing agent to cause the Account or venture to repay the loan on demand in the event insufficient market demand for such loans is present. In particular, RGM 42, LLC, a joint venture in which the Account holds a 70% interest, is the borrower under a VRDO loan program.
Valuation Risk. The market valuation of mortgage loans payable could have an adverse impact on the Account’s performance. Valuations of mortgage loans payable are generally based on the amount at which the liability could be transferred in a current transaction, exclusive of transaction costs, and such valuations are subject to a number of assumptions and factors with respect to the loan and the underlying property, a change in any of which could cause the value of a mortgage loan to fluctuate.

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A general disruption in the credit markets, such as the disruption experienced in 2008 and 2009, may aggravate some or all of these risks.
Risks of Joint Ownership. Investing in joint venture partnerships or other forms of joint property ownership may involve special risks, many of which are exacerbated when the consent of parties other than the Account is required to take action.
The co-venturer may have interests or goals inconsistent with those of the Account, including during times when a co-venturer may be experiencing financial difficulty. For example:
a co-venturer may desire a higher current income return on a particular investment than does the Account (which may be motivated by a longer-term investment horizon or exit strategy), or vice versa, which could cause difficulty in managing a particular asset;
a co-venturer may desire to maximize or minimize leverage in the venture, which may be at odds with the Account’s strategy;
a co-venturer may be more or less likely than the Account to agree to modify the terms of significant agreements (including loan agreements) binding the venture, or may significantly delay in reaching a determination whether to do so, each of which may frustrate the business objectives of the Account and/or lead to a default under a loan secured by a property owned by the venture; or
for reasons related to its own business strategy, a co-venturer may have different concentration standards as to its investments (geographically, by sector, or by tenant), which might frustrate the execution of the business plan for the joint venture.
The co-venturer may be unable to fulfill its obligations (such as to fund its pro rata share of committed capital, expenditures or guarantee obligations of the venture) during the term of such agreement or may become insolvent or bankrupt, any of which could expose the Account to greater liabilities than expected and frustrate the investment objective of the venture.
If a co-venturer doesn’t follow the Account’s instructions or adhere to the Account’s policies, the jointly owned properties, and consequently the Account, might be exposed to greater liabilities than expected.
The Account may have limited rights with respect to the underlying property pursuant to the terms of the joint venture, including the right to operate, manage or dispose of a property, and a co-venturer could have approval rights over the marketing or the ultimate sale of the underlying property.
The terms of the Account’s ventures often provide for complicated agreements which can impede our ability to direct the sale of the property owned by the venture at times the Account views most favorable. One such agreement is a buy-sell right, which may force us to make a decision (either to buy our co-venturer’s interest or sell our interest to our co-venturer) at inopportune times.
A co-venturer can make it harder for the Account to transfer its equity interest in the venture to a third party, which could adversely impact the valuation of the Account’s interest in the venture.
To the extent the Account serves as the general partner or managing member in a venture, it may owe certain contractual or other duties to the co-venturer, including fiduciary duties, which may present perceived or actual conflicts of interest in the management of the underlying assets. Such an arrangement could also subject the Account to liability to third parties in the performance of its duties as a general partner or managing member.
Risks of Developing or Redeveloping Real Estate or Buying Recently Constructed Properties. If the Account chooses to develop or redevelop a property or buys a recently constructed property, it may face the following risks:
There may be delays or unexpected increases in the cost of property development, redevelopment and construction due to strikes, bad weather, material shortages, increases in material and labor costs or other events.
There are risks associated with potential underperformance or non-performance by, and/or solvency of a contractor we select or other third party vendors involved in developing or redeveloping the property.
If the Account were viewed as developing or redeveloping underperforming properties, suffering losses on our investments, or defaulting on any loans on our properties, our reputation could be damaged. Damage to our reputation could make it more difficult to successfully develop or acquire properties in the future and to continue to grow and expand our relationships with our lenders, venture partners and tenants.

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Because external factors may have changed from when the project was originally conceived (e.g., slower growth in the local economy, higher interest rates, overbuilding in the area, or changes in the regulatory and permitting environment), the property may not attract tenants on the schedule we originally planned and/or may not operate at the income and expense levels first projected.
Risks with Purchase-Leaseback Transactions. To the extent the Account invested in a purchase-leaseback transaction, the major risk is that the third party lessee will be unable to make required payments to the Account. If the leaseback interest is subordinate to other interests in the real property, such as a first mortgage or other lien, the risk to the Account increases because the lessee may have to pay the senior lienholder to prevent foreclosure before it pays the Account. If the lessee defaults or the leaseback is terminated prematurely, the Account might not recover its investment unless the property is sold or leased on favorable terms.
Real Estate Regulatory Risks. Government regulation at the federal, state and local levels, including, without limitation, zoning laws, rent control or rent stabilization laws, laws regulating housing on the Account’s multifamily properties, the Americans with Disabilities Act, property taxes and fiscal, accounting, environmental or other government policies, could operate or change in a way that adversely affects the Account and its properties. For example, these regulations could raise the cost of acquiring, owning, improving or maintaining properties, present barriers to otherwise desirable investment opportunities or make it harder to sell, rent, finance, or refinance properties either on economically desirable terms, or at all, due to the increased costs associated with regulatory compliance.
Environmental Risks. The Account may be liable for damage to the environment or injury to individuals caused by hazardous substances used or found on its properties. Under various environmental regulations, the Account may also be liable, as a current or previous property owner or mortgagee, for the cost of removing or cleaning up hazardous substances found on a property, even if it did not know of and was not responsible for the hazardous substances. If any hazardous substances are present or the Account does not properly clean up any hazardous substances, or if the Account fails to comply with regulations requiring it to actively monitor the business activities on its premises, the Account may have difficulty selling or renting a property or be liable for monetary penalties. Further, environmental laws may impose restrictions on the manner in which a property may be used, the tenants which may be allowed, or the manner in which businesses may be operated, which may require the Account to expend funds in order to comply with these laws. These laws may also cause the most ideal use of the property to differ from that originally contemplated and as a result could impair the Account’s returns. The cost of any required clean-up relating to a single real estate investment (including remediating contaminated property) and the Account’s potential liability for environmental damage, including paying personal injury claims and performing under indemnification obligations to third parties, could exceed the value of the Account’s investment in a property, the property’s value, or in an extreme case, a significant portion of the Account’s assets. Finally, while the Account may from time to time acquire third-party insurance related to environmental risks, such insurance coverage may be inadequate to cover the full cost of any loss and would cause the Account to be reliant on the financial health of our third-party insurer at the time any such claim is submitted.
Uninsurable Losses. Certain catastrophic losses (e.g., from earthquakes, wars, terrorist acts, nuclear accidents, hurricanes, wind, floods or environmental or industrial hazards or accidents) may be uninsurable or so expensive to insure against that it is economically disadvantageous to buy insurance for them. Further, the terms and conditions of the insurance coverage the Account has on its properties, in conjunction with the type of loss actually suffered at a property, may subject the property, or the Account as a whole, to a cap on insurance proceeds that is less than the loss or losses suffered. If a disaster that we have not insured against occurs, if the insurance contains a high deductible, and/or if the aggregate insurance proceeds for a particular type of casualty are capped, the Account could lose some of its original investment and any future profits from the property. Also, the Account may not have sufficient access to internal or external sources of funding to repair or reconstruct a damaged property to the extent insurance proceeds do not cover the full loss. In addition, some leases may permit a tenant to terminate its obligations in certain situations, regardless of whether those events are fully covered by insurance. In that case, the Account would not receive rental income from the property while that tenant’s space is vacant, and any such vacancy might impact the value of that property. Finally, as with respect to all third-party insurance, we are reliant on the continued financial health of such insurers and their ability to pay on valid claims. If the financial health of an insurer were to deteriorate quickly, we may not be able to find adequate coverage from another carrier on favorable terms, which could adversely impact the Account’s returns.

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RISKS OF INVESTING IN REAL ESTATE INVESTMENT TRUST SECURITIES
The Account invests in registered and unregistered REIT securities for diversification, liquidity management and other purposes. The Account’s investment in REITs may also increase, as a percentage of net assets, during periods in which the Account is experiencing large net inflow activity, in particular due to net participant transfers into the Account. As of December 31, 2016, REIT securities comprised approximately 4.4% of the Account’s net assets. Investments in REIT securities are part of the Account’s real estate-related investment strategy and are subject to many of the same general risks associated with direct real property ownership. In particular, equity REITs may be affected by changes in the value of the underlying properties owned by the entity, while mortgage REITs may be affected by the quality of any credit extended. In addition to these risks, because REIT investments are securities and generally publicly traded, they may be exposed to market risk and potentially significant price volatility due to changing conditions in the financial markets and, in particular, changes in overall interest rates, regardless of the value of the underlying real estate such REIT may own. Also, sales of REIT securities by the Account for liquidity management purposes may occur at times when values of such securities have declined and it is otherwise an inopportune time to sell the security. Volatility in REITs can cause significant fluctuations in the Account’s AUV on a daily basis, as they are correlated to equity markets which have experienced significant day to day fluctuations over the past few years.
REITs do not pay federal income taxes if they distribute most of their earnings to their shareholders and meet other tax requirements. Many of the requirements to qualify as a REIT, however, are highly technical and complex. Failure to qualify as a REIT results in tax consequences, as well as disqualification from operating as a REIT for a period of time. Consequently, if the Account invests in securities of a REIT that later fails to qualify as a REIT, this may adversely affect the performance of our investment.
RISKS OF MORTGAGE-BACKED SECURITIES
The Account from time to time has invested in mortgage-backed securities and may in the future invest in such securities. Mortgage-backed securities, such as CMBS, are subject to many of the same general risks inherent in real estate investing, making mortgage loans and investing in debt securities. The underlying mortgage loans may experience defaults with greater frequency than projected when such mortgages were underwritten, which would impact the values of these securities, and could hamper our ability to sell such securities. In particular, these types of investments may be subject to prepayment risk or extension risk (i.e., the risk that borrowers will repay the loans earlier or later than anticipated). If the underlying mortgage assets experience faster than anticipated prepayments of principal, the Account could fail to recoup some or all of its initial investment in these securities, since the original price paid by the Account was based in part on assumptions regarding the receipt of interest payments. If the underlying mortgage assets are repaid later than anticipated, the Account could lose the opportunity to reinvest the anticipated cash flows at a time when interest rates might be rising. The rate of prepayments depends on a variety of geographic, social and other functions, including prevailing market interest rates and general economic factors. Further, it is possible that the U.S. government may change its support of, and policies regarding, Fannie Mae and Freddie Mac and, thus, the Account may be unable to acquire agency mortgage-backed securities in the future and even if the Account so acquired them, such changes may result in a negative effect on the pricing of such securities. Other policy changes impacting Fannie Mae and Freddie Mac and/or U.S. government programs related to mortgages that may be implemented in the future could create market uncertainty and affect the actual or perceived credit quality of issued securities, adversely affecting mortgage-backed securities through an increased risk of loss.
Importantly, the fair market value of these securities is also highly sensitive to changes in interest rates, liquidity of the secondary market and economic conditions impacting financial institutions and the credit markets generally. Note that the potential for appreciation, which could otherwise be expected to result from a decline in interest rates, may be limited by any increased prepayments. Further, volatility and disruption in the mortgage market and credit markets generally (such as was the case in 2008 and 2009) may cause there to be a very limited or even no secondary market for these securities and they therefore may be harder to sell than other securities.
RISKS OF U.S. GOVERNMENT AGENCY SECURITIES AND CORPORATE OBLIGATIONS
The Account invests in securities issued by U.S. government agencies and U.S. government-sponsored entities. Some of these issuers may not have their securities backed by the full faith and credit of the U.S. government, which could adversely affect the pricing and value of such securities. Also, the Account may invest in corporate obligations (such

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as commercial paper) and while the Account seeks out such holdings in short-term, higher-quality liquid instruments, the ability of the Account to sell these securities may be uncertain, particularly when there are general dislocations in the finance or credit markets. Any such volatility could have a negative impact on the value of these securities. Further, transaction activity may fluctuate significantly from time to time, which could impair the Account’s ability to dispose of a security at a favorable time, regardless of the credit quality of the underlying issuer. Also, inherent with investing in any corporate obligation is the risk that the credit quality of the issuer will deteriorate, which could cause the obligations to be downgraded and hamper the value or the liquidity of these securities. Finally, any further downgrades or threatened downgrades of the credit rating for U.S. government obligations generally could impact the pricing and liquidity of agency securities or corporate obligations in a manner which could impact the value of the Account’s units.
RISKS OF LIQUID INVESTMENTS
The Account’s investments in liquid investments (whether real estate-related, such as REITs, CMBS or some loans receivable, or non-real estate-related, such as cash equivalents and government securities, and whether debt or equity), are subject to the following general risks:
Financial / Credit Risk. The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value.
Market Volatility Risk. The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets even regardless of the credit quality or financial condition of the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility in recent years. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.
Interest Rate Volatility. The risk that interest rate volatility may affect the Account’s current income from an investment. As interest rates rise, the value of certain debt securities (such as those bearing lower fixed rates) held by the Account is likely to decrease. As of the date of this report, interest rates in the United States are at or near historic lows, which may increase the Account’s exposure to risks associated with rising interest rates.
Deposit / Money Market Risk. The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. In addition, there is some risk that investments held in money market accounts or funds can suffer losses.
Further, to the extent that a significant portion of the Account’s net assets, at any particular time, consist of cash, cash equivalents and non-real estate-related liquid securities, the Account’s returns may suffer as compared to the return that could have been generated by more profitable real estate-related investments. Such a potential negative impact on returns may be exacerbated in times of low prevailing interest rates payable on many classes of liquid securities, such as is the case as of the date hereof and which may persist in the future.

18



RISKS OF FOREIGN INVESTMENTS

In addition to other investment risks noted above, foreign investments present the following special risks:
The value of foreign investments or rental income can increase or decrease due to changes in currency exchange rates, currency exchange control or market control regulations, possible expropriation or confiscatory taxation, political, social, diplomatic and economic developments and foreign regulations. The Account translates into U.S. dollars purchases and sales of securities, income receipts and expense payments made in foreign currencies at the exchange rates prevailing on the respective dates of the transactions. The effect of any changes in currency exchange rates on investments and mortgage loans payable is included in the Account’s net realized and unrealized gains and losses. As such, fluctuations in currency exchange rates may impair the Account’s returns.
The Account may, but is not required to, hedge its exposure to changes in currency rates, which could involve extra costs. Further, any hedging activities might not be successful. Such hedges may also be subject to valuation changes. In addition, a lender to a foreign property owned by the Account could require the Account to compensate it for its loss associated with such lender’s hedging activities.
Non-U.S. jurisdictions may impose withholding taxes on the Account as a result of its investment activity in that jurisdiction. TIAA may be eligible for a foreign tax credit in respect of such tax paid by the Account and such credit (if available to TIAA) would be reimbursed to the Account. However, there may be circumstances where TIAA is unable to receive some or all of the benefit of a foreign tax credit and the Account would thus not receive reimbursement, which could harm the value of the Account’s units.
Foreign real estate markets may have different liquidity and volatility attributes than U.S. markets.
The regulatory environment in non-U.S. jurisdictions may disfavor owners and operators of real estate investment properties, resulting in less predictable and/or economically harmful outcomes if the Account were to face a significant dispute with a tenant or with a regulator itself.
The Account may be subject to increased risk of regulatory scrutiny pursuant to U.S. federal statutes, such as the Foreign Corrupt Practices Act, which, among other things, requires robust compliance and oversight programs to help prevent violations. The costs associated with maintaining such programs, in addition to costs associated with a potential regulatory inquiry, could impair the Account’s returns and divert management’s attention from other Account activities.
It may be more difficult to obtain and collect a judgment on foreign investments than on domestic investments, and the costs associated with contesting claims relating to foreign investments may exceed those costs associated with a similar claim on domestic investments.
We may invest from time to time in securities issued by (i) entities domiciled in foreign countries, (ii) domestic affiliates of such entities and/or (3) foreign domiciled affiliates of domestic entities. Such investments could be subject to the risks associated with investments subject to foreign regulation, including political unrest or the seizure, expropriation, repatriation or nationalization of the issuer’s assets. These events could depress the value of such securities and/or make such securities harder to sell on favorable terms, if at all.
RISKS OF INVESTING IN MORTGAGE LOANS AND RELATED INVESTMENTS
The Account’s investment strategy includes, to a limited extent, investments in mortgage loans (i.e., the Account serving as lender).
General Risks of Mortgage Loans. The Account will be subject to the risks inherent in making mortgage loans, including:
The borrower may default on the loan, requiring that the Account foreclose on the underlying property to protect the value of its mortgage loan. Since its mortgage loans are usually non-recourse, the Account must rely solely on the value of a property for its security. In addition, there is a risk of delay in exercising any contractual remedies due to actions of the borrower, including, without limitation, bankruptcy or insolvency of the borrower.
The larger the mortgage loan compared to the value of the property securing it, the greater the loan’s risk. Upon default, the Account may not be able to sell the property for its estimated or appraised value. Also, certain liens on the property, such as mechanic’s or tax liens, may have priority over the Account’s security interest.
A deterioration in the financial condition of tenants, which could be caused by general or local economic conditions or other factors beyond the control of the Account, or the bankruptcy or insolvency of a major tenant,

19



may adversely affect the income of a property, which could increase the likelihood that the borrower will default under its obligations.
The borrower may be unable to make a lump sum principal payment due under a mortgage loan at the end of the loan term, unless it can refinance the mortgage loan with another lender.
If interest rates are volatile during the loan period, the Account’s variable-rate mortgage loans could have volatile yields. Further, to the extent the Account makes mortgage loans with fixed interest rates, it may receive lower yields than that which is then available in the market if interest rates rise generally.
Interest Rate Risk. The risk that the value or yield of fixed-income investments may decline if interest rates change. In general, when prevailing interest rates decline, the market values of outstanding fixed-income investments (particularly those paying a fixed rate of interest) tend to increase while yields on similar newly issued fixed-income investments tend to decrease, which could adversely affect the Account’s income. Conversely, when prevailing interest rates increase, the market values of outstanding fixed-income investments (particularly those paying a fixed rate of interest) tend to decline while yields on similar newly issued fixed-income investments tend to increase. If a fixed-income investment pays a floating or variable rate of interest, changes in prevailing interest rates may increase or decrease the investment’s yield. Fixed-income investments with longer durations tend to be more sensitive to interest rate changes than shorter-term investments. Interest rate risk is generally heightened during periods when prevailing interest rates are low or negative. During periods of very low or negative interest rates, a fixed-income investment may not be able to maintain positive returns. In general, changing interest rates could have unpredictable effects on the markets and may expose fixed-income and related markets to heightened volatility.
Extension Risk. The risk that during periods of rising interest rates, borrowers pay off their mortgage loans later than expected, preventing the Account from reinvesting principal proceeds at higher interest rates, resulting in less income than potentially available. These risks are normally present in mortgage- backed securities and other asset-backed securities. For example, homeowners have the option to prepay their mortgages. Therefore, the duration of a security backed by home mortgages can lengthen depending on homeowner prepayment activity. A decline in the prepayment rate and the resulting increase in duration of fixed-income securities held by the Account can result in losses to the Account.
Prepayment Risks. The Account’s mortgage loan investments will usually be subject to the risk that the borrower repays a loan early. Also, the Account may be unable to reinvest the proceeds at as high an interest rate as the original mortgage loan rate, resulting in a decline in income.
Interest Limitations. The interest rate we charge on mortgage loans may inadvertently violate state usury laws that limit rates, if, for example, state law changes during the loan term. If this happens, the Account could incur penalties or may be unable to enforce payment of the loan.
Risks of Investing in Mezzanine Loans. The Account may invest from time to time in mezzanine loans to entities which own real estate assets. Generally these loans will be secured by a pledge of the equity securities of the entity, but not by a first lien security interest in the property itself. As such, the Account’s recovery in the event of an adverse circumstance at the property (such as a default under a mortgage loan on the property) will be subordinated to the recovery available to the first lien mortgage lender(s) to the property. The Account’s remedy may solely consist of foreclosing on the equity interest in the entity owning the property, and that equity interest will be junior in right of a recovery to a loan secured by the property owned by the entity. Also, as a subordinated lender, the Account may have limited rights to exercise control over the process by which the mortgage loan is restructured or the property is liquidated following a default. Any of these circumstances may result in the Account being unable to recover some or all of its original investment.
Risks of Participations. To the extent the Account invested in a participating mortgage, the following additional risks would apply:
The participation feature, in tying the Account’s returns to the performance of the underlying asset, might generate insufficient returns to make up for the higher interest rate the loan would have obtained without the participation feature.

20



In very limited circumstances, a court may characterize the Account’s participation interest as a partnership or joint venture with the borrower and the Account could lose the priority of its security interest or become liable for the borrower’s debts.
RISKS OF SECURITIES LENDING
In lending its securities, the Account bears the market risk with respect to the investment of collateral and the risk the borrower or Agent may default on its contractual obligations to the Account. Each Agent bears the risk that the borrower may default on its obligation to return the loaned securities, as the Agent is contractually obligated to indemnify the Account if, at the time of a default by a borrower, some or all of the loaned securities have not been returned.
CONFLICTS OF INTEREST WITHIN TIAA
General. TIAA and its affiliates (including TIAA-CREF Alternatives Advisors, LLC and Teachers Advisors, LLC, its wholly-owned subsidiaries and registered investment advisers, and TH Real Estate Global, its wholly-owned subsidiary) have interests in other real estate programs and accounts and also engage in other business activities. As such, they will have conflicts of interest in allocating their time between the Account’s business and these other activities. Also, the Account may be buying properties at the same time as TIAA affiliates that may have similar investment objectives to those of the Account. There is also a risk that TIAA will choose a property that provides lower returns to the Account than a property purchased by TIAA and its affiliates. Further, the Account will likely acquire properties in geographic areas where TIAA and its affiliates own or manage properties. In addition, the Account may desire to sell a property at the same time another TIAA affiliate is selling a property in an overlapping market. Conflicts could also arise because some properties owned or managed by TIAA and its affiliates may compete with the Account’s properties for tenants. Among other things, if one of the TIAA entities attracts a tenant that the Account is competing for, the Account could suffer a loss of revenue due to delays in locating another suitable tenant. TIAA has adopted allocation policies and procedures applicable to the purchasing conflicts scenario, but the resolution of such conflicts may be economically disadvantageous to the Account. As a result of TIAA’s and its affiliates’ obligations to TIAA itself and to other current and potential investment vehicles sponsored by TIAA affiliates with similar objectives to those of the Account, there is no assurance that the Account will be able to take advantage of every attractive investment opportunity that otherwise is in accordance with the Account’s investment objectives.
Liquidity Guarantee. In addition, as discussed elsewhere in this report, the TIAA General Account provides a liquidity guarantee to the Account. While an independent fiduciary is responsible for establishing a “trigger point” (a percentage of TIAA’s ownership of liquidity units beyond which TIAA’s ownership may be reduced at the fiduciary’s direction), there is no express cap on the amount TIAA may be obligated to fund under this guarantee. Further, the Account’s independent fiduciary oversees any redemption of TIAA liquidity units. TIAA’s ownership of liquidity units (including the potential for changes in its levels of ownership in the future) from time to time could result in the perception that TIAA is taking into account its own economic interests while serving as investment manager for the Account. In particular, the value of TIAA’s liquidity units fluctuates in the same manner as the value of accumulation units held by all participants. Any perception of a conflict of interest could cause participants to transfer accumulations out of the Account to another investment option, which could have an adverse impact on the Account’s ability to act most optimally upon its investment strategy. For a discussion of the relevant allocation policies and procedures TIAA has established as well as a summary of other conflicts of interest which may arise as a result of TIAA’s management of the Account, see “Establishing and Managing the Account—the Role of TIAA—Conflicts of Interest,” in the Account’s prospectus.
NO OPPORTUNITY FOR PRIOR REVIEW OF TRANSACTIONS
Investors do not have the opportunity to evaluate the economic or financial merit of the purchase, sale or financing of a property or other investment before the Account completes the transaction, so investors rely solely on TIAA’s judgment and ability to select investments consistent with the Account’s investment objective and policies. Further, the Account may change its investment objective and pursue specific investments in accordance with any such amended investment objective without the consent of the Account’s investors.

21



RISKS OF REGISTRATION UNDER THE INVESTMENT COMPANY ACT OF 1940
The Account has not registered, and management intends to continue to operate the Account so that it will not have to register, as an “investment company” under the Investment Company Act of 1940, as amended (the “Investment Company Act”). If the Account were obligated to register as an investment company, the Account would have to comply with a variety of substantive requirements under the Investment Company Act that impose, among other things, limitations on capital structure, restrictions on certain investments, compliance with reporting, record keeping, voting and proxy disclosure requirements and other rules and regulations that could significantly increase its operating expenses and reduce its operating flexibility. To maintain compliance with the exemptions from the Investment Company Act, the Account may be unable to sell assets it would otherwise want to sell and may be unable to purchase securities it would otherwise want to purchase, which might materially adversely impact the Account’s performance.
CYBERSECURITY RISKS
With the increased use of technologies such as the Internet to conduct business, the Account and its service providers (including, but not limited to, TIAA, Services, the independent fiduciary and the Account’s custodian and financial intermediaries) are susceptible to cybersecurity risks. In general, cyber-security attacks can result from infection by computer viruses or other malicious software or from deliberate actions or unintentional events, including gaining unauthorized access through “hacking” or other means to digital systems, networks, or devices that are used to service the Account’s operations in order to misappropriate assets or sensitive information, corrupt data, or cause operational disruption. Cybersecurity attacks can also be carried out in a manner that does not require gaining unauthorized access, including by carrying out a “denial-of-service” attack on the Account or its service providers’ websites. In addition, authorized persons could inadvertently or intentionally release and possibly destroy confidential or proprietary information stored on the Account’s systems or the systems of its service providers.
Cybersecurity failures by the Account or any of its service providers, or the issuers of any portfolio securities in which the Account invests (e.g., issuers of REIT stocks or debt securities), have the ability to result in disruptions to and impacts on business operations and may adversely affect the Account and the value of your accumulation units. Such disruptions or impacts may result in: financial losses; interference with the processing of contract transactions, including the processing of orders from TIAA’s website; interfere with the Account’s ability to calculate AUVs; barriers to trading and order processing; Account contract owners’ inability to transact business with the Account; violations of applicable federal and state privacy or other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs. The Account may incur additional, incremental costs to prevent and mitigate the risks of cybersecurity attacks or incidents in the future. The Account and its contract owners could be negatively impacted by such cyber-attacks or incidents. Although the Account has established business continuity plans and risk-based processes and controls to address such cybersecurity risks, there are inherent limitations in such plans and systems in part due to the evolving nature of technology and cybersecurity attack tactics. As a result, it is possible that the Account or the Account’s service providers will not be able to adequately identify or prepare for all cybersecurity attacks. In addition, the Account cannot directly control the cybersecurity plans or systems implemented by its service providers.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

22



ITEM 2. PROPERTIES.
THE PROPERTIES—GENERAL
In the table below, participants will find general information about each of the Account’s investments as of December 31, 2016. The Account’s investments include both properties that are wholly-owned by the Account and properties owned by the Account’s joint venture investments. Certain investments include a portfolio of properties.
Property
Location
Year
Built
Year
Purchased
Rentable
Area
(Sq. ft.)(1)
Percent
Leased
Annual Avg.
Base Rent
Per Leased
Sq. Ft.(2)
Fair
Value(3)
(in millions)
OFFICE PROPERTIES
1001 Pennsylvania Ave
Washington, D.C.
1987
2004
779,521

81.3
%
$
50.35

$
810.0

(4) 
Colorado Center(5)
Santa Monica, CA
1984
2004
1,127,893

67.4
%
40.61

567.8

 
Fourth & Madison
Seattle, WA
2002
2004
845,533

88.2
%
27.18

521.0

(4) 
99 High Street
Boston, MA
1971
2005
732,432

86.8
%
49.41

514.1

 
501 Boylston Street
Boston, MA
1940, 1961
2006
610,075

98.0
%
48.05

490.3

(4) 
780 Third Avenue
New York, NY
1984
1999
499,144

90.8
%
55.10

425.0

(4) 
701 Brickell Avenue
Miami, FL
1986
2002
677,667

90.7
%
34.97

380.7

(4) 
Lincoln Centre
Dallas, TX
1984
2005
1,625,465

86.6
%
22.49

347.0

 
Four Oaks Place LP(13)
Houston, TX
1983, 2016
2012
2,332,915

91.9
%
22.71

342.3

 
1900 K Street NW
Washington, D.C.
1996
2004
345,781

98.5
%
46.32

335.0

(4) 
55 Second Street
San Francisco, CA
2002
2014
379,328

92.7
%
39.66

335.0

(4) 
Wilshire Rodeo Plaza
Beverly Hills, CA
1935, 1984
2006
251,076

73.7
%
63.41

320.7

 
21 Penn Plaza
New York, NY
1931, 2012- 2014
2014
373,335

93.6
%
41.52

275.2

 
400 Fairview(12)
Seattle, WA
2015
2015
346,904

77.9
%
33.04

243.6

 
1401 H Street NW
Washington, D.C.
1992
2006
350,787

86.1
%
45.51

230.0

(4) 
One Boston Place(6)
Boston, MA
1970
2002
804,444

79.9
%
45.80

224.2

 
Fort Point Portfolio
Boston, MA
1890-1920, 1986-2010
2016
406,208

94.7
%
35.46

223.0

 
837 Washington
New York, NY
1938, 2012- 2014
2015
55,497

100.0
%
170.21

215.0

 
Foundry Square II(17)
San Francisco, CA
2002
2014
507,686

98.9
%
53.16

200.1

 
409-499 Illinois Street(20)
San Francisco, CA
2008, 2010
2015
463,985

99.0
%
48.69

196.8

 
225 Binney Street(19)
Cambridge, MA
2013
2015
305,212

100.0
%
40.50

194.9

 
Millennium Corporate Park
Redmond, WA
1999, 2000
2006
536,958

96.3
%
17.08

190.1

 
88 Kearny Street
San Francisco, CA
1986
1999
227,882

86.9
%
51.92

172.3

 
Castro Station
Mountain View, CA
2000, 2013
2015
114,809

93.6
%
77.88

158.2

 
Wilton Woods Corporate Campus
Wilton, CT
1974, 2001
2001
531,606

77.5
%
25.13

141.9

 
Campus Pointe 1(27)
San Diego, CA
1980, 2012
2016
449,759

99.4
%
27.20

137.5

 
Urban Centre
Tampa, FL
1984, 1987
2005
550,666

79.6
%
27.72

121.4

 
430 West 15th Street
New York, NY
1950
2016
98,087

100.0
%
84.11

116.1

 
Pacific Plaza
San Diego, CA
2000, 2002
2007
217,890

49.7
%
31.99

115.0

 
Campus Pointe 2(22)
San Diego, CA
1997, 2016
2016
305,006

100.0
%
36.83

85.7

 
The Ellipse at Ballston
Arlington, VA
1989
2006
196,676

85.3
%
43.49

79.8

 
1500 Owens(21)
San Francisco, CA
2009
2015
158,267

100.0
%
48.75

74.8

 
200 Middlefield Road
Menlo Park, CA
1967, 2012- 2013
2014
41,933

100.0
%
76.22

60.5

 
West Lake North Business Park
Westlake Village, CA
2000
2004
197,366

92.6
%
28.89

60.0

 

23



Property
Location
Year
Built
Year
Purchased
Rentable
Area
(Sq. ft.)(1)
Percent
Leased
Annual Avg.
Base Rent
Per Leased
Sq. Ft.(2)
Fair
Value(3)
(in millions)
Camelback Center
Phoenix, AZ
2001
2007
232,615

77.1
%
$
24.82

$
56.4

 
The Hub(25)
Long Island City, NY
1924
2016
296,632

52.6
%
14.35

54.9

 
8270 Greensboro Drive
McLean, VA
2000
2005
158,341

92.6
%
33.35

47.6

 
817 Broadway(26)
New York, NY
1900
2016
139,410

81.0
%
22.44

20.8

 
Subtotal—Office Properties
 
 
 
87.1
%
 
$
9,084.7

 
INDUSTRIAL PROPERTIES
 
 
 
 
Ontario Industrial Portfolio
Various, CA
1997-1998
1998, 2000, 2004
3,981,894

100.0
%
$
4.49

$
438.0

 
Dallas Industrial Portfolio
Dallas and Coppell, TX
1997-2001
2000-2002
3,684,941

98.5
%
2.62

201.3

 
Rancho Cucamonga Industrial Portfolio
Rancho Cucamonga, CA
2000-2002
2000, 2001, 2002, 2004
1,490,235

100.0
%
4.48

174.2

 
Great West Industrial Portfolio
Rancho Cucamonga and Fontana, CA
2004-2005
2008
1,358,925

100.0
%
4.16

166.1

 
Southern CA RA Industrial Portfolio
Los Angeles, CA
1982
2004
920,078

91.5
%
6.06

135.0

 
Pinto Business Park
Houston, TX
2014, 2015, 2016
2015, 2016
1,641,141

51.7
%
5.31

134.2

 
Cerritos Industrial Park
Cerritos, CA
1970-1977
2012
934,213

100.0
%
6.09

126.3

 
Rainier Corporate Park
Fife, WA
1991-1997
2003
1,104,399

94.8
%
5.00

104.0

 
Seneca Industrial Park
Pembroke Park, FL
1999-2001
2007
882,182

97.3
%
6.17

102.7

 
Amazon Distribution Center(28)
Teterboro, NJ
1958, 1974
2013
616,992

100.0
%
8.83

101.0

 
Weston Business Center
Weston, FL
1998-1999
2011
679,918

67.0
%
8.30

92.7

 
Shawnee Ridge Industrial Portfolio
Atlanta, GA
2000-2005
2005
1,422,922

100.0
%
3.61

86.7

 
Chicago Industrial Portfolio
Chicago and Joliet, IL
1997-2000
1998, 2000
1,427,748

96.9
%
3.02

85.5

 
Regal Logistics Campus
Seattle, WA
1999-2004
2005
968,535

100.0
%
4.28

83.1

 
Oakmont IE West Portfolio
Fontana, CA
2014-2015
2015
709,941

56.1
%
4.98

82.7

 
Chicago Caleast Industrial Portfolio
Chicago, IL
1974, 2005
2003
1,145,152

100.0
%
4.18

81.8

 
Northern CA RA Industrial Portfolio
Oakland, CA
1981
2004
657,602

94.3
%
6.32

76.7

 
South River Road Industrial
Cranbury, NJ
1999
2001
858,957

100.0
%
4.66

71.9

 
Northwest Houston Industrial Portfolio
Houston, TX
1981
2014
1,010,912

100.0
%
4.09

68.2

 
Atlanta Industrial Portfolio
Lawrenceville, GA
1996-1999
2000
1,295,440

95.9
%
2.98

62.8

 
Pinnacle Industrial Portfolio
Grapevine, TX
2003, 2004, 2006
2006
899,200

88.6
%
3.62

52.8

 
Ontario Mills Industrial Portfolio
Ontario, CA
2014
2014
435,733

100.0
%
5.08

52.0

 
200 Milik Street
Carteret, NJ
2013
2015
232,134

100.0
%
10.75

51.2

 
Stevenson Point
Newark, CA
2000
2015
312,885

100.0
%
9.08

49.3

 
Centre Pointe and Valley View
Los Angeles County, CA
1965, 1989
2004
307,685

93.8
%
6.14

42.8

 
Pacific Corporate Park
Fife, WA
2006
2012
388,783

100.0
%
4.64

42.0

 
Northeast RA Industrial Portfolio
Boston, MA
2000
2004
384,126

100.0
%
6.25

41.3

 
Landover Logistics
Landover, MD
2013
2014
360,550

46.4
%
7.84

39.8

 
Northwest RA Industrial Portfolio
Seattle, WA
1996
2004
312,321

100.0
%
5.46

31.7

 

24



Property
Location
Year
Built
Year
Purchased
Rentable
Area
(Sq. ft.)(1)
Percent
Leased
Annual Avg.
Base Rent
Per Leased
Sq. Ft.(2)
Fair
Value(3)
(in millions)
Beltway North Commerce Center
Houston, TX
2014
2015
352,000


$

$
19.5

 
Park 10 Distribution
Houston, TX
1980
2014
152,638

82.3
%
4.99

11.3

 
Subtotal—Industrial Properties
 
 
 
92.3
%
 
$
2,908.6

 
RETAIL PROPERTIES
 
 
 
Fashion Show(24)
Las Vegas, NV
1981
2016
1,911,837

97.5
%
$
35.70

$
839.1

 
The Florida Mall(8)
Orlando, FL
1986
2002
1,034,449

100.0
%
55.10

755.8

 
DDR Joint Venture(7)
Various, USA
Various
2007
8,551,095

95.4
%
12.18

552.8

 
The Forum at Carlsbad
Carlsbad, CA
2003
2011
263,708

98.5
%
38.89

221.5

(4) 
Miami International Mall(8)
Miami, FL
1982
2002
305,170

100.0
%
50.25

161.1

 
West Town Mall(8)
Knoxville, TN
1972
2002
961,143

96.6
%
18.79

154.4

 
Florida Retail Portfolio(9)
Various, FL
1974, 2005
2006
459,433

96.9
%
20.73

147.6

 
Pacific City(23)
Huntington Beach, CA
2015
2016
189,943

87.6
%
38.80

128.5

 
Valencia Town Center(16)
Valencia, CA
1991
2012
1,085,985

95.4
%
17.98

128.0

  
Westwood Marketplace
Los Angeles, CA
1950
2002
202,202

100.0
%
30.47

125.0

 
The Shops at Wisconsin Place
Chevy Chase, MD
2007-2010
2012
117,202

97.5
%
51.23

112.2

(14) 
Plaza America
Reston, VA
1995
2014
164,398

91.7
%
32.01

109.0

  
Marketfair
West Windsor, NJ
1987
2006
242,731

96.0
%
29.97

104.2

  
Charleston Plaza
Mountain View, CA
2006
2012
132,590

100.0
%
36.72

92.0

 
Mazza Gallerie
Washington, D.C.
1975
2004
294,112

85.8
%
14.18

78.0

  
South Denver Marketplace
Denver, CO
1996-1998
2013
261,135

100.0
%
16.15

73.0

  
Publix at Weston Commons
Weston, FL
2005
2006
126,922

100.0
%
28.42

73.0

  
Southside at McEwen
Franklin, TN
2012
2014
92,470

100.0
%
27.00

48.8

  
32 South State Street
Chicago, IL
1925
2016
96,354

100.0
%
26.84

46.5

(4) 
401 West 14th Street(18)
New York, NY
1923, 2007
2014
62,200

100.0
%
152.29

41.1

  
1619 Walnut Street
Philadelphia, PA
1937, 2013
2013
34,047

100.0
%
39.33

23.4

  
Subtotal—Retail Properties
 
 
 
96.5
%
 
$
4,015.0

  
OTHER COMMERCIAL PROPERTIES
 
 
 
425 Park Avenue(10)
New York, NY
N/A
2011
N/A

N/A

N/A

$
450.0

 
Storage Portfolio(11)
Various, USA
1972, 1990
2003
1,674,220

91.9
%
18.87

156.5

 
Subtotal—Other Commercial Properties
 
 
 
 
 
$
606.5

 
Subtotal—Commercial Properties
 
 
 
92.0
%
 
$
16,614.8

 
RESIDENTIAL PROPERTIES
 
 
 
 
Palomino Park
Highlands Ranch, CO
1996-2001
2005
N/A

95.5
%
N/A

$
314.1

(4) 
The Colorado
New York, NY
1987
1999
N/A

86.7
%
N/A

258.1

(4) 
The Corner
New York, NY
2010
2011
N/A

93.4
%
N/A

250.0

(4) 
The Woodley
Washington, D.C.
2014
2014
N/A

91.5
%
N/A

203.0

 
MiMA(15)
New York, NY
2010
2012
N/A

100.0
%
N/A

194.7

 
The Louis at 14th
Washington, D.C.
2013-2014
2014
N/A

91.8
%
N/A

183.2

 
Stella
Marina Del Rey, CA
2013
2013
N/A

93.0
%
N/A

173.1

 
Mass Court
Washington, D.C.
2004
2012
N/A

93.2
%
N/A

169.0

(4) 
250 North 10th Street
Brooklyn, NY
2014
2015
N/A

89.3
%
N/A

162.0

 
Houston Apartment Portfolio
Houston, TX
1984-2004
2006
N/A

99.2
%
N/A

159.3

 
BLVD63
San Diego, CA
2014
2016
N/A

100.0
%
N/A

157.0

 
The Manor at Flagler Village
Fort Lauderdale, FL
2014
2015
N/A

90.1
%
N/A

150.8

  
Holly Street Village
Pasadena, CA
1997
2013
N/A

87.4
%
N/A

146.0

 

25



Property
Location
Year
Built
Year
Purchased
Rentable
Area
(Sq. ft.)(1)
Percent
Leased
Annual Avg.
Base Rent
Per Leased
Sq. Ft.(2)
Fair
Value(3)
(in millions)
The Legacy at Westwood
Los Angeles, CA
2001
2002
N/A

91.8
%
N/A

$
142.1

(4) 
Larkspur Courts
Larkspur, CA
1991
1999
N/A

93.9
%
N/A

140.5

 
The Palatine
Arlington, VA
2008
2011
N/A

95.8
%
N/A

130.9

(4) 
Kierland Apartment Portfolio
Scottsdale, AZ
1996-2000
2006
N/A

100.0
%
N/A

127.9

(4) 
Ashford Meadows Apartments
Herndon, VA
1998
2000
N/A

91.8
%
N/A

107.2

(4) 
Union - South Lake Union
Seattle, WA
2012
2015
N/A

94.4
%
N/A

105.3

  
South Florida Apartment Portfolio
Boca Raton and Plantation, FL
1986
2001
N/A

92.4
%
N/A

104.1

  
Casa Palma
Coconut Creek, FL
2014
2015
N/A

89.7
%
N/A

97.0

  
Circa Green Lake
Seattle, WA
2009
2012
N/A

93.0
%
N/A

92.5

  
Regents Court
San Diego, CA
2001
2002
N/A

91.6
%
N/A

89.9

(4) 
Township Apartments
Redwood City, CA
2014
2014
N/A

92.4
%
N/A

89.6

  
Oceano at Warner Center
Woodland Hills, CA
2012
2013
N/A

93.0
%
N/A

88.3

  
The Caruth
Dallas, TX
1999
2005
N/A

93.2
%
N/A

84.3

(4) 
The Residences at the Village of Merrick Park
Coral Gables, FL
2003
2012
N/A

92.5
%
N/A

74.1

  
Greene Crossing
Columbia, SC
2015
2016
N/A

95.2
%
N/A

65.8

 
Prescott Wallingford Apartments
Seattle, WA
2012
2012
N/A

93.5
%
N/A

58.8

 
The Manor Apartments
Plantation, FL
2013
2014
N/A

93.3
%
N/A

53.6

 
The Pepper Building
Philadelphia, PA
1927, 2010
2011
N/A

93.5
%
N/A

52.9

 
The Maroneal
Houston, TX
1998
2005
N/A

87.7
%
N/A

52.1

 
The Cordelia
Portland, OR
2014
2015
N/A

91.9
%
N/A

50.0

 
Westcreek
Westlake Village, CA
1988
1997
N/A

90.5
%
N/A

48.2

 
Cliffs at Barton Creek
Austin, TX
1994
2013
N/A

86.6
%
N/A

45.8

 
The Ashton
Washington, D.C.
2009
2015
N/A

95.9
%
N/A

39.2

 
Subtotal—Residential Properties
 
92.5
%
 
$
4,460.4

 
Total—All Properties
92.1
%
 
$
21,075.2

 
(1) 
The square footage is an approximate measure and is subject to periodic remeasurement.
(2) 
Based on total contractual rent for leases existing as of December 31, 2016. The contractual rent can be either on a gross or net basis, depending on the terms of the leases.
(3) 
Fair value reflects the value determined in accordance with the procedures described in the Account’s prospectus and as stated in the Notes to Consolidated Financial Statements.
(4) 
Property is subject to a mortgage. The fair value shown represents the Account’s interest gross of debt.
(5) 
This property is held in a joint venture with EOP Operating LP. Fair value shown reflects the value of the Account’s 50% interest in the joint venture, net of debt.
(6) 
The Account owns a 50.25% interest in a private REIT, which owns this property. A 49.70% interest is owned by Societe Immobiler Trans-Quebec, and 0.05% is owned by 100 individuals. Fair value shown reflects the value of the Account’s interest in the joint venture.
(7) 
This investment is held in a joint venture with DDR Corp. and consists of 25 properties located in 11 states. Fair Value shown reflects the value of the Account’s 85% interest in the joint venture, net of debt.
(8) 
These investments are held in a joint venture with the Simon Property Group. Fair value shown reflects the value of the Account’s 50% interest in the joint venture, net of debt.
(9) 
This investment is held in a joint venture with Weingarten Realty Investors and contains two neighborhood and/or community shopping centers located in the Orlando and Tampa, Florida areas. Fair value shown reflects the value of the Account’s 80% interest in the joint venture.
(10) 
Represents a fee interest encumbered by a ground lease real estate investment.
(11) 
This investment is held in a joint venture with Storage USA. Fair value shown reflects the value of the Account’s 75% interest in the joint venture, net of debt.
(12) 
This property is held in a joint venture with SCD 400 Fairview, LLC. Fair value shown reflects the value of the Account’s 90% interest in the joint venture, net of debt.
(13) 
This property is held in a joint venture with Allianz US Private REIT LP. Fair value shown reflects the Account’s 51% interest in the joint venture, net of debt.

26



(14) 
Fair value shown reflects both the retail property and the Account’s 33.3% interest in a joint venture investment.
(15) 
This property is held in a joint venture with Related 42, LLC. Fair value shown reflects the value of the Account’s 70% interest in the joint venture, net of debt.
(16) 
This property is held in a joint venture with Westfield Holdings, LP. Fair value shown reflects the value of the Account’s 50% interest in the joint venture, net of debt.
(17) 
This property is held in a joint venture with Norges Bank Investment Management. Fair value shown reflects the value of the Account’s 50.1% interest in the joint venture, net of debt.
(18) 
This property is held in a joint venture with Taconic Investment Partners LLC. Fair value shown reflects the value of the Account’s 42.2% interest in the joint venture, net of debt.
(19) 
This property is held in a joint venture with ARE - MA Region No. 54 LLC. Fair value shown reflects the value of the Account’s 70% interest in the joint venture, net of debt.
(20) 
This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account’s 40% interest in the joint venture, net of debt.
(21) 
This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account’s 49.9% interest in the joint venture, net of debt.
(22) 
This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account's 40.47% interest in the joint venture, net of debt.
(23) 
This property is held in a joint venture with DJM Capital Partners. Fair value shown reflects the value of the Account's 70% interest in the joint venture, net of debt.
(24) 
This property is held in a joint venture with General Growth Properties. Fair value shown reflects the value of the Account's 50% interest in the joint venture, net of debt.
(25) 
This property is held in a joint venture with Metro Realty Holdings. Fair value shown reflects the value of the Account's 95% interest in the joint venture, net of debt.
(26) 
This property is held in a joint venture with Taconic Investment Partners, LLC. Fair value shown reflects the value of the Account's 61.46% interest in the joint venture, net of debt.
(27) 
This property is held in a joint venture with Alexandria Real Estate Equities. Fair value shown reflects the value of the Account's 45% interest in the joint venture, net of debt.
(28) 
Investment was formerly named Mohawk Distribution Center.
Commercial (Non-Residential) Investments
At December 31, 2016, the Account held 93 commercial (non-residential) investments in its portfolio, including a portfolio of storage facilities located throughout the United States. Twenty-three of these investments were held through joint ventures, and 22 were subject to mortgages (including 12 joint venture investments). Although the terms vary under each lease, certain expenses, such as real estate taxes and other operating expenses are paid or reimbursed in whole or in part by the tenants.
Management believes that the Account’s portfolio is diversified by both property type and geographic location. The portfolio consists of:
Office. 38 investments containing approximately 18.3 million square feet located in nine states and the District of Columbia.
Industrial. 31 investments containing approximately 30.9 million square feet located in nine states.
Retail. 22 investments containing approximately 18.4 million square feet located in 16 states and the District of Columbia. One of the retail investments is an 85% interest in a portfolio containing 25 individual retail shopping centers primarily located throughout the Eastern and Southern regions.
Other-Land (425 Park Avenue). The Account has a fee interest encumbered by a ground lease real estate investment located in New York, NY.
Other-Storage. The Account has a 75% interest in a portfolio of storage facilities located throughout the United States containing approximately 1.7 million square feet.

27



Major Tenants: The following tables list the Account’s ten most significant tenants based on the total space they occupied as of December 31, 2016 in each of the Account’s commercial property types.
Major Office Tenants
 
Occupied Sq. Ft.
 
% of
Total Rentable
Area of
Account’s
 Office Properties  
 
% of
Total Rentable
Area of
Non-Residential
Properties
BHP Petroleum (Americas), Inc.(1)
 
1,313,885

 
7.2
%
 
1.9
%
Microsoft Corporation(2)
 
479,193

 
2.6
%
 
0.7
%
Eli Lilly and Company(1)
 
429,553

 
2.4
%
 
0.6
%
Crowell & Moring LLP(2)
 
399,471

 
2.2
%
 
0.6
%
Atmos Energy Corporation(2)
 
312,238

 
1.7
%
 
0.5
%
Biogen MA Inc(1)
 
305,212

 
1.7
%
 
0.5
%
Bank of New York Mellon(1)
 
281,071

 
1.5
%
 
0.4
%
Fibrogen Inc(1)
 
238,707

 
1.3
%
 
0.4
%
Bridgewater Associates LP(2)
 
227,883

 
1.2
%
 
0.3
%
Pearson Education Inc(2)
 
225,299

 
1.2
%
 
0.3
%
Major Industrial Tenants
 
Occupied Sq. Ft.
 
% of
Total Rentable
Area of
Account’s
Office Properties
 
% of
Total Rentable
Area of
Non-Residential
Properties
Wal-Mart Stores, Inc.(2)
 
1,099,112

 
3.6
%
 
1.6
%
Regal West Corporation(2)
 
968,535

 
3.1
%
 
1.4
%
Restoration Hardware, Inc.(2)
 
886,052

 
2.9
%
 
1.3
%
Kumho Tire U.S.A. Inc.(2)
 
830,485

 
2.7
%
 
1.2
%
Exel, Inc.(2)
 
800,000

 
2.6
%
 
1.2
%
Del Monte Fresh Product, N.A., Inc.(2)
 
689,660

 
2.2
%
 
1.0
%
Amazon.com(2)
 
684,988

 
2.2
%
 
1.0
%
R.R Donnelley & Sons Company(2)
 
659,157

 
2.1
%
 
1.0
%
Rheem Sales Company, Inc.(2)
 
656,600

 
2.1
%
 
1.0
%
Global Equipment Company, Inc.(2)
 
647,228

 
2.1
%
 
1.0
%
Major Retail Tenants
 
Occupied Sq. Ft.
 
% of
Total Rentable
Area of
Account’s
Office Properties
 
% of
Total Rentable
Area of
Non-Residential
Properties
Dick's Sporting Goods, Inc.(1)
 
415,902

 
2.3
%
 
0.6
%
Kohl's Corporation(1)
 
349,777

 
1.9
%
 
0.5
%
Ross Stores, Inc.(1)
 
346,072

 
1.9
%
 
0.5
%
J.C. Penney Corporation, Inc(1)
 
327,027

 
1.8
%
 
0.5
%
Sears, Roebuck & Co. (1)
 
304,465

 
1.7
%
 
0.5
%
The Neiman Marcus Group Inc.(3)
 
291,314

 
1.6
%
 
0.4
%
Nordstrom Inc.(3)
 
278,688

 
1.5
%
 
0.4
%
PetSmart, Inc.(3)
 
264,119

 
1.4
%
 
0.4
%
Michael's Stores, Inc.(3)
 
236,646

 
1.3
%
 
0.4
%
Wal-Mart Stores, Inc.(2)
 
209,751

 
1.1
%
 
0.3
%
(1) 
Tenant occupied space within joint venture investments.
(2) 
Tenant occupied space within wholly-owned property investments.
(3) 
Tenant occupied space within wholly-owned property investments and joint venture investments.

28



The following tables list the rentable area for long term leases subject to expiring leases during the next ten years and an aggregate figure for expirations in 2027 and after, in the Account’s commercial (non-residential) properties that are both wholly-owned by the Account and held within the Account’s joint venture investments. While many of the leases contain renewal options with varying terms, these charts assume that none of the tenants exercise their renewal options, including those with terms that expired on December 31, 2016 or are month to month leases.
Office Properties
Year of
Lease Expiration
 
Number of
Tenants with
Expiring Leases
 
Rental Income
Associated with Such
Leases (in millions)(1)
 
Expiring Rent as
a % of
Rental Revenue(1)
 
Rentable Area
Subject to Expiring
Leases (sq. ft.)
 
% of
Total Rentable
Area of Account’s
Office Properties
Represented by
Expiring Leases
2017
 
155

 
$
20.8

 
1.4
%
 
1,314,447

 
7.2
%
2018
 
142

 
35.9

 
2.5
%
 
1,966,102

 
10.8
%
2019
 
115

 
36.7

 
2.6
%
 
1,379,365

 
7.5
%
2020
 
106

 
27.4

 
1.9
%
 
1,353,970

 
7.4
%
2021
 
103

 
34.7

 
2.4
%
 
2,136,162

 
11.7
%
2022
 
68

 
21.4

 
1.5
%
 
1,266,230

 
6.9
%
2023
 
37

 
24.2

 
1.7
%
 
1,135,123

 
6.2
%
2024
 
43

 
29.4

 
2.0
%
 
1,232,281

 
6.7
%
2025
 
46

 
51.4

 
3.6
%
 
908,774

 
5.0
%
2026
 
23

 
36.2

 
2.5
%
 
1,235,690

 
6.8
%
Thereafter
 
34

 
71.1

 
5.0
%
 
2,003,405

 
11.0
%
Total
 
872

 
$
389.2

 
27.1
%
 
15,931,549

 
87.2
%
Industrial Properties
Year of
Lease Expiration
 
Number of
Tenants with
Expiring Leases
 
Rental Income
Associated with Such
Leases (in millions)(1)
 
Expiring Rent as
a % of
Rental Revenue(1)
 
Rentable Area
Subject to Expiring
Leases (sq. ft.)
 
% of
Total Rentable
Area of Account’s
Industrial Properties
Represented by
Expiring Leases
2017
 
89

 
$
8.2

 
0.6
%
 
3,254,873

 
10.5
%
2018
 
83

 
12.1

 
0.8
%
 
5,153,191

 
16.7
%
2019
 
87

 
8.7

 
0.6
%
 
2,557,918

 
8.3
%
2020
 
60

 
16.4

 
1.1
%
 
5,642,327

 
18.2
%
2021
 
44

 
10.7

 
0.7
%
 
3,915,291

 
12.7
%
2022
 
26

 
7.3

 
0.5
%
 
4,372,421

 
14.1
%
2023
 
8

 
2.5

 
0.2
%
 
1,237,319

 
4.0
%
2024
 
4

 
1.6

 
0.1
%
 
690,208

 
2.2
%
2025
 
6

 
3.6

 
0.3
%
 
460,410

 
1.5
%
2026
 
5

 
5.3

 
0.4
%
 
1,176,157

 
3.8
%
Thereafter
 
3

 
0.5

 
%
 
55,454

 
0.2
%
Total
 
415

 
$
76.9

 
5.3
%
 
28,515,569

 
92.2
%

29



Retail Properties
Year of
Lease Expiration
 
Number of
Tenants with
Expiring Leases
 
Rental Income
Associated with Such
Leases (in millions)(1)
 
Expiring Rent as
a % of
Rental Revenue(1)
 
Rentable Area
Subject to Expiring
Leases (sq. ft.)
 
% of
Total Rentable
Area of Account’s
Retail Properties
Represented by
Expiring Leases
2017
 
268

 
$
13.6

 
0.9
%
 
1,621,676

 
8.8
%
2018
 
254

 
18.1

 
1.3
%
 
1,665,860

 
9.1
%
2019
 
223

 
15.4

 
1.1
%
 
1,749,541

 
9.5
%
2020
 
222

 
16.7

 
1.2
%
 
1,456,968

 
7.9
%
2021
 
265

 
20.1

 
1.4
%
 
2,309,103

 
12.6
%
2022
 
150

 
11.4

 
0.8
%
 
1,901,141

 
10.3
%
2023
 
132

 
11.5

 
0.8
%
 
1,192,618

 
6.5
%
2024
 
120

 
13.4

 
0.9
%
 
744,482

 
4.1
%
2025
 
139

 
20.5

 
1.4
%
 
976,008

 
5.3
%
2026
 
101

 
9.4

 
0.7
%
 
983,263

 
5.4
%
Thereafter
 
68

 
15.0

 
1.0
%
 
1,129,481

 
6.1
%
Total
 
1,942

 
$
165.1

 
11.5
%
 
15,730,141

 
85.6
%
(1) 
Rental income includes income from wholly-owned properties, which is shown as Rental income on the Consolidated Statements of Operations, as well as income from properties held in joint venture investments, which is included in Income from real estate joint ventures and limited partnerships on the Consolidated Statements of Operations.
Certain leases provide for additional rental amounts based upon the recovery of actual operating expenses in excess of specified base amounts, sales volume or contractual increases as defined in the lease agreement. These contractual contingent rentals are not included in the table above.
The following table details the leasing activity during the year ended December 31, 2016.
 
Leasing Activity
(sq. ft.)
 
Vacant space beginning of year
4,860,768

 
Vacant space acquired during the year
956,346

 
Vacant space disposed of during the year
(66,094
)
 
Vacant space placed into service during the year
(8,460,733
)
 
Expiring leases during the year
8,092,614

 
Vacant space end of year
5,382,901

 
Average remaining lease term*
51 Months

 
*Includes office, industrial and retail properties.
Based on leases in place at December 31, 2016, leases representing approximately 9.2% of net rentable area are scheduled to expire throughout 2017. Rents associated with such lease expirations are generally at or below prevailing market rents in the Account’s primary metropolitan markets.
Residential Properties
The Account’s residential property investment portfolio consisted of 36 properties as of December 31, 2016, comprised of first class or luxury multi-family, garden, mid-rise, and high-rise apartment buildings, including one investment held in a joint venture. The portfolio contains approximately 11,750 units located in 11 states and the District of Columbia. The portfolio was 92.5% leased as of December 31, 2016. Eleven of the residential properties in the portfolio are subject to mortgages, including one joint venture investment. The complexes generally contain one to three bedroom apartment units with a range of amenities, such as patios or balconies, washers and dryers, and central air conditioning. Many of these apartment communities have on-site fitness facilities, including some with swimming pools. Rents on each of the properties tend to be comparable with competitive communities and are not subject to rent regulation. The

30



Account is responsible for the expenses of operating its residential properties. As of December 31, 2016, the Account’s residential properties had an aggregate fair value of approximately $4.5 billion.
The following table contains detailed information regarding the apartment complexes in the Account’s portfolio as of December 31, 2016.
Property
 
Location
 
Number
Of Units
 
Average
Unit Size
(Sq. Ft.)
 
Avg. Rent
Per Unit/
Per Month
Palomino Park(1)
 
Highlands Ranch, CO
 
1,184

 
1,100

 
1,658

Houston Apartment Porfolio(1)
 
Houston, TX
 
877

 
1,158

 
1,722

Greene Crossing
 
Columbia, SC
 
726

 
367

 
747

Kierland Apartment Portfolio(1)
 
Scottsdale, AZ
 
723

 
1,048

 
1,316

South Florida Apartment Portfolio(1)
 
Boca Raton and Plantation, FL
 
550

 
888

 
1,343

MiMA
 
New York, NY
 
500

 
740

 
5,099

Ashford Meadows Apartments
 
Herndon, VA
 
440

 
1,050

 
1,712

The Manor at Flagler Village
 
Fort Lauderdale, FL
 
382

 
964

 
2,309

Holly Street Village
 
Pasadena, CA
 
374

 
879

 
2,209

Mass Court
 
Washington, D.C.
 
370

 
834

 
2,782

Casa Palma
 
Coconut Creek, FL
 
350

 
1,123

 
1,908

The Caruth
 
Dallas, TX
 
338

 
1,168

 
2,095

BLVD63
 
San Diego, CA
 
332

 
1,250

 
3,452

The Maroneal
 
Houston, TX
 
309

 
928

 
1,590

Union - South Lake Union
 
Seattle, WA
 
284

 
696

 
2,065

The Louis at 14th
 
Washington, D.C.
 
268

 
665

 
3,075

The Palatine
 
Arlington, VA
 
260

 
1,055

 
2,587

Regents Court
 
San Diego, CA
 
251

 
886

 
2,131

Larkspur Courts
 
Larkspur, CA
 
247

 
1,001

 
3,271

Oceano at Warner Center
 
Woodland Hills, CA
 
244

 
935

 
2,170

Stella
 
Marina Del Rey, CA
 
244

 
970

 
3,373

250 North 10th Street
 
Brooklyn, NY
 
233

 
676

 
3,614

The Woodley
 
Washington, D.C.
 
212

 
1,117

 
4,631

Cliffs at Barton Creek
 
Austin, TX
 
209

 
953

 
1,555

Circa Green Lake
 
Seattle, WA
 
199

 
765

 
2,101

The Corner
 
New York, NY
 
196

 
791

 
6,164

The Manor
 
Plantation, FL
 
194

 
979

 
1,950

The Pepper Building
 
Philadelphia, PA
 
184

 
817

 
1,820

The Legacy at Westwood
 
Los Angeles, CA
 
183

 
1,183

 
4,667

The Colorado
 
New York, NY
 
173

 
873

 
6,220

Prescott Wallingford Apartments
 
Seattle, WA
 
154

 
663

 
1,810

The Cordelia
 
Portland, OR
 
135

 
667

 
1,757

Township Apartments
 
Redwood City, CA
 
132

 
914

 
3,565

Westcreek
 
Westlake Village, CA
 
126

 
951

 
2,530

The Residences at the Village of Merrick Park
 
Coral Gables, FL
 
120

 
1,231

 
3,384

The Ashton
 
Washington, D.C.
 
49

 
1,612

 
4,646

(1) 
Represents a portfolio containing multiple properties.

31



ITEM 3. LEGAL PROCEEDINGS.
The Account is party to various claims and routine litigation arising in the ordinary course of business. Management of the Account does not believe that the results of any such claims or litigation, individually or in the aggregate, will have a material effect on the Account’s business, financial position or results of operations.
ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.


32



PART II

ITEM 5. MARKET FOR THE REGISTRANT’S SECURITIES, RELATED STOCKHOLDER MATTERS, AND ISSUER PURCHASES OF EQUITY SECURITIES.
Market Information. There is no established public trading market for securities issued by the Account. Accumulation units in the Account are sold to eligible participants at the Account’s current accumulation unit value, which is based on the value of the Account’s then current net assets and are redeemable in accordance with the terms of the participant’s contract. For the period from January 1, 2016 to December 31, 2016, the high and low accumulation unit values for the Account were $381.636 and $362.267, respectively. For the period January 1, 2015 to December 31, 2015, the high and low accumulation unit values for the Account were $362.925 and $335.860, respectively.
Holders. The approximate number of Account contract owners at December 31, 2016&