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

FORM 10-K

(Mark One)

S ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2008

OR

£ 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; 333-149862

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 £  NO S

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 £  NO S

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 S  NO £

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:  S Not Applicable

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):

(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 £  NO S

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

TABLE OF CONTENTS

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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 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 designed as an option for retirement and tax-deferred savings plans for employees of nonprofit institutions. TIAA offers the Account under the following annuity contracts:

Investors should note that state regulatory approval may be pending for certain of these contracts and they may not currently be available in every state.

The Account is regulated by the State of New York Insurance Department (NYID) and the insurance departments of some 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.

Investment Objective. The Real Estate Account seeks favorable long-term returns primarily through rental income and appreciation of real estate investments owned by the Account. The Account will also invest in 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 expense needs.

Investment Strategy. The Account intends to have between 75% and 85% of its 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. The Account’s principal strategy is to purchase direct ownership interests in income-producing real estate, such as office, industrial, retail, and multi-family residential properties. The Account from time to time will also make foreign investments, which, together with foreign real estate related and foreign liquid investments, are expected to comprise no more than 25% of the Account’s total assets.

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The Account can also invest in other real estate or real estate-related investments through joint ventures, real estate partnerships or real estate equity securities. To a limited extent, the Account can also invest in conventional mortgage loans, participating mortgage loans, common or preferred stock of companies whose operations involve real estate (i.e., that primarily own or manage real estate), and collateralized mortgage obligations, including commercial mortgage-backed securities and other similar instruments.

The Account will invest the remaining portion of its assets in liquid investments; namely, securities issued by U.S. government agencies or U.S. government sponsored entities and corporate debt securities, money market instruments, and, at times, stock of companies that do not primarily own or manage real estate. The amount the Account has invested in real estate and real estate-related investments at a given time will vary depending on its liquidity position (including the Account’s obligations to meet participant redemption requests) as well as market conditions and real estate prospects, among other factors.

There will be periods of time (such as in the fourth quarter of 2008 and in early 2009) during which the Account’s liquid investments will comprise less than 15% of its total assets, especially during and immediately following periods of significant net participant outflows. As discussed in more detail under “Liquidity Guarantee” below, and pursuant to its existing liquidity guarantee obligation, TIAA has agreed to purchase accumulation units issued by the Account in the event the Account has insufficient cash and liquid investments to ensure the ability, on its own, to fund participant transfer, redemption or withdrawal requests. This liquidity guarantee was first exercised in December 2008.

In some circumstances, the Account can increase the portion of its assets invested in debt securities or money market instruments above 25%. This could happen, for example, if the Account receives a large inflow of money in a short period of time, there is a lack of attractive real estate investments available on the market, or the Account anticipates a need to have more cash available.

The amount the Account invests in real estate and real estate-related investments at a given time will vary depending on its liquidity position (including the Account’s obligation to meet participant redemption requests) as well as market conditions and real estate prospects, among other factors.

More detailed information concerning the composition of the Account’s properties, including the Account’s foreign investments and information regarding significant tenants in the Account’s properties, is contained below under the heading “Item 2. Properties.”

Net Assets and Portfolio Investments. As of December 31, 2008, the Account’s net assets totaled approximately $11.5 billion. At December 31, 2008, the Account held a total of 108 real estate property investments (including its interests in 12 real estate-related joint ventures). As of that date, the Account also held investments in a mortgage loan receivable, representing 0.54% of Total Investments, real estate limited partnerships, representing 2.15% of Total Investments, commercial paper representing 1.84% of Total Investments, and government agency notes, representing 1.99% of Total Investments.

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 and in the Account’s prospectus (as supplemented from time to time).

Personnel and Management. The Real Estate Account does not directly employ any persons nor does the Account have its own management or board of directors. Rather, TIAA employees, under the direction and control of TIAA’s Board of Trustees and Investment Committee thereof, manage the investment of the Account’s assets pursuant to investment management procedures adopted by TIAA for the Account. TIAA and TIAA-CREF Individual & Institutional Services, LLC (“Services”), a wholly-owned subsidiary of TIAA, provide all portfolio accounting, custodial, distribution, administrative and related services for the Account at cost.

Appraisals and Valuations. The Account will rely on TIAA’s own analysis, normally along with an independent external appraisal, in connection with the purchase of a property by the Account. The Account will normally receive an independent external appraisal performed by a third party appraisal firm at or before the time it buys a real estate asset, and the Account also generally obtains an independent appraisal when it makes mortgage loans.

Subsequently, each of the Account’s real properties are appraised, and mortgage loans are valued, at least once every calendar quarter. Effective with the second quarter of 2009, each of the Account’s real estate

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properties are appraised each quarter by an independent external state-certified (or its foreign equivalent) appraiser (which we refer to in this Form 10-K 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 quarterly appraisal of each real estate property, 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. 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. 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 (any accumulation units that are purchased by TIAA are generally referred to as “liquidity units”). 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.

Importantly, however, 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. The Account pays TIAA for the liquidity guarantee through a daily deduction from the Account’s net assets. As a result of significant net participant transfers throughout 2008 (in particular, in the second half of 2008), and pursuant to this liquidity guarantee obligation, the TIAA general account purchased an aggregate of $155.6 million of accumulation units issued by the Account on December 24, 2008. Subsequent to December 24, 2008, and through March 18, 2009, the TIAA general account has purchased an additional $787.0 million in the aggregate of accumulation units in a number of separate transactions. As of the date of filing this Form 10-K, no accumulation units have been redeemed by TIAA. As of the date of this Form 10-K, management cannot predict the extent to which future accumulation unit purchases will be required under this liquidity guarantee, nor can management predict when such liquidity units will be redeemed in part, or in full. Please refer to the “Liquidity and Capital Resources” section in “Management’s Discussion and Analysis of the Account’s Financial Condition and Results of Operations” for full disclosure surrounding the liquidity guarantee.

Independent Fiduciary. Because TIAA’s ability to purchase and sell liquidity units raises certain technical issues under Employee Retirement Income Security Act of 1974, as amended (“ERISA”), TIAA applied for and received 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. Real Estate Research Corporation, a real estate consulting firm whose principal offices are located in Chicago, Illinois, was appointed as independent fiduciary effective March 1, 2006 (which appointment was renewed in December 2008) and currently serves as the Account’s independent fiduciary. The independent fiduciary’s responsibilities include:

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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 addition, as set forth in PTE 96-76, the independent fiduciary’s responsibilities include:

As of the date of this Form 10-K, the independent fiduciary, which has the right to adjust the trigger point, has established the trigger point at 45% of the outstanding accumulation units and it will continue to monitor TIAA’s ownership interest in the Account and provide further recommendations as necessary. As of December 31, 2008, TIAA owned 1.4% of the outstanding accumulation units of the Account and as of March 18, 2009, TIAA owned 8.7% of the outstanding accumulation units of the Account.

Available Information. The Account’s annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, 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-cref.org. Information contained on this website is expressly not incorporated by reference into this Annual Report on Form 10-K.

ITEM 1A. RISK FACTORS.

The value of an investment in the Account will fluctuate based on the value of the Account’s assets and the income the assets generate. Participants may lose money by investing in the Account. The value of an 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. 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 participants should consider the specific risks presented below before investing in the Account. Please refer to the section entitled “Statements Regarding Forward-Looking Information,” 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 annual report, the substantial majority of the Account’s net assets are comprised 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:

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•				the availability of financing;
•				an oversupply of, or a reduced demand for, certain types of real estate properties;
•				business closings, industry or sector slowdowns, employment losses and related factors;
•				natural disasters, 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 market value of the Account’s real properties or interests in investment vehicles (such as limited partnerships) which directly hold real properties.

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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, the leases may allow other tenants in a retail property to terminate their leases, reduce or withhold rental payments. The insolvency and/or closing of an anchor tenant may also cause such tenants 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, 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 in the future. This competition may limit the Account’s ability to lease space, increase its costs of securing tenants, 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, 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.
•				Terrorism and Acts of War and Violence. Terrorist attacks may harm our property investments. The Account cannot assure participants that there will not be further terrorist attacks against the United States, 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 and worldwide financial markets and 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.

General Risks of Selling Real Estate Investments: Among the risks of selling real estate investments are:

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•				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.

Valuation and Appraisal Risks: Investments in the Account’s assets are stated at fair value which is defined as the most probable price for which a property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value, 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. Recent disruptions in the macroeconomy, real estate markets and the credit markets have led to a significant decline in transaction activity in a number of markets and sectors and the lack of observable transaction data may have made it more difficult for an appraisal to determine the fair value of the Account’s real estate.

Further, as the Account generally obtains appraisals on a quarterly basis, there may be circumstances in the interim period between the appraisals 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 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 receive more than their pro rata share of the value of the Account’s assets, to the detriment of other non-redeeming participants. 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 receive 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 have purchased more than their pro rata share of the value of the Account’s assets.

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 annual report, the Account intends to hold between 15 and 25 percent of its assets in investments other than real estate, primarily comprised of liquid investments. These liquid assets are intended to be available to purchase real estate properties in accordance with the Account’s investment objective and strategy and to meet the Account’s expense needs and participant redemption requests. During 2008 (and in particular, the second half of 2008), the Account experienced significant net participant transfers out of the Account. Due in large part to this activity, the Account’s liquid assets as of December 31, 2008 declined to approximately 4.0% of the Account’s total investments and the TIAA general account’s liquidity guarantee was initially executed in December 2008. See “Liquidity Guarantee” in Item 1 of this Annual Report above.

If the amount of net participant transfers out of the Account were to continue, particularly at a rate similar to 2008, the Account may not have enough available liquid assets to pursue, or consummate, new investment opportunities presented that are otherwise attractive to the Account. This, in turn, could harm the Account’s returns. Management cannot predict with precision whether the level of net participant transfers will stabilize in the near term. Additionally, even if net transfers out of the Account ceased for a period of time, there is no guarantee that redemption activity would not increase again, in a significant and rapid manner.

Risks of Borrowing: The Account acquires some of its properties subject to existing financing or by borrowing new funds at the time of purchase, and may from time to time place new leverage on, increase the

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leverage already placed on, or refinance maturing debt on, existing properties the Account owns. The Account may incur indebtedness, in the aggregate, either directly or through its joint venture investments, an amount up to 30% of the Account’s total net assets (measured at the time of incurrence), and the Account may borrow up to 70% of the then-current value of a particular property. Among the risks of borrowing money and investing in a property subject to a mortgage are:

A general disruption in the credit markets, such as the credit markets have been recently experiencing, may aggravate some or all of these risks.

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 residential 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 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

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businesses may be operated, which may require the Account to expend funds. 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 cleanup 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.

Uninsurable Losses: Certain catastrophic losses (e.g., from earthquakes, wars, terrorist acts, nuclear accidents, 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, and, depending on the insurance which the Account has on its properties, may be subject to aggregate caps on proceeds. If a disaster that we have not insured against occurs, if the insurance contains a high deductible, 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. Further, the Account may not have sufficient access to 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.

Risks of Developing Real Estate or Buying Recently Constructed Properties: If the Account chooses to develop a property or buys a recently constructed property, it may face the following risks:

Risks of Joint Ownership: Investing in joint venture partnerships or other forms of joint property ownership may involve special risks.

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.

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RISKS OF MAKING MORTGAGE LOAN INVESTMENTS

The Account’s investment strategy includes, to a limited extent, investments in mortgage loans (i.e., the Account serving as lender):

RISKS OF INVESTING IN REAL ESTATE INVESTMENT TRUST (“REIT”) SECURITIES

Investments in REIT securities 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, 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.

In addition, REITs are tax regulated entities established to invest in real estate-related assets. REITs do not pay federal income taxes if they distribute most of their earnings to their shareholders and meet other tax requirements. As a result, REITs are subject to tax risk in continuing to qualify as a REIT.

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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 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 the Account’s 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.

Importantly, the 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 has recently been the case) 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.

CONFLICTS OF INTEREST WITHIN TIAA

TIAA and its affiliates (including Teachers Advisors, Inc., its wholly owned subsidiary and a registered investment adviser) have interests in other real estate programs and accounts and also engage in other business activities and 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 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 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 other current and potential TIAA-sponsored investment vehicles 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.

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 invests in corporate obligations (such 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, such as has recently been the case. Any such volatility could have a negative impact on the value of these securities. Further, transaction activity generally 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. Further, inherent with investing in any corporate obligation is the risk that the credit quality of the issuer will

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deteriorate, which could cause the obligations to be downgraded, and hamper the value or the liquidity of these securities.

RISKS OF LIQUID INVESTMENTS

The Account’s investments in marketable securities and mortgage loans receivable are subject to the following general risks:

Further, to the extent that a significant portion of the Account’s net assets at any particular time are comprised of cash, cash equivalents and marketable securities, the Account’s returns may suffer as compared to the return that could have been generated by more profitable real estate related investments.

RISKS OF FOREIGN INVESTMENTS

In addition to other investment risks noted above, foreign investments present the following special risks:

NO OPPORTUNITY FOR PRIOR REVIEW OF PURCHASE

Investors do not have the opportunity to evaluate the economic or financial merit of the purchase of a property or other investment before the Account completes the purchase, so investors will need to 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.

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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”). Generally, a company is an “investment company” and required to register under the Investment Company Act if, among other things, it holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities, or it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and owns or proposes to acquire investment securities having a value exceeding 40% of the value of such company’s total assets (exclusive of government securities and cash items) on an unconsolidated basis.

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.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not applicable.

ITEM 2. PROPERTIES.

THE PROPERTIES—IN GENERAL

In the table below, participants will find general information about each of the Account’s property investments as of December 31, 2008. The Account’s property investments include both properties that are wholly-owned by the Account and properties owned by the Account’s joint venture investments. Certain property investments are comprised of a portfolio of properties.

15

Property		Location		Year Built(1)		Year Purchased(2)		Rentable Area (Sq. ft.)(3)							Percent Leased							Annual Average Base Rent Per Leased Sq. Ft.(4)							Market Value(5)
Wilshire Rodeo Plaza		Beverly Hills, CA		1935, 1984		2006					264,287							98	%						44.69							213,783,319	(6)
Mellon Financial Center at One Boston Place(13)		Boston, MA		1970(11)		2002					788,364							98	%						45.99							212,083,264
1401 H Street NW		Washington, D.C.		1992		2006					350,635							100	%						33.42							194,600,000	(6)
Ten & Twenty Westport Road		Wilton, CT		1974(11); 2001		2001					538,840							100	%						29.93							174,400,000
Millennium Corporate Park		Redmond, WA		1999, 2000		2006					536,884							97	%						14.81							162,192,911
980 9th Street and 1010 8th Street(14)		Sacramento, CA		1992		2005					455,606							92	%						26.37							151,600,000
Urban Centre		Tampa, FL		1984, 1987		2005					547,979							89	%						22.40							113,274,489
Treat Towers(15)		Walnut Creek, CA		1999		2003					367,313							83	%						23.78							105,074,348
Pacific Plaza		San Diego, CA		2000, 2002		2007					215,758							63	%						22.23							104,969,706	(6)
Inverness Center		Birmingham, AL		1980-1985		2005					903,857							99	%						12.09							102,891,256
88 Kearny Street		San Francisco, CA		1986		1999					228,358							83	%						40.40							99,815,000
Morris Corporate Center III		Parsippany, NJ		1990		2000					526,052							81	%						20.51							94,955,176
The Ellipse at Ballston		Arlington, VA		1989		2006					194,914							98	%						32.75							84,018,202
Prominence in Buckhead(15)		Atlanta, GA		1999		2003					423,916							95	%						28.69							78,209,416
Oak Brook Regency Towers		Oakbrook, IL		1977(11)		2002					402,318							83	%						13.44							75,936,788
Parkview Plaza		Oakbrook, IL		1990		1997					264,461							100	%						16.63							65,846,414
The North 40 Office Complex		Boca Raton, FL		1983, 1984		2006					350,000							89	%						11.01							64,397,949
Camelback Center		Phoenix, AZ		2001		2007					231,345							94	%						22.94							58,000,000
8270 Greensboro Drive		McLean, VA		2000		2005					158,110							100	%						36.86							57,000,000
West Lake North Business Park		Westlake Village, CA		2000		2004					198,558							88	%						22.55							54,424,547
One Virginia Square		Arlington, VA		1999		2004					116,077							100	%						38.43							51,796,610
Capitol Place		Sacramento, CA		1988(11)		2003					161,051							97	%						28.87							50,000,000
The Pointe on Tampa Bay		Tampa, FL		1982(11)		2002					250,357							97	%						23.08							49,700,000
Centerside I		San Diego, CA		1982		2004					202,913							60	%						18.31							46,400,000
Wellpoint		Westlake Village, CA		1986 1998		2006					181,000							100	%						16.04							46,000,000
3 Hutton Centre		Santa Ana, CA		1985(11)		2003					197,819							52	%						13.89							45,709,764
4200 West Cypress Street		Tampa, FL		1989		2003					219,815							100	%						23.61							41,568,436
Park Place on Turtle Creek		Dallas, TX		1986		2006					177,169							87	%						21.06							40,094,406
Preston Sherry Plaza		Dallas, TX		1986		2007					147,008							89	%						22.43							38,400,000	(6)
Tysons Executive Plaza II(16)		McLean, VA		1988		2000					257,740							86	%						25.93							36,047,976
Needham Corporate Center		Needham, MA		1987		2001					138,259							89	%						21.04							32,493,814
Creeksides at Centerpoint		Kent, WA		1985		2006					218,712							67	%						10.41							27,200,000
Subtotal—Office Properties																		92	%											$		6,994,022,998
INDUSTRIAL PROPERTIES
Ontario Industrial Portfolio(16)		Various, CA		1997-1998		1998, 2000, 2004					3,981,894							78	%				$		3.29					$		278,000,000	(6)

16

Property		Location		Year Built(1)		Year Purchased(2)		Rentable Area (Sq. ft.)(3)							Percent Leased							Annual Average Base Rent Per Leased Sq. Ft.(4)							Market Value(5)
Dallas Industrial Portfolio(18) (19)		Dallas and Coppell, TX		1997-2001		2000-2002					3,684,941							91	%						2.68							141,328,444
Southern California RA Industrial Portfolio		Los Angeles, CA		1982		2004					920,078							91	%						5.67							107,218,320
Rancho Cucamonga Industrial Portfolio(20)		Rancho Cucamonga, CA		2000-2002		2000; 2001; 2002; 2004					1,490,235							62	%						2.13							102,300,000
Seneca Industrial Park		Pembroke Park, FL		1999-2001		2007					882,182							83	%						5.66							101,296,137
Great West Industrial Portfolio		Rancho Cucamonga and Fontana, CA		2004-2005		2008					1,369,645							100	%						2.63							93,600,000
Rainier Corporate Park		Fife, WA		1991-1997		2003					1,104,646							99	%						3.90							81,034,580
Chicago Industrial Portfolio(19)		Chicago and Joliet, IL		1997-2000		1998;2000					1,427,699							97	%						4.07							78,022,333
Shawnee Ridge Industrial Portfolio		Atlanta, GA		2000-2005		2005					1,422,922							100	%						3.32							69,000,000
IDI National Portfolio(21)		Various, U.S.		1999-2004		2004					3,655,671							95	%						3.08							67,730,752
Regal Logistics Campus		Seattle, WA		1999-2004		2005					968,535							100	%						4.15							67,000,000
Chicago CALEast Industrial Portfolio(22)		Chicago, IL		1974-2005		2003					1,145,152							100	%						3.75							63,931,502
Northern California RA Industrial Portfolio(19)		Oakland, CA		1981		2004					657,602							78	%						3.70							63,456,497
Atlanta Industrial Portfolio(19)		Lawrenceville, GA		1996-1999		2000					1,295,440							97	%						2.73							54,001,468
New Jersey CALEast Industrial Portfolio		Cranbury, NJ		1982-1989		2003					807,773							100	%						4.05							49,000,000
South River Road Industrial		Cranbury, NJ		1999		2001					858,957							53	%						1.58							43,872,143
GE Appliance East Coast Distribution Facility		Perryville, MD		2003		2005					1,004,000							100	%						2.82							40,500,000
Pinnacle Industrial/DFW Trade Center		Grapevine. TX		2003, 2004, 2006		2006					899,200							100	%						3.04							38,732,826
Northeast RA Industrial Portfolio		Boston, MA		2000		2004					384,000							75	%						4.42							30,793,863
Centre Pointe and Valley View		Los Angeles County, CA		1965-1989		2004					307,685							88	%						5.08							29,000,000
Broadlands Business Park		Elkton, MD		2006		2006					756,600							100	%						2.85							27,519,795
Northwest RA Industrial Portfolio		Seattle, WA		1996		2004					312,321							100	%						4.65							24,100,000
Summit Distribution Center		Memphis, TN		2002		2003					708,532							100	%						2.60							22,700,000
Konica Photo Imaging Headquarters		Mahwah, NJ		1999		1999					168,000							0	%						—							18,300,000
Airways Distribution Center		Memphis, TN		2005		2006					556,600							100	%						2.42							17,400,000
UPS Distribution Facility		Fernley, NV		1998		1998					256,000							100	%						3.90							12,100,000
Subtotal—Industrial Properties																		89	%											$		1,721,938,660
RETAIL PROPERTIES
DDR Joint Venture(23)		Various		Various		2007					16,183,158							92	%				$		10.99					$		712,773,185
The Florida Mall(25)		Orlando, FL		1986(11)		2002					919,826(25	)						99	%						42.57							281,940,801
Printemps de l’Homme		Paris, FR		1930		2007					142,363							100	%						87.19							247,620,812	(8)