10-Q

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10 - Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 2006

[  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________________ to ________________________

Commission File Numbers 33-92990, 333-13477, 333-22809, 333-59778, 333-83964,
333-113602, and 333-121493

TIAA REAL ESTATE ACCOUNT
(Exact name of registrant as specified in its charter)

NEW YORK
(State or other jurisdiction of
incorporation or organization)

NOT APPLICABLE
(IRS Employer Identification No.)

C/O TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NEW YORK
(address of principal executive offices)

10017-3206
(Zip code)

(212) 490-9000
(Registrant’s telephone number including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

                 Yes [X]      No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

               [  ]  Large filer     [  ]  Accelerated filer     [X]  Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

                 Yes [  ]    No [X]

PART I. FINANCIAL INFORMATION

Item 1.   FINANCIAL STATEMENTS.

INDEX TO UNAUDITED FINANCIAL STATEMENTS
OF TIAA REAL ESTATE ACCOUNT
JUNE 30, 2006

	Page
Statements of Assets and Liabilities	3
Statements of Operations	4
Statements of Changes in Net Assets	5
Statements of Cash Flows	6
Notes to the Financial Statements	7
Statement of Investments	13

2

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES

		June 30, 2006		December 31, 2005
		(Unaudited)
ASSETS
Investments, at value:
Real estate properties
(cost: $8,467,013,184 and $7,386,769,868)	$	9,491,566,609	$	7,977,600,751
Real estate joint ventures and limited partnerships
(cost: $1,117,996,240 and $1,086,041,287)		1,607,594,611		1,418,583,542
Marketable securities:
Real estate related
(cost: $531,438,696 and $433,482,015)		584,125,292		448,662,598
Other
(cost: $1,875,041,558 and $1,640,676,190)		1,874,997,180		1,640,894,515
Mortgage loan receivable
(cost: $75,000,000)		75,000,000		—
Total investments
(cost: $12,066,489,678 and $10,546,969,360)		13,633,283,692		11,485,741,406
Cash		142,418,378		1,211,370
Due from investment advisor		16,423,504		7,717,256
Other		205,619,317		190,756,381
TOTAL ASSETS		13,997,744,891		11,685,426,413
LIABILITIES
Mortgage loans payable—Note 5		1,214,965,581		973,502,186
(Principal outstanding: $1,224,556,283 and $941,135,080)
Payable for securities transactions		4,564,958		993,809
Accrued real estate property level expenses		305,754,966		145,789,277
Security deposits held		18,001,715		16,430,039
TOTAL LIABILITIES		1,543,287,220		1,136,715,311
NET ASSETS
Accumulation Fund		12,086,166,207		10,227,655,797
Annuity Fund		368,291,464		321,055,305
TOTAL NET ASSETS	$	12,454,457,671	$	10,548,711,102
NUMBER OF ACCUMULATION UNITS
OUTSTANDING—Notes 6 and 7		46,613,298		42,623,491
NET ASSET VALUE, PER ACCUMULATION UNIT—Note 6	$	259.29	$	239.95

See notes to the financial statements.

3

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF OPERATIONS
(Unaudited)

		For the						For the
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2006			2005			2006			2005
INVESTMENT INCOME
Real estate income net:
Rental income	$	197,334,348		$	145,633,320		$	386,184,677		$	285,712,598
Real estate property level expenses and taxes:
Operating expenses		47,292,424			36,947,719			96,282,898			71,205,870
Real estate taxes		26,982,852			21,962,749			51,168,767			41,438,579
Interest expense		16,763,342			9,482,304			32,684,110			17,497,914
Total real estate property level expenses and taxes		91,038,618			68,392,772			180,135,775			130,142,363
Real estate income, net		106,295,730			77,240,548			206,048,902			155,570,235
Income from real estate joint ventures and limited
partnerships		13,642,202			18,706,861			24,553,167			35,897,681
Interest		29,954,222			11,251,893			52,569,354			17,126,514
Dividends		4,811,864			4,170,430			7,223,519			7,924,557
TOTAL INCOME		154,704,018			111,369,732			290,394,942			216,518,987
Expenses—Note 2:
Investment advisory charges		5,958,340			4,312,907			12,550,605			8,327,349
Administrative and distribution charges		11,010,515			5,970,843			20,006,720			11,927,701
Mortality and expense risk charges		1,652,512			1,457,241			3,540,505			2,752,778
Liquidity guarantee charges		927,841			823,551			1,862,232			1,404,892
TOTAL EXPENSES		19,549,208			12,564,542			37,960,062			24,412,720
INVESTMENT INCOME, NET		135,154,810			98,805,190			252,434,880			192,106,267
NET REALIZED AND UNREALIZED
GAIN (LOSS) ON INVESTMENTS
AND MORTGAGE LOANS PAYABLE
Net realized gain (loss) on investments:
Real estate properties		(6,050	)		20,030,078			(635,693	)		20,013,809
Marketable securities		2,236,929			15,110,869			(2,578,279	)		20,064,403
Total realized gain (loss) on investments:		2,230,879			35,140,947			(3,213,972	)		40,078,212
Net change in unrealized appreciation
(depreciation) on:
Real estate properties		294,852,148			165,498,449			409,493,184			220,291,140
Real estate joint ventures and limited partnerships		103,907,559			41,014,573			170,093,354			60,525,182
Marketable securities		(13,280,130	)		24,513,609			40,767,042			(6,916,377	)
Mortgage loans payable		23,899,362			(3,066,525	)		24,236,605			(29,666,525	)
Net change in unrealized appreciation on
investments and mortgage loans payable		409,378,939			227,960,106			644,590,185			244,233,420
NET REALIZED AND UNREALIZED GAIN
ON INVESTMENTS AND
MORTGAGE LOANS PAYABLE		411,609,818			263,101,053			641,376,213			284,311,632
NET INCREASE IN NET ASSETS RESULTING
FROM OPERATIONS	$	546,764,628		$	361,906,243		$	893,811,093		$	476,417,899

See notes to the financial statements.

4

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSETS
(Unaudited)

		For the						For the
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2006			2005			2006			2005
FROM OPERATIONS
Investment income, net	$	135,154,810		$	98,805,190		$	252,434,880		$	192,106,267
Net realized gain (loss) on investments		2,230,879			35,140,947			(3,213,972	)		40,078,212
Net change in unrealized appreciation on
investments and mortgage loans payable		409,378,939			227,960,106			644,590,185			244,233,420
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS		546,764,628			361,906,243			893,811,093			476,417,899
FROM PARTICIPANT TRANSACTIONS
Premiums		266,744,344			246,067,474			530,995,943			471,857,748
Net transfers from TIAA		41,751,124			55,210,135			100,092,647			91,330,741
Net transfers from CREF Accounts		346,049,773			485,466,880			610,430,314			746,952,115
Net transfers from (to) TIAA-CREF
Institutional Mutual Funds		(4,696,416	)		11,355,472			(6,025,065	)		12,516,400
Annuity and other periodic payments		(12,949,809	)		(8,740,524	)		(26,603,840	)		(17,590,450	)
Withdrawals and death benefits		(97,942,813	)		(54,107,707	)		(196,954,523	)		(106,550,404	)
NET INCREASE IN NET ASSETS
RESULTING FROM PARTICIPANT
TRANSACTIONS		538,956,203			735,251,730			1,011,935,476			1,198,516,150
NET INCREASE IN NET ASSETS		1,085,720,831			1,097,157,973			1,905,746,569			1,674,934,049
NET ASSETS
Beginning of period		11,368,736,840			7,823,326,062			10,548,711,102			7,245,549,986
End of period	$	12,454,457,671		$	8,920,484,035		$	12,454,457,671		$	8,920,484,035

See notes to the financial statements.

5

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF CASH FLOWS
(Unaudited)

		For the						For the
		Three Months Ended						Six Months Ended
		June 30,						June 30,
		2006			2005			2006			2005
CASH FLOWS FROM OPERATING
ACTIVITIES
Net increase in net assets resulting
from operations	$	546,764,628		$	361,906,243		$	893,811,093		$	476,417,899
Adjustments to reconcile net increase
in net assets resulting from operations
to net cash used in operating activities:
Purchase of real estate properties		(904,294,008	)		(297,563,731	)		(938,986,655	)		(315,950,189	)
Capital improvements on real
estate properties		(29,659,721	)		(14,829,750	)		(49,084,038	)		(34,379,424	)
Proceeds from sale of real estate
properties		—			117,886,588			—			121,711,588
(Increase) decrease in other investments .		341,206,070			(585,934,891	)		(354,631,987	)		(1,166,699,570	)
Increase in mortgage loan receivable		(75,000,000	)		—			(75,000,000	)		—
Increase in other assets		(34,643,521	)		(19,675,968	)		(23,569,185	)		(17,740,969	)
Increase in amounts due to bank		—			—			—			(231,476	)
(Decrease) increase in accrued real
estate property level expenses		190,516,570			4,805,920			159,965,693			(4,051,870	)
Increase in security deposits held		2,000,298			567,906			1,571,676			706,801
Increase (decrease) in other liabilities		(22,775,523	)		(22,162,626	)		3,571,148			43,542,636
Net realized (gain) loss
on total investments		(2,230,879	)		(35,140,947	)		3,213,972			(40,078,212	)
Unrealized gain on total investments and
mortgage loans payable		(409,378,939	)		(227,960,106	)		(644,590,185	)		(244,233,420	)
NET CASH USED IN
OPERATING ACTIVITIES		(397,495,025	)		(718,101,362	)		(1,023,728,468	)		(1,180,986,206	)
CASH FLOWS FROM FINANCING
ACTIVITIES
Mortgage loan acquired		—			—			153,000,000			—
Premiums		266,744,344			246,067,474			530,995,943			471,857,748
Net transfers from TIAA		41,751,124			55,210,135			100,092,647			91,330,741
Net transfers from CREF Accounts		346,049,773			485,466,880			610,430,314			746,952,115
Net transfers from (to) TIAA-CREF
Institutional Mutual Funds		(4,696,416	)		11,355,472			(6,025,065	)		12,516,400
Annuity and other periodic payments		(12,949,809	)		(8,740,524	)		(26,603,840	)		(17,590,450	)
Withdrawals and death benefits		(97,942,813	)		(54,107,707	)		(196,954,523	)		(106,550,404	)
NET CASH PROVIDED BY
FINANCING ACTIVITIES		538,956,203			735,251,730			1,164,935,476			1,198,516,150
NET INCREASE IN CASH		141,461,178			17,150,368			141,207,008			17,529,944
CASH
Beginning of period		957,200			379,576			1,211,370			—
End of period	$	142,418,378			17,529,944		$	142,418,378		$	17,529,944
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest	$	17,158,966			9,411,395		$	32,760,009		$	17,427,005
Debt assumed in acquisition of properties	$	112,700,000		$	185,000,000		$	112,700,000		$	185,000,000

See notes to the financial statements.

6

TIAA REAL ESTATE ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS (Unaudited)

Note 1—Significant Accounting Policies

The TIAA Real Estate Account (“Account”) is a segregated investment account of Teachers Insurance and Annuity Association of America (“TIAA”) and was established by resolution of TIAA’s Board of Trustees on February 22, 1995, under the insurance laws of the State of New York, for the purpose of funding variable annuity contracts issued by TIAA. The investment objective of the Account is a favorable long-term rate of return primarily through rental income and capital appreciation from real estate investments owned by the Account. The Account holds real estate properties directly and through wholly-owned subsidiaries. The Account also holds interests in limited partnerships and owns real estate joint ventures in which the Account does not hold a controlling interest. Such joint ventures are not consolidated for financial statement purposes. The Account also invests in publicly-traded securities and other instruments to maintain adequate liquidity for operating expenses, capital expenditures and to make benefit payments. The financial statements were prepared in accordance with U.S. generally accepted accounting principles which may require the use of estimates made by management. Actual results may vary from those estimates. The following is a summary of the significant accounting policies of the Account.

Basis of Presentation: The accompanying financial statements include the Account and those subsidiaries wholly-owned by TIAA for the benefit of the Account. All significant intercompany accounts and transactions have been eliminated in consolidation.

Valuation of Real Estate Properties: Investments in real estate properties are stated at fair value, as determined in accordance with procedures approved by the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole; accordingly, the Account does not record depreciation. Fair value for real estate properties is defined as the most probable price for which a property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value involves subjective judgment because the actual market value of real estate can be determined only by negotiation between the parties in a sales transaction. Real estate properties owned by the Account are initially valued at their respective purchase prices (including acquisition costs). Subsequently, independent appraisers value each real estate property at least once a year. The independent fiduciary, Real Estate Research Corporation, must approve all independent appraisers used by the Account. TIAA’s appraisal staff performs a valuation review of each real estate property on a quarterly basis and updates the property value if it believes that the value of the property has changed since the previous valuation review or appraisal. The independent fiduciary can also require additional appraisals if it believes that a property’s value has changed materially and that such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued correctly. The independent fiduciary must also approve an appraisal where a property’s value changed by 6% or more from the most recent annual appraisal. The independent fiduciary, Real Estate Research Corporation, is appointed by a special subcommittee of TIAA’s Board of Trustees. Real estate properties subject to a mortgage are generally valued as described; the value of the mortgage is appraised independently of the property, and its fair value is reported separately. The independent fiduciary reviews and approves any such valuation adjustments which exceed certain prescribed limits before such adjustments are recorded by the Account. The Account continues to use the revised value to calculate the Account’s net asset value until the next valuation review or appraisal.

Valuation of Real Estate Joint Ventures: Real estate joint ventures are stated at the Account’s equity in the net assets of the underlying entities, which value their real estate holdings and mortgage notes payable at fair value.

Valuation of Marketable Securities: Equity securities listed or traded on any national market or exchange are valued at the last sale price as of the close of the principal securities exchange on which such securities are traded or, if there is no sale, at the mean of the last bid and asked prices on such exchange.

Debt securities, other than money market instruments, are valued at the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). Money market

7

instruments, with maturities of one year or less, are valued in the same manner as debt securities or derived from a pricing matrix that has various types of money market instruments along one axis and various maturities along the other. Portfolio securities and limited partnership interests for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole.

Mortgage Loans Receivable: Mortgage loans receivable are stated at fair value and are initially valued at the face amount of the mortgage loan funding. Subsequently, mortgage loans receivable are valued quarterly based on market factors, such as market interest rates and spreads for comparable loans, and the performance of the underlying collateral.

Mortgage Loans Payable: Commencing in 2005, the Account separately reports mortgage loans payable at estimated market value. Estimated market values are based on the amount at which the liability could be settled (either transferred or paid back) in a current transaction exclusive of direct transaction costs. Different assumptions or changes in future market conditions could significantly affect estimated market value. At times, the Account may assume debt in connection with the purchase of real estate. For debt assumed, the Account allocates a portion of the purchase price to the below or above market debt and amortizes the premium or discount over the remaining life of the debt.

Foreign currency transactions and translation: Portfolio investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of securities, income receipts and expense payments made in foreign currencies are translated into U.S. dollars at the exchange rates prevailing on the respective dates of the transactions. The effect of changes in foreign currency exchange rates on portfolio investments are included in the net realized and unrealized gains and losses on investments. Net realized gains and losses on foreign currency transactions include maturities of forward foreign currency contracts, disposition of foreign currencies, and currency gains and losses between the accrual and receipt dates of portfolio investment income and between the trade and settlement dates of portfolio investment transactions.

Accumulation and Annuity Funds: The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment. The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments. The net increase or decrease in net assets from investment operations is apportioned between the accounts based upon their relative daily net asset values. Once an Account participant begins receiving lifetime annuity income benefits, monthly payment levels cannot be reduced as a result of the Account’s adverse mortality experience. In addition, the contracts are required to stipulate the maximum expense charge that can be assessed, which is equal to 2.50% of average net assets per year. Accordingly, a small risk charge is paid by the Account to TIAA to assume these risks.

Accounting for Investments: Real estate transactions are accounted for as of the date on which the purchase or sale transactions for the real estate properties close (settlement date). Rent from real estate properties consists of all amounts earned under tenant operating leases, including base rent, recoveries of real estate taxes and other expenses and charges for miscellaneous services provided to tenants. Rental income is recognized in accordance with the billing terms of the lease agreements. The Account bears the direct expenses of the real estate properties owned. These expenses include, but are not limited to, fees to local property management companies, property taxes, utilities, maintenance, repairs, insurance and other operating and administrative costs. An estimate of the net operating income earned from each real estate property is accrued by the Account on a daily basis and such estimates are adjusted as soon as actual operating results are determined. The Account recognizes a gain to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A loss occurs when the cost-to-date exceeds the sales price. As the Account is fair valued and all properties are appraised quarterly, any accumulated unrealized gains and losses are reversed in the calculation of realized gains/losses.

The Account has limited partnership interests in various real estate funds (limited partnerships). The Account records its contributions as increases to the investments and distributions from the investments are treated as either income or return of capital as determined by the management of the limited partnerships. Unrealized gains and losses are calculated and recorded quarterly when the Account’s accounting records are compared to the financial statements of the limited partnerships.

Income from joint ventures is recorded based on the Account’s proportional interest in the income earned by the joint venture that has been distributed from the joint venture to the Account.

8

Securities transactions are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned and includes accrual of discount and amortization of premium. Dividend income is recorded on the ex-dividend date. Realized gains and losses on securities transactions are accounted for on the specific identification method.

Federal Income Taxes: Based on provisions of the Internal Revenue Code, Section 817, the Account is taxed as a segregated asset account of TIAA. The Account should incur no material federal income tax attributable to the net investment experience of the Account.

Reclassifications: Certain prior year amounts have been reclassified to conform to the current presentation. These reclassifications did not affect the total assets, total net assets or net increase in net assets previously reported.

Note 2—Management Agreements

Investment advisory services for the Account are provided by TIAA employees, under the direction of TIAA’s Board of Trustees and its Investment Committee, pursuant to investment management procedures adopted by TIAA for the Account. TIAA’s investment management decisions for the Account are also subject to review by the Account’s independent fiduciary, Real Estate Research Corporation. TIAA also provides all portfolio accounting and related services for the Account.

Distribution and administrative services for the Account are provided by TIAA-CREF Individual & Institutional Services, LLC (“Services”) pursuant to a Distribution and Administrative Services Agreement with the Account. Services, a wholly-owned subsidiary of TIAA, is a registered broker-dealer and member of the National Association of Securities Dealers, Inc.

The services provided by TIAA and Services are provided at cost. TIAA and Services receive payments from the Account on a daily basis according to formulas established each year with the objective of keeping the payments as close as possible to the Account’s actual expenses. Any differences between actual expenses and the amounts paid are adjusted quarterly.

TIAA also provides a liquidity guarantee to the Account, for a fee, to ensure that sufficient funds are available to meet participant transfer and cash withdrawal requests in the event that the Account’s cash flows and liquid investments are insufficient to fund such requests. TIAA also receives a fee for assuming certain mortality and expense risks.

The expenses for the services noted above that are provided to the Account by TIAA and other related parties are identified in the accompanying statements of operations.

Note 3—Leases

The Account’s real estate properties are leased to tenants under operating lease agreements which expire on various dates through 2035. Aggregate minimum annual rentals for the properties owned, excluding short-term residential and storage facility leases, are as follows:

Years Ending
December 31,
2006	$	696,917,734
2007		685,693,752
2008		620,072,601
2009		554,266,684
2010		467,771,010
2011 – 2035		1,466,924,613
Total	$	4,491,646,394

9

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

Note 4—Investment in Joint Ventures and Limited Partnerships

The Account owns several real estate properties through joint ventures and receives distributions and allocations of profits and losses from the joint ventures based on the Account’s ownership interest percentages. Several of these joint ventures have mortgage notes payable on the properties owned. The Account’s allocated portion of the mortgage notes payable is $459,921,721 and $468,664,313 at June 30, 2006 and December 31, 2005, respectively. The Account’s equity in the joint ventures at June 30, 2006 and December 31, 2005 was $1,359,990,226 and $1,222,036,564, respectively. A condensed summary of the financial position and results of operations of the joint ventures is shown below.

		June 30, 2006		December 31, 2005
		(Unaudited)
Assets
Real estate properties, at value	$	3,225,913,892	$	2,989,209,293
Other assets		77,041,436		80,768,265
Total assets	$	3,302,955,328	$	3,069,977,558
Liabilities and Equity
Mortgage notes payable	$	852,680,381	$	865,828,626
Other liabilities		59,521,020		70,471,251
Total liabilities		912,201,401		936,299,877
Equity		2,390,753,927		2,133,677,681
Total liabilities and equity	$	3,302,955,328	$	3,069,977,558
		For the Six
		Months Ended		Year Ended
		June 30, 2006		December 31, 2005
		(Unaudited)
Operating Revenues and Expenses
Revenues	$	144,413,930	$	270,519,206
Expenses		76,588,033		142,782,169
Excess of revenues over expenses	$	67,825,897	$	127,737,037

The Account invests in limited partnerships that own real estate properties and receives distributions from the limited partnerships based on the Account’s ownership interest percentages, which range from 5.27% to 19.75% of the limited partnerships. The Account’s investment in limited partnerships was $247,604,385 and $196,546,978 at June 30, 2006 and December 31, 2005, respectively.

Note 5—Mortgage Loans Payable

At June 30, 2006, the Account had outstanding mortgage balances on the following properties:

	Interest			Amount
Property	Rate Percentage			June 30, 2006		Due
				(Unaudited)
50 Fremont	6.40 paid monthly			135,000,000		August 21, 2013
Ontario Industrial Portfolio	7.24 paid monthly			9,213,265		May 1, 2011
IDX Tower	6.40 paid monthly			145,000,000		August 21, 2013
1001 Pennsylvania Ave	6.40 paid monthly			210,000,000		August 21, 2013
99 High Street	5.5245 paid monthly			185,000,000		November 11, 2015
Reserve at Sugarloaf	5.49 paid monthly			26,400,000		June 1, 2013
Westferry Circus	5.4003 paid quarterly	(a)		248,243,018		November 15, 2012
Lincoln Centre	5.51 paid monthly			153,000,000		February 1, 2016
Wilshire Rodeo Plaza	5.28 paid monthly			112,700,000		April 11, 2014
Total principal outstanding			$	1,224,556,283
Fair value adjustment				(9,590,702	)
Total Mortgage Loans Payable			$	1,214,965,581

(a) The mortgage is denominated in British pounds, converted to U.S. dollars at the exchange rate as of the date indicated, and is interest only with a balloon payment at maturity. The interest rate is fixed.

10

Note 6—Condensed Financial Information

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

		For the
		Six Months
		Ended		Years Ended December 31,
		June 30,
		2006			2005			2004			2003			2002
		(Unaudited)
Per Accumulation Unit data:
Rental income	$	8.333		$	15.604		$	13.422		$	15.584		$	14.225
Real estate property level expenses and taxes		3.887			7.026			5.331			5.890			4.819
Real estate income, net		4.446			8.578			8.091			9.694			9.406
Income from real estate joint ventures
and limited partnerships		0.500			1.604			1.935			1.379			0.807
Dividends and interest		1.362			1.998			1.406			0.839			1.249
Total income		6.308			12.180			11.432			11.912			11.462
Expense charges(1)		0.819			1.415			1.241			1.365			1.101
Investment income, net		5.489			10.765			10.191			10.547			10.361
Net realized and unrealized gain (loss)
on investments		13.844			18.744			13.314			2.492			(4.621	)
Net increase in Accumulation Unit Value		19.333			29.509			23.505			13.039			5.740
Accumulation Unit Value:
Beginning of period		239.953			210.444			186.939			173.900			168.160
End of period	$	259.286		$	239.953		$	210.444		$	186.939		$	173.900
Total return		8.06	%		14.02	%		12.57	%		7.50	%		3.41	%
Ratios to Average Net Assets:
Expenses(1)		0.33	%		0.63	%		0.63	%		0.76	%		0.67	%
Investment income, net		2.22	%		4.82	%		5.17	%		5.87	%		5.65	%
Portfolio turnover rate:
Real estate properties		0.00	%		6.72	%		2.32	%		5.12	%		0.93	%
Securities		39.04	%		77.63	%		143.47	%		71.83	%		52.08	%
Thousands of Accumulation Units
outstanding at end of period		46,613			42,623			33,338			24,724			20,347
Net assets end of period (in thousands)	$	12,454,458			$10,548,711		$	7,245,550		$	4,793,422		$	3,675,989

(1) Expense charges per Accumulation Unit and the Ratio of Expenses to Average Net Assets exclude real estate property level expenses and, for the six months ended June 30, 2006, are not annualized. If the real estate property level expenses were included, the expense charge per Accumulation Unit for the six months ended June 30, 2006 would be $4.706 ($8.441, $6.572, $7.255 and $5.920 for the years ended December 31, 2005, 2004, 2003 and 2002, respectively), and the Ratio of Expenses to Average Net Assets for the six months ended June 30, 2005 would be 1.92% (3.78%, 3.33%, 4.04% and 3.61% for the years ended December 31, 2005, 2004, 2003 and 2002, respectively).

11

Note 7—Accumulation Units

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

	For the	For the
	Six Months	Year
	Ended	Ended
	June 30, 2006	December 31, 2005
	(Unaudited)
Accumulation Units:
Credited for premiums	2,087,006	4,335,121
Credited for transfers, net disbursements and
amounts applied to the Annuity Fund	1,902,801	4,950,773
Outstanding:
Beginning of period	42,623,491	33,337,597
End of period	46,613,298	42,623,491

Note 8—Commitments

During the normal course of business, the Account enters into discussions and agreements to purchase or sell real estate properties. As of June 30, 2006, the Account had outstanding commitments in the total gross amount of $357.6 million to purchase three properties: an office property for $208.2 million which will be subject to approximately $115.0 million in debt, a retail property for $55.7 million which will be subject to approximately $35.0 million in debt, and a retail property for $93.7 million.

In addition, the Account had outstanding commitments to purchase interests in six limited partnerships and to purchase shares in a private real estate equity investment trust, which totaled $366.7 million in the aggregate. As of June 30, 2006, $76.6 million remains to be funded under these commitments.

Other than lawsuits in the ordinary course of business that are expected to have no material impact, there are no lawsuits to which the Account is a party.

12

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

REAL ESTATE PROPERTIES—69.62% and 69.46%		Value
Location / Description		2006			2005
		(Unaudited)
Alabama:
Inverness Center—Office building	$	104,500,000		$	98,090,987
Arizona:
Mountain RA Industrial Portfolio—Industrial building		6,300,000			5,754,652
Kierland Apartment Portfolio—Apartments		230,596,665			—
Phoenix Apartment Portfolio—Apartments		178,143,731			—
California:
3 Hutton Centre Drive—Office building		57,000,000			48,349,580
9 Hutton Centre—Office building		28,100,086			26,746,837
50 Fremont—Office building		390,000,000	(1)		373,010,003	(1)
88 Kearny Street—Office building		92,200,000			81,567,474
Cabot Industrial Portfolio—Industrial building		85,300,000			77,000,000
Capitol Place—Office building		50,100,000			48,000,000
Centerside I—Office building		67,100,000			66,000,000
Centre Pointe and Valley View—Industrial building		30,400,000			28,000,000
Eastgate Distribution Center—Industrial building		25,500,000			22,000,000
Embarcadero Center West—Office building		214,000,000			205,965,261
Kenwood Mews—Apartments		33,500,000			30,000,000
Larkspur Courts—Apartments		90,000,000			86,000,000
The Legacy at Westwood—Apartments		110,000,000			100,000,000
Northern CA RA Industrial Portfolio—Industrial building		64,700,351			62,325,024
Ontario Industrial Portfolio—Industrial building		260,426,826	(1)		230,000,000	(1)
Regents Court—Apartments		69,000,000			62,500,000
Southern CA RA Industrial Portfolio—Industrial building		91,500,000			89,017,793
980 9th Street and 1018 8th Street—Office building		168,000,000			159,000,000
Westcreek—Apartments		33,500,000			30,939,671
West Lake North Business Park—Office building		58,800,000			57,600,000
Westwood Marketplace—Shopping center		89,500,000			86,000,000
Wilshire Rodeo Plaza—Office building		196,273,111	(1)		—
Colorado:
The Lodge at Willow Creek—Apartments		38,100,000			34,600,000
The Market at Southpark—Shopping center		35,700,000			34,001,746
Monte Vista—Apartments		25,009,447			24,647,901
Palomino Park—Apartments		181,000,000			176,232,394
Connecticut:
Ten & Twenty Westport Road—Office building		160,000,000			157,000,000
Delaware:
Mideast RA Industrial Portfolio—Industrial building		15,220,016			14,258,555
Florida:
701 Brickell—Office building		216,262,047			201,173,724
4200 West Cypress Street—Office building		40,100,000			36,691,519
The Fairways of Carolina—Apartments		24,500,000			21,100,000
Golfview—Apartments		33,958,986			30,835,506
The Greens at Metrowest—Apartments		21,500,000			18,200,000
Maitland Promenade One—Office building		43,100,000			37,817,891
The North 40 Office Complex—Office building		63,233,789			—
Plantation Grove—Shopping center		14,700,000			13,800,000
Pointe on Tampa Bay—Office building		47,200,000			44,711,876

See notes to the financial statements.

13

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

		Value
Location / Description		2006			2005
		(Unaudited)
Florida: (continued)
Quiet Waters at Coquina Lakes—Apartments	$	24,500,000		$	20,912,293
Royal St. George—Apartments		24,400,000			21,400,000
Sawgrass Office Portfolio—Office building		70,200,000			59,700,000
South Florida Apartment Portfolio—Apartments		63,000,000			56,400,000
Suncrest Village—Shopping center		18,000,000			16,400,000
Urban Centre—Office building		115,114,292			106,007,400
Georgia:
Alexan Buckhead—Apartments		40,000,000			34,800,000
Atlanta Industrial Portfolio—Industrial building		75,008,500			73,825,000
Reserve at Sugarloaf—Apartments		46,600,000	(1)		44,800,000	(1)
Glenridge Walk—Apartments		47,000,000			45,300,000
1050 Lenox Park—Apartments		74,000,000			71,000,000
Shawnee Ridge Industrial Portfolio—Industrial building		44,250,000			44,418,860
Illinois:
Chicago Caleast Industrial Portfolio—Industrial building		73,521,322			74,622,731
Chicago Industrial Portfolio—Industrial building		75,812,495			72,000,000
Columbia Centre III—Office building		31,900,000			28,700,000
East North Central RA Industrial Portfolio—Industrial building		36,995,280			37,717,159
Oak Brook Regency Towers—Office building		76,600,000			73,400,000
Parkview Plaza—Office building		55,200,000			54,500,000
Kentucky:
IDI Kentucky Portfolio—Industrial building		63,500,000			58,500,000
Maryland:
Broadlands Business Park—Industrial building		35,000,000			—
FEDEX Distribution Facility—Industrial building		8,600,000			8,500,000
GE Appliance East Coast Distribution Facility—Industrial building		47,500,000			46,470,475
Massachusetts:
99 High Street—Office building		291,500,000	(1)		276,266,900	(1)
Batterymarch Park II—Office building		12,400,000			11,472,283
Needham Corporate Center—Office building		21,200,000			17,143,612
Northeast RA Industrial Portfolio—Industrial building		30,900,000			29,000,000
Nevada:
UPS Distribution Facility—Industrial building		15,000,000			15,000,000
New Jersey:
10 Waterview Boulevard—Office building		28,200,000			27,500,000
371 Hoes Lane—Office building		14,820,007			11,700,000
Konica Photo Imaging Headquarters—Industrial building		24,800,000			25,300,000
Morris Corporate Center III—Office building		99,000,000			97,400,000
NJ Caleast Industrial Portfolio—Industrial building		42,100,000			42,000,000
Plainsboro Plaza—Shopping center		50,925,004			50,745,252
South River Road Industrial—Industrial building		60,000,000			55,000,000
New York:
780 Third Avenue—Office building		268,000,000			230,000,000
The Colorado—Apartments		90,049,240			85,048,163

See notes to the financial statements.

14

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

		Value
Location / Description		2006			2005
		(Unaudited)
Ohio:
Columbus Portfolio—Office building	$	23,700,000		$	23,000,000
Pennsylvania:
Lincoln Woods—Apartments		36,027,473			35,528,316
Tennessee:
Memphis Caleast Industrial Portfolio—Industrial building		53,400,000			54,000,000
Summit Distribution Center—Industrial building		26,300,000			25,900,000
Texas:
Butterfield Industrial Park—Industrial building		4,640,000	(2)		4,618,955	(2)
Dallas Industrial Portfolio—Industrial building		146,000,000			146,000,000
Four Oaks Place—Office building		296,007,593			295,239,109
Houston Apartment Portfolio—Apartments		304,421,046			—
Park Place on Turtle Creek—Office building		44,325,666			—
The Caruth—Apartments		61,200,000			61,200,000
The Legends at Chase Oaks—Apartments		29,000,187			28,499,971
Lincoln Centre—Office building		262,000,000	(1)		255,311,299
The Maroneal—Apartments		39,006,323			35,000,000
United Kingdom:
1 & 7 Westferry Circus—Office building		397,875,849	(1)		373,116,817	(1)
Utah:
Landmark at Salt Lake City (Building #4)—Industrial building		16,600,000			14,700,000
Virginia:
8270 Greensboro Drive—Office building		62,000,000			60,200,000
Ashford Meadows—Apartments		85,646,829			78,904,526
Fairgate at Ballston—Office building		45,400,000			35,300,000
Monument Place—Office building		55,000,000			53,000,000
One Virginia Square—Office building		50,000,000			47,000,000
Washington:
IDX Tower—Office building		382,000,000	(1)		370,000,000	(1)
Northwest RA Industrial Portfolio—Industrial building		19,529,028			19,700,000
Rainier Corporate Park—Industrial building		65,565,420			64,273,372
Regal Logistics Campus—Industrial building		63,200,000			63,103,879
Washington DC:
1001 Pennsylvania Avenue—Office building		535,000,000	(1)		502,993,710	(1)
1015 15th Street—Office building		79,100,000			73,121,166
1900 K Street—Office building		244,000,000			230,000,000
Mazza Gallerie—Shopping center		85,000,000			86,001,109
TOTAL REAL ESTATE PROPERTIES
(Cost $8,467,013,184 and $7,386,769,868)		9,491,566,609			7,977,600,751
OTHER REAL ESTATE RELATED INVESTMENTS—11.79% and 12.35%
REAL ESTATE JOINT VENTURES—9.98% and 10.64%
GA—Buckhead LLC
Prominence in Buckhead (75% Account Interest)		104,048,254			97,142,406
IL—161 Clark Street LLC
161 North Clark Street (75% Account Interest)		184,384,099			175,578,714
One Boston Place REIT
One Boston Place (50.25% Account Interest)		167,229,279			149,723,498

See notes to the financial statements.

15

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

				Value
Location / Description				2006			2005
				(Unaudited)
Storage Portfolio I, LLC
Storage Portfolio(3) (75% Account Interest)			$	73,028,196	(4)	$	63,237,298	(4)
CA—Treat Towers LP
Treat Towers (75% Account Interest)				95,143,573			93,964,192
Strategic Ind Portfolio I, LLC
IDI Nationwide Industrial Portfolio(3) (60% Account Interest)				69,479,409	(4)		66,871,766	(4)
CA—Colorado Center LP
Yahoo Center (50% Account Interest)				183,521,486	(4)		138,531,366	(4)
Florida Mall Associates, Ltd.
The Florida Mall (50% Account Interest)				234,503,353	(4)		208,013,192	(4)
Teachers REA IV, LLC, which owns
Tyson’s Executive Plaza II (50% Account Interest)				37,935,328			34,032,806
West Dade Associates
Miami International Mall (50% Account Interest)				92,210,904	(4)		82,290,482	(4)
West Town Mall, LLC
West Town Mall (50% Account Interest)				118,506,345	(4)		112,650,844	(4)
TOTAL REAL ESTATE JOINT VENTURE
(Cost $897,689,879 and $888,034,873)				1,359,990,226			1,222,036,564
LIMITED PARTNERSHIPS—1.81% and 1.71%
Cobalt Industrial REIT (11.0132% Account Interest)				20,045,936			8,352,409
Colony Realty Partners, LP (5.27% Account Interest)				24,394,129			13,481,704
Essex Apartment Value Fund, LP (10% Account Interest)				80,587			487,306
Heitman Value Partners, LP (8.43% Account Interest)				9,498,977			8,106,810
Lion Gables Apartment Fund, LP (18.45% Account Interest)				174,519,721			150,000,000
MONY/Transwestern Mezzanine Realty Partners II, LLC
(16.67% Account Interest)				17,260,251			14,142,822
MONY/Transwestern Mezzanine Realty Partners, LP
(19.75% Account Interest)				1,804,784			1,975,927
TOTAL LIMITED PARTNERSHIP
(Cost $220,306,361 and $198,006,414)				247,604,385			196,546,978
TOTAL OTHER REAL ESTATE RELATED INVESTMENTS
(Cost $1,117,996,240 and $1,086,041,287)				1,607,594,611			1,418,583,542
MORTGAGE LOAN RECEIVABLE— 0.55% and 0.00%
Principal
2006	2005	Borrower, Current Rate and Maturity Date
75,000,000	—	Klingle Corporation
		6.150% 07/10/11		75,000,000			—
TOTAL MORTGAGE LOAN RECEIVABLE
(Cost $75,000,000)				75,000,000			—

See notes to the financial statements.

16

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

MARKETABLE SECURITIES—18.04% and 18.19%
REAL ESTATE RELATED—4.29% and 3.91%
REAL ESTATE EQUITY SECURITIES—4.09% and 3.72%
Shares				Value
2006	2005	Issuer		2006		2005
				(Unaudited)
—	75,000	Aames Investment Corp	$	—	$	484,500
53,300	—	Acadia Realty Trust		1,260,545		—
86,700	550,000	Affordable Residential Communities		932,025		5,241,500
47,900	—	Alexandria Real Estate Equities, Inc		4,247,772		—
163,585	36,685	AMB Property Corp		8,269,222		1,803,801
30,000	40,000	American Campus Communities		745,500		992,000
—	919,000	American Financial Realty		—		11,028,000
181,000	—	Apartment Investment & Management Co		7,864,450		—
399,200	450,000	Archstone-Smith Trust		20,307,304		18,850,500
100,000	150,000	Ashford Hospitality Trust		1,262,000		1,573,500
33,300	—	Associated Estates Realty Corp		412,920		—
138,300	40,000	Avalonbay Communities Inc		15,298,746		3,570,000
—	150,000	Bimini Mortgage Management-A		—		1,357,500
103,000	—	Biomed Realty Trust Inc		3,083,820		—
211,200	—	Boston Properties Inc		19,092,480		—
29,500	—	Boykin Lodging Company		321,255		—
161,300	—	Brandywine Realty Trust		5,189,021		—
90,100	30,000	BRE Properties		4,955,500		1,364,400
439,400	270,000	Brookfield Properties		14,135,498		7,943,400
105,200	—	Camden Property Trust		7,737,460		—
103,000	194,000	Carramerica Realty Corp		4,588,650		6,718,220
115,000	—	CBL & Associates Properties		4,476,950		—
65,000	424,000	Cedar Shopping Centers Inc		956,800		5,965,680
—	50,000	Centerpoint Properties Trust		—		2,474,000
—	280,000	Cogdell Spencer Inc		—		4,729,200
79,000	—	Colonial Properties Trust		3,902,600		—
70,400	—	Corporate Office Properties		2,962,432		—
90,000	—	Cousins Properties Inc		2,783,700		—
179,000	—	Crescent Real Estate Equity Company		3,322,240		—
—	976,000	Deerfield Triarc Capital Cor		—		13,371,200
204,000	380,000	Developers Diversified Realty		10,644,720		17,867,600
48,600	—	Digital Realty Trust Inc		1,199,934		—
252,100	193,400	Duke Realty Corp		8,861,315		6,459,560
45,000	—	Eastgroup Properties Inc		2,100,600		—
—	1,087,000	ECC Capital Corp		—		2,456,620
49,900	600,000	Education Realty Trust Inc		830,835		7,734,000
89,800	—	Equity Inns Inc		1,487,088		—
38,800	—	Equity Lifestyle Properties		1,700,604		—
697,000	—	Equity Office Properties Trust		25,447,470		—
127,000	—	Equity One Inc		2,654,300		—
545,500	180,000	Equity Residential		24,400,215		7,041,600
41,000	—	Essex Property Trust Inc		4,578,060		—
—	580,577	Extra Space Storage Inc		—		8,940,886

See notes to the financial statements.

17

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Shares				Value
2006	2005	Issuer		2006		2005
				(Unaudited)
93,000	—	Federal Realty Investment Trust	$	6,510,000	$	—
101,000	—	Felcor Lodging Trust Inc		2,195,740		—
1,159,100	1,367,000	Feldman Mall Properties		12,703,736		16,417,670
41,600	111,600	First Potomac Realty Trust		1,239,264		2,968,560
78,500	—	First Industrial Realty Trust		2,978,290		—
444,700	110,000	General Growth Properties		20,038,182		5,168,900
63,750	—	Glenborough Realty Trust Inc		1,373,175		—
60,300	—	Glimcher Realty Trust		1,496,043		—
73,800	404,800	GMH Communities Trust		972,684		6,278,448
—	348,700	Gramercy Capital Corp		—		7,943,386
—	300,000	Great Wolf Resorts Inc		—		3,093,000
—	562,000	Hersha Hospitality Trust		—		5,063,620
79,300	—	Heritage Property Investment		2,769,156		—
—	150,000	Highland Hospitality Corp		—		1,657,500
95,200	—	Highwoods Properties Inc		3,444,336		—
—	60,000	Hilton Hotels Corp		—		1,446,600
56,000	80,000	Home Properties Inc		3,108,560		3,264,000
—	450,000	Homebanc Corp/Ga		—		3,366,000
127,900	—	Hospitality Properties Trust		5,617,368		—
976,270	—	Host Hotels and Resorts Inc		21,351,025		—
—	300,000	Host Marriott Corp		—		5,685,000
366,700	—	HRPT Properties Trust		4,239,052		—
72,000	—	Innkeepers USA Trust		1,244,160		—
—	300,000	Interstate Hotels & Resorts		—	$	1,311,000
—	80,000	Istar Financial Inc		—		2,852,000
—	1,958,000	Jameson Inns Inc		—		4,209,700
—	100,000	JER Investors Trust Inc		—		1,695,000
59,400	—	Kilroy Realty Corp		4,291,650		—
445,900	108,000	Kimco Realty Corp		16,270,891		3,464,640
66,000	426,000	Kite Realty Group Trust		1,028,940		6,590,220
—	300,000	KKR Financial Corp		—		7,197,000
75,000	200,000	Lasalle Hotel Properties		3,472,500		7,344,000
—	120,000	Lexington Corporate Properties Trust		—		2,556,000
157,000	—	Liberty Property Trust		6,939,400		—
—	1,266,660	Lodgian Inc		—		13,591,262
—	200,000	LTC Properties Inc		—		4,206,000
131,600	75,000	Macerich Company/The		9,238,320		5,035,500
110,000	400,000	Mack-Cali Realty Corp		5,051,200		17,280,000
81,000	—	Maguire Properties Inc		2,848,770		—
—	200,000	Medical Properties Trust Inc		—		1,956,000
37,000	—	Mid-America Apartment Comm		2,062,750		—
100,200	40,000	Mills Corp/The		2,680,350		1,677,600
—	100,000	Mission West Properties		—		974,000
—	331,200	Monmouth REIT-CLA		—		2,656,224
—	300,000	Mortgageit Holdings Inc		—		4,098,000
—	130,000	NewCastle Investment Corp		—		3,230,500
185,000	—	New Plan Excel Realty Trust		4,567,650		—
—	100,000	Novastar Financial Inc		—		2,811,000

See notes to the financial statements.

18

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Shares				Value
2006	2005	Issuer		2006		2005
				(Unaudited)
—	525,000	Origen Financial Inc	$	—	$	3,738,000
72,000	—	Pan Pacific Retail Properties Trust		4,994,640		—
25,100	328,100	Parkway Properties		1,142,050		13,169,934
62,400	—	Penn Real Estate Investment Trust		2,519,088		—
69,300	—	Post Properties, Inc		3,142,062		—
453,600	400,000	Prologis Trust		23,641,632		18,688,000
37,100	—	PS Business Parks Inc		2,188,900		—
243,700	30,000	Public Storage, Inc		18,496,830		2,031,600
28,500	—	Ramco-Gershenson Properties		767,505		—
—	100,000	RAIT Investment Trust		—		2,592,000
147,000	—	Reckson Associates Realty Corp		6,082,860		—
121,300	236,000	Regency Centers Corp		7,538,795		13,912,200
—	384,000	Republic Property Trust		—		4,608,000
28,600	—	Saul Centers Inc		1,166,308		—
81,700	—	Shurgard Storage Centers-A		5,106,250		—
416,621	305,721	Simon Property Group Inc		34,554,545		23,427,400
80,300	—	SL Green Realty Corp		8,790,441		—
29,100	—	Sovran Self Storage Inc		1,477,989		—
—	350,000	Starwood Hotels & Resorts		—		22,351,000
134,700	—	Strategic Hotel Capital Inc		2,793,678		—
30,900	—	Sun Communities Inc		1,005,177		—
—	303,820	Sunset Financial Resources		—		2,576,394
100,000	—	Sunstone Hotel Investors Inc		2,906,000		—
52,300	—	Tanger Factory Outlet Center		1,692,951		—
86,400	—	Taubman Centers Inc		3,533,760		—
—	111,200	Thomas Properties Group		—		1,391,112
280,000	50,000	Trizec Properties Inc		8,019,200		1,146,000
95,400	—	U-Store-IT Trust		1,799,244		—
250,400	100,000	United Dominion Realty Trust		7,013,704		2,344,000
—	95,000	Ventas Inc		—		3,041,900
263,000	200,000	Vornado Realty Trust		25,655,650		16,694,000
74,500	—	Washington Real Estate Inv		2,734,150		—
159,600	—	Weingarten Realty Investors		6,109,488		—
44,700	—	Winston Hotels Inc		547,575		—
—	944	Windrose Medical Properties		—		14,028
TOTAL REAL ESTATE EQUITY SECURITIES
(Cost $504,834,858 and $411,877,936 )				557,167,695		426,781,565
COMMERCIAL MORTGAGE-BACKED SECURITIES—0.20% and 0.19%
Principal
2006	2005	Issuer, Current Rate and Maturity Date
5,000,000	—	Credit Suisse Mortgage
		5.320% 04/15/21		5,001,200		—
10,000,000	10,000,000	GSMS 2001-Rock A2FL
		5.710% 05/03/18		10,204,840		10,217,650
10,000,000	10,000,000	MSDWC 2001-280 A2F
		5.740% 02/03/16		10,149,880		10,061,730

See notes to the financial statements.

19

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Principal				Value
2006	2005	Issuer, Current Rate and Maturity Date		2006		2005
				(Unaudited)
1,601,634	1,601,634	Trize 2001—TZHA A3FL
		5.570% 03/15/13	$	1,601,677	$	1,601,653
TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
(Cost $26,603,838 and $21,604,079)				26,957,597		21,881,033
TOTAL REAL ESTATE RELATED
(Cost $531,438,696 and $433,482,015)				584,125,292		448,662,598
OTHER—13.75% and 14.28%
COMMERCIAL PAPER—10.61% and 11.67%
—	25,000,000	Abbey National North America LLC
		4.440% 04/12/06		—	$	24,994,000
20,000,000	—	Abbey National PLC
		5.000% 07/14/06		19,998,000		—
25,000,000	25,000,000	Abbey National PLC
		5.000% 07/18/06		24,996,500		24,999,500
—	10,000,000	Alabama Power Co
		4.250% 01/12/06		—		9,989,100
11,000,000	25,000,000	American Express Centurion Bank
		4.950% 07/06/06		10,999,670		25,000,000
9,000,000	—	American Express Centurion Bank
		5.440% 09/26/06		9,000,900		—
20,000,000	—	American Express Centurion Bank
		5.300% 07/28/06		20,000,400		—
10,000,000	—	American Express Centurion Bank
		5.300% 07/28/06		10,000,200		—
20,000,000	2,430,000	American Honda Finance, Corp
		5.010% 08/03/06		19,908,800		2,428,250
—	10,000,000	Atlantis One Funding Corp
		4.620% 04/27/06		—		9,936,500
—	25,000,000	Atlantis One Funding Corp
		4.650% 05/01/06		—		24,890,750
20,000,000	25,000,000	Bank of Montreal
		4.990% 09/20/06		19,979,000		24,999,500
25,000,000	—	Bank of Montreal
		5.050% 07/13/06		24,998,250		—
15,000,000	30,000,000	Barclay’s Bank, PLC
		5.290% 08/30/06		14,999,550		29,998,200
22,000,000	15,000,000	Barclay’s Bank, PLC
		5.110% 08/14/06		21,993,620		14,999,400
—	18,040,000	Becton Dickinson & Co.
		4.210% 01/24/06		—		17,994,719
20,000,000	13,100,000	Beta Finance, Inc
		4.970% 07/10/06		19,979,200		13,085,590
13,000,000	11,000,000	Beta Finance, Inc
		5.070% 07/25/06		12,957,750		10,981,190
17,000,000	20,000,000	Calyon
		5.070% 07/21/06		16,997,960		19,997,800

See notes to the financial statements.

20

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Principal				Value
2006	2005	Issuer, Current Rate and Maturity Date		2006		2005
				(Unaudited)
9,000,000	—	Calyon
		4.960% 07/11/06	$	8,989,470	$	—
5,375,000	—	Calyon
		4.960% 08/11/06		5,344,201		—
20,000,000	—	Canadian Imperial Holdings, Inc
		5.310% 08/28/06		19,833,600		—
—	10,000,000	Canadian Wheat Board (The)
		4.320% 02/06/06		—		9,959,500
9,150,000	—	Caterpillar Financial Services Corporation
		5.100% 07/05/06		9,147,346		—
17,000,000	14,000,000	CC (USA), Inc
		5.030% 07/10/06		16,982,320		13,982,920
2,153,000	—	CC (USA), Inc
		5.270% 08/24/06		2,136,357		—
5,000,000	—	CC (USA), Inc
		5.010% 07/12/06		4,993,300		—
25,000,000	—	CC (USA), Inc
		5.010% 07/24/06		24,922,500		—
5,000,000	40,000,000	Ciesco LP
		5.020% 07/11/06		4,994,050		39,903,200
10,000,000	10,000,000	Ciesco LP
		5.050% 07/14/06		9,983,700		9,936,500
20,000,000	—	Ciesco LP
		5.330% 08/24/06		19,845,400		—
15,000,000	—	Ciesco LP
		5.320% 09/19/06		14,824,050		—
13,000,000	13,000,000	Citigroup Funding Inc.
		4.980% 07/24006		12,960,090		12,923,560
29,170,000	37,000,000	Citigroup Funding Inc.
		5.030% 07/27/06		29,067,613		36,925,260
—	24,150,000	Colgate-Palmolive Co
		4.250% 01/06/06		—		24,141,306
15,000,000	15,000,000	Corporate Asset Funding Corp, Inc
		5.030% 07/13/06		14,977,800		14,981,700
8,000,000	5,035,000	Corporate Asset Funding Corp, Inc
		5.050% 07/28/06		7,970,400		5,022,815
—	16,000,000	Corporate Asset Funding Corp, Inc
		4.740% 05/15/06		—		15,957,440
—	5,905,000	Corporate Asset Funding Corp, Inc
		4.680% 05/04/06		—		5,884,982
—	2,020,000	Corporate Asset Funding Corp, Inc
		4.360% 02/17/06		—		2,008,930
24,000,000	50,000,000	Dexia Bank
		5.370% 08/29/06		24,001,440		49,998,000
25,000,000	25,000,000	Deutsche Bank
		4.930% 07/05/06		24,999,500		24,997,000
5,000,000	—	Deutsche Bank
		5.050% 07/17/06		4,999,500		—

See notes to the financial statements.

21

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Principal				Value
2006	2005	Issuer, Current Rate and Maturity Date		2006		2005
				(Unaudited)
20,000,000	—	Deutsche Bank
		5.050% 07/12/06	$	19,998,800	$	—
5,300,000	20,000,000	Dorada Finance Inc
		5.010% 07/10/06		5,294,488		19,865,600
3,085,000	8,000,000	Dorada Finance Inc
		5.010% 07/31/06		3,072,228		7,980,640
25,000,000	21,500,000	Dorada Finance Inc
		5.100% 08/25/06		24,803,000		21,384,975
7,000,000	13,000,000	Edison Asset Securitization, LLC
		5.000% 08/23/06		6,946,870		12,977,770
10,100,000	7,248,000	Edison Asset Securitization, LLC
		5.050% 08/08/06		10,046,066		7,162,981
1,000,000	20,000,000	Edison Asset Securitization, LLC
		5.150% 08/30/06		991,340		19,877,800
21,000,000	—	Edison Asset Securitization, LLC
		5.030% 08/02/06		20,906,550		—
—	20,000,000	FCAR Owner Trust I
		4.740% 05/10/06		—		19,915,000
17,000,000	17,000,000	First Tennessee National Bank
		5.100% 08/07/06		16,995,920		16,999,660
13,650,000	—	Gannett Inc
		5.250% 07/18/06		13,619,970		—
25,000,000	21,590,000	General Electric Capital Corp
		5.030% 08/04/06		24,883,000		21,282,342
—	25,000,000	General Electric Capital Corp
		4.520% 06/28/06		—		24,435,000
17,000,000	35,000,000	Goldman Sachs Group, LP
		4.810% 11/02/06		16,684,820		34,870,150
11,000,000	29,140,000	Govco Incorporated
		4.950% 07/19/06		10,973,930		29,118,436
4,400,000	10,000,000	Govco Incorporated
		5.340% 12/18/06		4,286,304		9,981,700
21,200,000	9,000,000	Govco Incorporated
		5.310% 08/15/06		21,064,956		8,922,420
29,000,000	20,000,000	Grampian Funding LLC
		5.270% 07/05/06		28,978,773		19,929,600
10,000,000	5,015,000	Grampian Funding LLC
		4.960% 09/05/06		9,904,200		5,002,814
10,000,000	—	Grampian Funding LLC
		4.880% 08/11/06		9,942,200		—
1,010,000	—	Grampian Funding LLC
		5.310% 09/15/06		998,759		—
5,000,000	10,000,000	Greyhawk Funding LLC
		4.960% 07/11/06		4,994,050		9,996,300
20,000,000	—	Greenwich Capital Holdings, Inc
		5.340% 10/19/06		19,674,800		—
13,000,000	25,000,000	Harrier Finance Funding (US) LLC
		4.970% 07/12/06		12,982,580		24,933,500

See notes to the financial statements.

22

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Principal				Value
2006	2005	Issuer, Current Rate and Maturity Date		2006		2005
				(Unaudited)
7,000,000	—	Harrier Finance Funding (US) LLC
		5.050% 07/14/06	$	6,988,590	$	—
12,775,000	—	Harrier Finance Funding (US) LLC
		5.020% 07/13/06		12,756,093		—
13,505,000	10,085,000	HBOS Treasury Srvcs Plc
		4.980% 07/19/06		13,473,398		10,033,163
15,000,000	—	HBOS Treasury Srvcs Plc
		5.050% 08/08/06		14,920,800		—
4,270,000	—	HBOS Treasury Srvcs Plc
		5.050% 08/18/06		4,241,007		—
24,000,000	—	HSBC Finance Corporation
		5.030% 07/20/06		23,940,000		—
41,110,000	31,740,000	Kitty Hawk Funding Corp
		5.290% 07/26/06		40,969,815		31,705,086
—	10,000,000	Kitty Hawk Funding Corp
		4.780% 05/18/06		—		9,947,600
4,000,000	25,000,000	Links Finance L.L.C.
		4.940% 07/06/06		3,998,240		24,884,750
—	25,000,000	Links Finance L.L.C.
		4.770% 06/08/06		—		24,787,750
25,000,000	—	McGraw-Hill, Inc
		5.260% 07/28/06		24,908,250		—
32,000,000	—	Merrill Lynch & Company, Inc.
		5.260% 07/06/06		31,985,920		—
48,000,000	—	Morgan Stanley
		5.270% 07/06/06		47,978,880		—
17,000,000	10,000,000	Paccar Financial Corp
		5.040% 08/10/06		16,905,140		9,989,200
10,000,000	13,655,000	Paccar Financial Corp
		5.060% 08/15/06		9,936,700		13,557,913
10,000,000	20,080,000	Park Avenue Receivables Corp
		5.280% 07/26/06		9,965,800		20,021,166
—	10,000,000	Park Avenue Receivables Corp
		4.290% 01/04/06		—		9,998,800
—	10,000,000	Preferred Receivables Funding Corp
		4.670% 05/04/06		—		9,996,300
10,000,000	15,000,000	Private Export Funding Corporation
		4.990% 07/05/06		9,997,100		14,926,500
15,000,000	5,000,000	Private Export Funding Corporation
		5.020% 08/09/06		14,918,100		4,944,250
14,000,000	9,000,000	Private Export Funding Corporation
		4.660% 07/06/06		13,993,840		8,929,260
—	19,150,000	Private Export Funding Corporation
		4.530% 05/09/06		—		19,070,145
—	20,000,000	Proctor & Gamble
		4.490% 04/04/06		—		19,983,200
—	3,500,000	Proctor & Gamble
		4.090% 01/26/06		—		3,490,445

See notes to the financial statements.

23

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Principal			Value
2006	2005	Issuer, Current Rate and Maturity Date		2006		2005
				(Unaudited)
9,500,000	—	Rabobank USA Financial Corp
		4.960% 07/13/06	$	9,486,130	$	—
40,340,000	—	Rabobank USA Financial Corp
		4.970% 09/29/06		39,809,126		—
27,000,000	50,000,000	Ranger Funding Company LLC
		5.330% 08/16/06		26,824,230		49,914,500
—	17,000,000	Regions Bank (Alabama)
		4.180% 01/30/06		—		16,998,130
20,000,000	—	Royal Bank of Canada
		5.170% 09/21/06		19,988,600		—
10,680,000	—	Royal Bank of Canada
		4.850% 07/28/06		10,676,262		—
20,515,000	—	Scaldis Capital LLC
		5.230% 07/17/06		20,472,329		—
10,000,000	—	Scaldis Capital LLC
		5.110% 09/15/06		9,888,700		—
7,175,000	—	Sheffield Receivable Corporation
		5.290% 07/21/06		7,155,843		—
5,000,000	—	Sheffield Receivable Corporation
		4.820% 09/05/06		4,952,100		—
20,000,000	—	Shell International Finance B.V.
		5.000% 07/31/06		19,918,200		—
8,600,000	—	Shell International Finance B.V.
		5.260% 07/03/06		8,596,230		—
—	540,000	Sherwin-Williams Co
		4.070% 02/07/06		—		537,732
8,500,000	14,390,000	Sigma Finance Inc
		5.030% 07/20/06		8,478,580		14,374,171
—	8,000,000	Sigma Finance Inc
		4.610% 05/05/06		—		7,937,120
—	5,000,000	Sigma Finance Inc
		3.940% 03/01/06		—		4,965,150
—	17,000,000	Sigma Finance Inc
		4.220% 01/31/06		—		16,942,370
—	5,575,000	Sigma Finance Inc
		4.340% 02/27/06		—		5,537,536
18,800,000	6,030,000	Societe Generale North America, Inc
		5.030% 08/22/06		18,661,256		5,974,283
10,280,000	—	Societe Generale North America, Inc
		5.010% 09/25/06		10,151,089		—
10,000,000	—	Societe Generale North America, Inc
		4.830% 10/06/06		9,857,600		—
10,021,000	—	Societe Generale North America, Inc
		5.060% 08/23/06		9,945,542		—
20,000,000	—	Suntrust
		5.080% 05/01/07		20,001,000		—
5,000,000	27,600,000	Swedish Export Credit Corp
		5.000% 07/11/06		4,994,150		27,550,596

See notes to the financial statements.

24

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Principal				Value
2006	2005	Issuer, Current Rate and Maturity Date		2006		2005
				(Unaudited)
5,000,000	—	Swedish Export Credit Corp
		5.000% 07/12/06	$	4,993,400	$	—
30,000,000	—	Swedish Export Credit Corp
		5.290% 08/31/06		29,726,942		—
21,000,000	—	Toronto Dominion Bank
		5.180% 09/22/06		20,988,240		—
3,775,000	—	Toronto Dominion Holdings (U.S.)
		4.800% 10/27/06		3,708,900		—
15,000,000	15,000,000	Toyota Motor Credit Corp
		5.090% 10/10/06		15,000,750		15,000,900
—	24,000,000	UBS Finance, (Delaware) Inc
		4.580% 04/10/06		—		23,891,280
—	3,120,000	UBS Finance, (Delaware) Inc
		4.850% 06/30/06		—		3,079,190
15,000,000	25,000,000	Variable Funding Capital Corporation
		4.920% 07/03/06		15,000,000		24,993,750
—	5,010,000	Washington Gas Light Co
		4.330% 01/09/06		—		5,006,393
—	20,000,000	Wells Fargo
		4.770% 05/05/06		—		19,999,600
—	19,460,000	Yorktown Capital, LLC
		4.700% 04/18/06		—		19,457,665
—	2,625,000	Yorktown Capital, LLC
		4.630% 04/21/06		—		2,611,893
—	4,066,000	Yorktown Capital, LLC
		4.350% 01/06/06		—		4,064,496
TOTAL COMMERCIAL PAPER
(Cost $1,447,039,450 and $1,340,511,661)
GOVERNMENT AGENCY BONDS—3.14% and 2.61%
30,000,000	7,030,000	Federal Home Loan Banks
		4.950% 08/18/06		29,801,700		7,027,383
32,260,000	—	Federal Home Loan Banks
		4.900% 07/07/06		32,241,612		—
12,000,000	—	Federal Home Loan Banks
		5.110% 07/19/06		11,972,520		—
50,000,000	—	Federal Home Loan Banks
		5.060% 07/06/06		49,978,500		—
28,535,000	30,000,000	Federal Home Loan Mortgage Corp
		5.180% 08/01/06		28,416,294		30,000,000
16,380,000	18,000,000	Federal Home Loan Mortgage Corp
		4.800% 09/12/06		16,210,958		17,922,240
735,000	50,000,000	Federal Home Loan Mortgage Corp
		4.860% 12/01/06		718,815		49,839,500
13,990,000	3,840,000	Federal Home Loan Mortgage Corp
		4.870% 07/25/06		13,945,932		3,837,351
30,000,000	—	Federal Home Loan Mortgage Corp
		4.965% 07/26/06		29,871,000		—

See notes to the financial statements.

25

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2006 and December 31, 2005

Principal				Value
2006	2005	Issuer, Current Rate and Maturity Date		2006		2005
				(Unaudited)
5,150,000	—	Federal Home Loan Mortgage Corp
		5.020% 11/14/06	$	5,049,575	$	—
2,070,000	—	Federal Home Loan Mortgage Corp
		4.940% 08/21/06		2,055,427		—
30,555,000	—	Federal Home Loan Mortgage Corp
		4.940% 08/15/06		30,366,170		—
10,000,000	—	Federal Home Loan Mortgage Corp
		4.940% 08/16/06		9,936,800		—
5,740,000	37,615,000	Federal National Mortgage Association
		5.240% 08/16/06		5,703,723		37,584,908
30,345,000	23,940,000	Federal National Mortgage Association
		4.910% 07/11/06		30,310,407		23,797,557
17,710,000	46,555,000	Federal National Mortgage Association
		4.900% 07/21/06		17,664,308		46,512,169
7,405,000	29,320,000	Federal National Mortgage Association
		4.890% 07/26/06		7,380,638		29,217,380
30,000,000	1,766,000	Federal National Mortgage Association
		5.180% 07/24/06		29,896,400		1,757,135
20,000,000	50,000,000	Federal National Mortgage Association
		4.920% 07/19/06		19,954,200		49,737,500
10,000,000	3,015,000	Federal National Mortgage Association
		4.930% 09/01/06		9,912,800		3,004,809
38,577,000	—	Federal National Mortgage Association
		4.950% 08/21/06		38,305,418		—
8,395,000	—	Federal National Mortgage Association
		4.790% 08/30/06		8,325,070		—
TOTAL GOVERNMENT AGENCY BONDS
(Cost $428,002,108 and $300,164,529 )				428,018,267		300,237,932
TOTAL OTHER
(Cost $1,875,041,558 and $1,640,676,190 )				1,874,997,180		1,640,894,515
TOTAL MARKETABLE SECURITIES
(Cost $2,406,480,254 and $2,074,158,205)				2,459,122,472		2,089,557,113
TOTAL INVESTMENTS—100.00%
(Cost $12,066,489,678 and $10,546,969,360)			$	13,633,283,692	$	11,485,741,406

(1)	The investment has a mortgage payable outstanding, as indicated in Note 5.
(2)	Leasehold interest only.
(3)	Located throughout the U.S.
(4)	The market value reflects the Account’s interest in the joint venture, net of any debt.

See notes to the financial statements.

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

     The following discussion and analysis of our financial condition and results of operations should be read together with our financial statements and notes contained in this report.

     As of June 30, 2006, the TIAA Real Estate Account (the “Account”) had Total Net Assets in the amount of $12,454,457,671, an 18.1% increase from December 31, 2005. The growth in net assets continues to be fueled by the strong flow of funds into the Account, which includes real estate income, dividends and interest, premiums and net transfers into the Account.

     As of June 30, 2006, the Account owned a total of 116 real estate properties (eleven of which were held in joint ventures) representing 79.60% of the Account’s total investment portfolio. The real estate portfolio included 48 office properties (six of which were held in joint ventures and one of which was located in London, England), 31 industrial properties (including one held in a joint venture), 27 apartment complexes, 9 retail properties (including three held in joint ventures), and a 75% joint venture partnership interest in a portfolio of storage facilities.

     The Account was active in the real estate market during the second quarter of 2006, closing on six real estate transactions. As a result, the Account’s investments in real estate properties (including joint ventures) increased to 79.60% of Total Investments at June 30, 2006, compared to 75.70% of Total Investments at March 31, 2006. In addition to real estate purchases, the Account originated its first mortgage loan in the amount of $75 million, secured by an apartment complex located in Washington, D.C. The mortgage has a 5 year term and a floating interest rate.

     The Account’s six real estate acquisitions during the second quarter of 2006 totaled $1,016.9 million. The Account purchased three office buildings located in: Beverly Hills, California for an investment of $196.3 million, subject to $112.7 million in debt; Dallas, Texas for $44.3 million; and Boca Raton, Florida for $63.2 million. The Account also purchased three portfolios of apartments, two located in Phoenix and Scottsdale, Arizona and one in Houston, Texas, for $178.1 million, $230.6 million and $304.4 million, respectively.

     The Account’s real estate portfolio is diversified by location and property type and, at June 30, 2006, no single property represented more than 3.92% of its Total Investments, or 4.93% of its Total Real Estate Investments. The following charts reflect the diversification of the Account’s Real Estate Assets. All information is based on the value of each property as stated in the Statement of Investments as of June 30, 2006.

Real Estate Assets
Diversification by Market Value

		East		West		South		Midwest		Various*		Foreign**		TOTAL
		(31)		(37)		(37)		(8)		(2)		(1)		(116)
Office	(48)	20.0	%	18.2	%	12.9	%	3.4	%	0.0	%	3.7	%	58.2	%
Apartment	(27)	2.0	%	9.1	%	7.7	%	0.0	%	0.0	%	0.0	%	18.8	%
Industrial	(31)	3.1	%	6.9	%	3.2	%	1.7	%	0.6	%	0.0	%	15.5	%
Retail	(9)	1.3	%	1.1	%	4.4	%	0.0	%	0.0	%	0.0	%	6.8	%
Other***	(1)	0.0	%	0.0	%	0.0	%	0.0	%	0.7	%	0.0	%	0.7	%
TOTAL	(116)	26.4	%	35.3	%	28.2	%	5.1	%	1.3	%	3.7	%	100.0	%

( )	Number of properties in parentheses.
*	Represents a portfolio of storage facilities and a portfolio of industrial properties located in various regions across the U.S.
**	Represents a foreign real estate investment - United Kingdom
***	Represents a portfolio of storage facilities located in various regions across the U.S.

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Top Ten Real Estate Holdings

						% of Total
		State/	Property	Market		Real Estate	% of Total
Property Name	City	Country	Type	Value ($M) (a)		Portfolio	Investments
1001 Pennsylvania Ave	Washington	DC	Office	$535.0	(b)	4.93%	3.92%
1 & 7 Westferry Circus	London	UK	Office	$397.9	(c)	3.67%	2.92%
50 Fremont Street	San Francisco	CA	Office	$390.0	(d)	3.59%	2.86%
IDX Tower	Seattle	WA	Office	$382.0	(e)	3.52%	2.80%
Houston Apartment
Portfolio	Houston	TX	Apartment	$304.4		2.81%	2.23%
Four Oaks Place	Houston	TX	Office	$296.0		2.73%	2.17%
99 High Street	Boston	MA	Office	$291.5	(f)	2.69%	2.14%
780 Third Avenue	New York City	NY	Office	$268.0		2.47%	1.97%
Lincoln Centre	Dallas	TX	Office	$262.0	(g)	2.41%	1.92%
Ontario Industrial
Portfolio	Ontario	CA	Industrial	$260.4	(h)	2.40%	1.91%

(a)	Value as reported in the June 30, 2006 Statement of Investments. Investments owned 100% by the Account are reported based on market value. Investments in joint ventures are reported based on the equity method of accounting.
(b)	This property is shown gross of debt. The value of the Account’s interest less leverage is $321.1 M.
(c)	This property is shown gross of debt. The value of the Account’s interest less leverage is $152.0 M. The market value has been converted to U.S. dollars from British pounds at the exchange rate as of June 30, 2006.
(d)	This property is shown gross of debt. The value of the Account’s interest less leverage is $252.7 M.
(e)	This property is shown gross of debt. The value of the Account’s interest less leverage is $234.0 M.
(f)	This property is shown gross of debt. The value of the Account’s interest less leverage is $114.9 M.
(g)	This property is shown gross of debt. The value of the Account’s interest less leverage is $116.5 M.
(h)	This property is shown gross of debt. The value of the Account’s interest less leverage is $250.6 M.

Top Five Overall Market Exposures 

	%		# of	% of Total
Metropolitan Statistical Area	Leased		Investments	Investments
Washington D.C.-Arlington-Alexandria	97	%	10	9.38	%
Los Angeles-Long Beach-Glendale	98	%	8	5.82	%
San Francisco-San Mateo-Redwood City	94	%	4	5.77	%
Houston-Bay Town-Sugar Land	96	%	3	4.69	%
Dallas-Plano-Irving	91	%	5	3.98	%

     As of June 30, 2006, the Account also held investments in real estate limited partnerships, representing 1.81% of Total Investments, real estate equity securities, representing 4.09% of Total Investments, mortgages, representing 0.55% of Total Investments, commercial mortgage-backed securities (CMBS), representing 0.20% of Total Investments, commercial paper representing 10.61% of Total Investments, and government agency bonds, representing 3.14% of Total Investments.

Real Estate Market Outlook In General

     United States real estate markets and the national economy experienced modest improvement during the second quarter of 2006. Real estate market fundamentals continued to strengthen and the market is healthy, but the rates of improvement in market conditions and the growth of the national economy slowed during the quarter. Still,

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investor interest and purchases of commercial real estate remained strong and continue to support real estate values. Nonetheless, real estate values can be affected by prospective changes in economic and capital market conditions as well as by changes in real estate supply and demand at the local level.

     Payroll employment in the United States grew by 325,000 in the second quarter of 2006, as compared with an increase of 529,000 in the first quarter of 2006. The largest employment gains were reported by the health care, professional and business services sectors. Financial services, a key office-using sector, saw minimal job growth during the quarter. Employment in the Account’s top five metropolitan areas grew at a healthy pace during the second quarter of 2006. Of the Account’s five top markets, employment growth was strongest in the Dallas metropolitan area, where employment grew 3.6% during the quarter. In the Washington, D.C. metropolitan area, the Account’s largest exposure, employment grew 2.5% . The Account’s other top markets also experienced employment growth during the second quarter of 2006: Houston grew by 2.9%, San Francisco by 1.4%, Los Angeles by 1.2%, and Chicago by 1.2% . The overall employment growth for the United States was 1.4% in the second quarter of 2006.

     Growth in employment is highly correlated with tenant demand for commercial real estate, though demand for space often lags employment growth due to the nature of the leasing cycle. With the United States economy creating 854,000 jobs during the first two quarters of 2006, improvements in commercial real estate market conditions are evident. Torto Wheaton Research, a widely used source of real estate market data, reported that office market vacancies averaged 13.1% in the second quarter of 2006, compared with 13.4% in the first quarter of 2006. In comparison, for the second quarter of 2006, the vacancy rate of the Account’s office portfolio was 10.1%, 3.0% lower than the national average. While office vacancy rates have now declined for twelve consecutive quarters, the declines in the national vacancy rate during the second quarter of 2006 and the first quarter of 2006 were the smallest quarterly declines since late 2003.

     Real estate conditions in the Account’s top office markets have experienced measurable improvement in recent quarters. For example, office vacancies in the Washington, D.C. metropolitan area are well below the national average and stand at 9.2% at the end of the second quarter of 2006; vacancies in the District of Columbia, where the largest concentration of the Account’s investments are located, averaged 6.2% at the end of the second quarter of 2006. In San Francisco, vacancies have declined to 12.5% in the second quarter of 2006 as compared with 12.9% in the first quarter of 2006. Similarly, vacancies in Boston, Los Angeles, and Seattle, which are the Account’s remaining top office markets, have experienced steady declines in vacancies over the past year. Average vacancies in Boston, Los Angeles, and Seattle at the end of the second quarter of 2006 were 13.4%, 10.4% and 10.6%, respectively.

     For the second consecutive quarter, industrial market vacancies in the United States at the end of the second quarter of 2006 were unchanged at 9.9% . While the national vacancy rate was unchanged, Torto Wheaton Research noted that vacancies in the second quarter declined in 30 of the 55 industrial markets that it tracks, and, in addition, noted that, “demand for industrial space is still moving in the right direction”. The vacancy rate for the Account’s industrial portfolio averaged 4.5% in the second quarter of 2006.

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     The Account’s top industrial markets include the nation’s top distribution hubs, such as Riverside and Los Angeles, where vacancies averaged 6.8% and 4.7%, respectively, in the second quarter of 2006. Vacancies in Chicago (12.1%) and Dallas (12.2%) were above the national average, but vacancies declined in both markets during the second quarter. Vacancies in Atlanta increased to 13.2% in the second quarter of 2006 from 12.9% in the first quarter of 2006, but have declined from 14.1% in the second quarter of 2005. The vacancy rates at the end of the second quarter for the Account’s industrial portfolios in the Riverside, Los Angeles, Chicago, and Atlanta markets were 0%, 6.0%, 8.3%, and 12.5%, respectively. In Dallas, the Account owns one portfolio of industrial properties, which was 30% vacant at June 30, 2006.

     Apartment market conditions showed modest improvement during the second quarter of 2006. Torto Wheaton Research reported that vacancy rates in the nation’s largest metropolitan markets averaged 4.4% in the second quarter of 2006, compared with 4.5% in the first quarter of 2006. Torto Wheaton noted that “rental apartments continue to benefit from the slowing housing market and expanding employment; however, the pace of improvement has slowed considerably and is likely to slow even more through year-end.” The average vacancy rate for the Account’s apartment portfolio was 2.5% for the second quarter of 2006.

     U.S. retail markets remained relatively healthy during the second quarter of 2006. According to Torto Wheaton Research, vacancies in neighborhood and community centers averaged 8.5% at the end of the second quarter of 2006 versus 8.2% for the first quarter of 2006. Vacancies have now increased for two consecutive quarters, and Torto Wheaton Research believes that “high gas prices and the weak housing market have begun to wear on consumers’ discretionary spending.” Still, vacancies declined in 15 of the 41 retail markets that Torto Wheaton Research tracks. The average vacancy rate for the Account’s retail portfolio was 3.4%, and, for its neighborhood and community centers, was 3.5% at the end of the second quarter of 2006.

     Overall, Torto Wheaton Research believes that commercial real estate construction remains at manageable levels. According to Torto Wheaton Research, office construction nationally is expected to total roughly 55 million square feet in 2006, which is well below the average annual construction of 90 million square feet per year during the 1999-2002 cyclical peak. Industrial construction is expected to total 172 million square feet nationally in 2006 as compared with the average annual construction of 235 million square feet per year during the 1998-2001 cyclical peak. Torto Wheaton Research expects apartment construction to total 220,000 units in 2006, up from 205,000 units in 2005. Nevertheless, Torto Wheaton Research expects apartment vacancies to decline slightly in 2006. Further, Torto Wheaton Research believes that retail construction is expected to total 23 million square feet in 2006, which is virtually the same amount built in 2005. Torto Wheaton Research expects retail vacancies to increase slightly over the remainder of 2006 because of reduced retail space demand as consumer spending weakens.

     On balance, management believes that economic and property market fundamentals remain solid, and near term prospects appear promising. However, real estate markets are cyclical, and current market conditions, while positive, are subject to change in the

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future. While employment growth remains steady, it moderated during the second quarter of 2006, and a number of economists expect employment growth to remain modest during the balance of 2006. Further, recent data suggest that improvements in office, industrial, and apartment market conditions are slowing. For the retail sector, market conditions remain healthy but vacancies increased during the first half of the year and could increase further if consumer spending continues to be constrained by high gas and energy prices and a softer housing market. Continued employment growth is needed to maintain market fundamentals and sustain demand for all types of commercial real estate.

Results of Operations

Six Months Ended June 30, 2006 Compared to Six Months Ended June 30, 2005

Performance

     For the six months ended June 30, 2006, the Account’s total net return was 8.06% . This was 209 basis points higher than the return of 5.97% for the six months ending June 30, 2005. The Account’s strong performance in the 2006 period was primarily due to substantial capital appreciation on the Account’s real estate assets, including joint ventures, as well as an increase in interest rates on its marketable securities. The Account’s total net assets grew 40% from June 30, 2005 to June 30, 2006. The primary drivers of this growth were significant net participant transactions and the Account’s realized and unrealized gains on its investments over the last twelve months.

Income and Expenses

     The Account’s net investment income, after deduction of all expenses, increased by 31% for the six months ended June 30, 2006 compared to the same period in 2005. This was due to a 40% increase in total net assets, which included a 48% increase in real estate and joint ventures holdings.

     The Account’s real estate holdings, including real estate joint ventures and limited partnerships, generated approximately 79% of the Account’s total investment income (before deducting Account level expenses) during the six months ended June 30, 2006, as compared to 88% for the six-month period ended June 30, 2005. The remaining portion of the Account’s total investment income was generated by investments in marketable securities, including real estate equity securities, commercial paper and government bonds. The decline in the percentage of the Account’s total investment income derived from its real estate holdings was primarily due to increased income from its marketable securities and a decline in joint venture income.

     Gross real estate rental income increased 35% in the six months ended June 30, 2006 compared to the same period in 2005. The increase in real estate income for the six months ended June 30, 2006 was due primarily to the increase in the number and size of properties owned by the Account (116 as of June 30, 2006 vs. 104 at June 30, 2005). Income from real estate joint ventures and limited partnerships during the six months ended June 30, 2006 was $24,553,167, as compared to $35,897,681 for the same period in 2005. The 32% decrease was due to the properties owned by the joint ventures hold-

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ing more cash in order to fund certain expenditures, including capital improvements, thereby decreasing joint venture distributions. Investment income on the Account’s marketable securities for the six months ended June 30, 2006 and 2005 totaled $59,792,873 and $25,051,071, respectively. This increase was due to an increase in the amount of non-real estate assets held by the Account relative to Total Investments, and an increase in market interest rates during the first six months of 2006.

     Total property level expenses for the six months ended June 30, 2006 and 2005 were $180,135,775 and $130,142,363, respectively. The 38% increase in property level expenses during the six months ended June 30, 2006 was a result of the increased number and size of properties held in the Account and interest expense incurred in 2006, due to an increase in the overall leverage on the Account. The interest expense incurred in the six months ended June 30, 2006 was $32,684,110, as compared to $17,497,914 for the same period in 2005. Without the interest expense, the increase in property level expenses would have been 31% on a period-to-period comparison.

     The Account also incurred expenses for the six months ended June 30, 2006 and 2005 of $12,550,605 and $8,327,349, respectively, for investment advisory services, $20,006,720 and $11,927,701 respectively, for administrative and distribution services and $5,402,737 and $4,157,670, respectively, for the mortality, expense risk and liquidity guarantee charges. The aggregate 55% increase in these expenses was a result of the larger net asset base of the Account and the increased costs associated with managing the Account.

Net Realized and Unrealized Gains and Losses on Investments

     The Account had net realized and unrealized gains on investments and mortgage notes payable of $641,376,213 and $284,311,632 for the six months ended June 30, 2006 and 2005, respectively. The difference was primarily due to the substantial increase in net realized and unrealized gains of $408,857,491 compared to $240,304,949 on its real estate properties for the six months ended June 30, 2006 and 2005, respectively. The increase in net realized and unrealized gain on real estate was due to the capital appreciation of real estate assets resulting from the continued inflow of capital into the real estate market from institutional and other investors, which has had the effect of increasing the value of real estate investments. The Account had unrealized gains on its real estate joint venture and limited partnership holdings of $170,093,354 for the six months ended June 30, 2006, as compared to unrealized gains of $60,525,182 for the same period in 2005. This difference on a year-to-year comparison reflects the substantial capital appreciation of the properties owned by the joint ventures. The Account’s marketable securities posted substantial net realized and unrealized gains of $38,188,763 for the six months ended June 30, 2006, as compared to $13,148,026 for the same period in 2005. In addition, the net change in unrealized appreciation on the Account’s mortgage loans payable was a gain of $24,236,605 for the six months ended June 30, 2006, as compared to an unrealized loss of $29,666,525 for the same period in 2005. Every quarter the mortgages on the properties owned by the Account are valued. During the six months ended June 30, 2006, the net effect of these valuations was positive due to the increase in market interest rates.

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     During the six months ended June 30, 2006, the Account had no real estate sales. The $635,693 of realized loss in the six months ended June 30, 2006 was due to post-closing adjustments made in the current period for properties sold in 2005.

Three Months Ended June 30, 2006 Compared to Three Months Ended June 30, 2005

Performance

     For the three months ended June 30, 2006, the Account’s total net return was 4.69% . This was 31 basis points higher than the total net return of 4.38% for the three months ended June 30, 2005 and 148 basis points higher than the total net return of 3.21% for the three months ended March 31, 2006. The Account’s strong performance in the second quarter of 2006 was primarily due to capital appreciation on the Account’s real estate-related assets, including interests in joint ventures and real estate limited partnerships, and an increase in interest earned on marketable securities. The Account’s real estate holdings, including its joint venture holdings, which represented 79.60% of the Account’s total portfolio, had a gross total return of 6.15% . Its real estate limited partnership interests, which represented 1.81% of the Account’s total investments, had a gross total return of 13.92% . The market value of the Account’s real estate and real estate-related portfolios benefited from healthy economic conditions and the continued strengthening of real estate market fundamentals. The substantial amounts of equity available in the capital markets for investment in real estate by institutional and foreign investors continued to drive market values upward, albeit at a marginally slower pace than at the same time last year.

Income and Expenses

     The Account’s net investment income, after deduction of all expenses, increased by 37% for the three months ended June 30, 2006 compared to the same period in 2005.

     The Account’s real estate holdings, including real estate joint ventures and limited partnerships, generated approximately 78% of the Account’s total investment income (before deducting Account level expenses) during the three months ended June 30, 2006, as compared to 86% for the three month period ended June 30, 2005. The decline was primarily due to increased income from the Account’s marketable securities and a decrease in joint venture income distributed in the three months ended June 30, 2006.

     Gross real estate rental income increased 36% in the three months ended June 30, 2006 as compared with the same period in 2005. The increase in real estate income for the three months ended June 30, 2006 was due primarily to the increase in the number and size of properties owned by the Account. Income from real estate joint ventures and limited partnerships in the three months ended June 30, 2006 was $13,642,202, as compared to $18,706,861 for the same period in 2005. The 27% decrease was due to the properties owned by the joint ventures holding more cash in order to fund certain expenditures, including capital improvements, thereby decreasing joint venture distributions. Interest income on the Account’s interest earning marketable securities for the three months ended June 30, 2006 and 2005 totaled $29,954,222 and $11,251,893, respectively. This increase was due to

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an increase in the amount of non-real estate assets held by the Account relative to Total Investments during the first six months of 2006. In addition, interest rates earned on these investments were higher during the period ended June 30, 2006. Dividend income on the Account’s investments in real estate equity securities declined slightly to $4,811,864 from $4,170,430 for the three months ended June 30, 2006 and 2005, respectively.

     Total property level expenses for the three months ended June 30, 2006 and 2005 were $91,038,618 and $68,392,772, respectively. The 33% increase in property level expenses during the three months ended June 30, 2006 was a result of the increased number and size of properties held in the Account and an increase in the overall leverage of the Account. The interest expense incurred in the second quarter of 2006 was $16,763,342, as compared to $9,482,304 for the same period in 2005. Without the interest expense, the increase in property level expenses would have been 26% on a period-to-period comparison.

     The Account also incurred expenses for the three months ended June 30, 2006 and 2005 of $5,958,340 and $4,312,907, respectively, for investment advisory services, $11,010,515 and $5,970,843, respectively, for administrative and distribution services and $ 2,580,353 and $2,280,792, respectively, for the mortality, expense risk and liquidity guarantee charges. The aggregate 56% increase in these expenses was a result of the larger net asset base in the Account and the increased costs associated with managing and administering the Account.

Net Realized and Unrealized Gains and Losses on Investments

     The Account had net realized and unrealized gains on investments and mortgage loans payable of $411,609,818 and $263,101,053 for the three months ended June 30, 2006 and 2005, respectively. The difference was primarily due to the substantial increase in net realized and unrealized gains on the Account’s real estate properties, which totaled $294,846,098 for the three months ended June 30, 2006, as compared to $185,528,527 for the three months ended June 30, 2005. In addition, the Account had unrealized gains on joint ventures and limited partnerships of $103,907,559 in the second quarter of 2006, as compared to unrealized gains of $41,014,573 in the same period of 2005. This substantial increase in unrealized gains was due to the increase in market value of real estate assets owned by the joint ventures and appreciation of the Account’s interests in the limited partnerships. The Account’s marketable securities posted net realized and unrealized losses of $11,043,201 for the three months ended June 30, 2006, as compared to net realized and unrealized gains of $39,624,478 for the same period in 2005. The change was due to a decline in realized gains from sales of marketable securities (to $2,236,929 in the second quarter of 2006 from $15,110,869 in the second quarter of 2005) and an increase in market interest rates during the second quarter of 2006 as compared to the same period in 2005. In addition, the net change in unrealized appreciation on the Account’s mortgage loans payable was a gain of $23,899,362 for the six months ended June 30, 2006 as compared to a loss of $3,066,525 for the same period 2005, due to an increase in market interest rates in 2006.

     During the three months ended June 30, 2006, the Account had no real estate sales. The $6,050 of realized loss in the three months ended June 30, 2006 was due to post-closing adjustments made in the current period for properties sold in 2005.

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Liquidity and Capital Resources

     At June 30, 2006 and 2005, the Account’s liquid assets (i.e., real estate equity securities, commercial mortgage-backed securities, commercial paper, government agency bonds and cash) had a value of $2,601,540,850 and $2,247,905,335, respectively. The increase in the Account’s liquid assets was primarily due to the net positive inflow of transfers and premiums into the Account, which management believes was in response to the strong relative performance of the Account.

     During the six months ended June 30, 2006, the Account received $530,995,943 in premiums and $704,497,896 in net participant transfers from TIAA, the CREF Accounts and affiliated mutual funds, while, for the same period in 2005, the Account received $471,857,748 in premiums and $850,799,256 in net participant transfers. The Account’s liquid assets are available to purchase additional suitable real estate properties and to meet expense needs and redemption requests (i.e., cash withdrawals, benefits or transfers). In the unlikely event that the Account’s liquid assets and its cash flow from operating activities and participant transactions are not sufficient to meet its cash needs, including redemption requests, TIAA’s general account will purchase liquidity units in accordance with TIAA’s liquidity guarantee to the Account.

     The Account, under certain conditions more fully described in the Account’s prospectus, may borrow money and assume or obtain a mortgage on a property (i.e., to make leveraged real estate investments). Also, to meet any short-term cash needs, the Account may obtain a line of credit whose terms may require that the Account secure a loan with one or more of its properties. The Account’s total borrowings may not exceed 20% of the Account’s total net assets.

Effects of Inflation and Increased Operating Expenses

     Inflation, along with increased insurance, utilities and security costs, may increase property level operating expenses and real estate taxes in the future. These increases in operating expenses are generally billed to tenants either through contractual lease provisions in office, industrial, and retail properties or through rent increases in apartment complexes. However, depending on how long any vacant space in a property remains unleased or any other contractual restrictions in the existing leases, the Account may not be able to recover the full amount of such increases in operating expenses and /or real estate taxes.

Critical Accounting Policies

     The financial statements of the Account are prepared in conformity with accounting principles generally accepted in the United States.

     In preparing the Account’s financial statements, management is required to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. Management bases its estimates on historical experience and assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

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     Management believes that the following policies related to the valuation of the Account’s assets reflected in the Account’s financial statements affect the significant judgments, estimates and assumptions used in preparing its financial statements:

     Valuation of Real Estate Properties: Investments in real estate properties are stated at fair value, as determined in accordance with procedures approved by the Investment Committee of the TIAA Board of Trustees. Fair value for real estate properties is defined as the most probable price for which a property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value involves subjective judgment because the actual market value of real estate can be determined only by negotiation between the parties in a sales transaction. The Account’s properties are initially valued at their respective purchase prices (including acquisition costs). Subsequently, independent appraisers value each real estate property at least once a year. TIAA’s appraisal staff performs a valuation of each real estate property on a quarterly basis and updates the property value if it believes that the value of the property has changed since the previous valuation or appraisal. The appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices (USPAP), the real estate appraisal industry standards created by The Appraisal Foundation. Real estate appraisals are estimates of property values based on a professional’s opinion.

     Valuation of Real Estate Joint Ventures: Real estate joint ventures are stated at the Account’s equity in the net assets of the underlying entities, which value their real estate holdings and mortgage notes payable at fair value.

     Valuation of Marketable Securities: Equity securities listed or traded on any national market or exchange are valued at the last sale price as of the close of the principal securities exchange on which such securities are traded or, if there is no sale, at the mean of the last bid and asked prices on such exchange. Debt securities, other than money market instruments, are valued at the most recent bid price or the equivalent quoted yield for such securities (or those of comparable maturity, quality and type). Money market instruments, with maturities of one year or less, are valued in the same manner as debt securities or derived from a pricing matrix that has various types of money market instruments along one axis and various maturities along the other. Portfolio securities and limited partnership interests for which market quotations are not readily available are valued at fair value as determined in good faith under the direction of the Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole.

     Accumulation and Annuity Fund: The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment. The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments. The net increase or decrease in net assets from investment operations is apportioned between the accounts based upon their relative daily net asset values. Once an Account participant begins receiving lifetime annuity income benefits, monthly payment levels cannot be reduced as a result of the Account’s adverse mortality experience. In addition, the contracts are required to stipulate the maximum expense charge that can be assessed, which is equal to 2.50% of average net assets per year. Accordingly, a small risk charge is paid by the Account to TIAA to assume these risks.

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     Accounting for Investments: Real estate transactions are accounted for as of the date on which the purchase or sale transactions for the real estate properties close (settlement date). Rent from real estate properties consists of all amounts earned under tenant operating leases, including base rent, recoveries of real estate taxes and other expenses and charges for miscellaneous services provided to tenants. Rental income is recognized in accordance with the billing terms of the lease agreements. The Account bears the direct expenses of the real estate properties owned. These expenses include, but are not limited to, fees to local property management companies, property taxes, utilities, maintenance, repairs, insurance and other operating and administrative costs. An estimate of the net operating income earned from each real estate property is accrued by the Account on a daily basis and such estimates are adjusted as soon as actual operating results are determined.

     The Account has limited partnership interests in various real estate funds (limited partnerships). The Account records its contributions as increases to the investments, and distributions from the investments are treated as either income or return of capital, as determined by the management of the limited partnerships. Unrealized gains and losses are calculated and recorded quarterly when the Account’s accounting records are compared to the fund’s financial statements and the Account’s equity values are adjusted.

     Income from joint ventures is recorded based on the Account’s proportional interest in the income earned by the joint venture that has been distributed from the joint venture to the Account.

     Securities transactions are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned and includes accrual of discount and amortization of premium. Dividend income is recorded on the ex-dividend date or as soon as the Account is informed of the dividend. Realized gains and losses on securities transactions are accounted for on the specific identification method.

     Mortgage Loans Payable: Commencing in 2005, the Account separately reports mortgage loans payable at estimated market value. Estimated market values are based on the amount at which the liability could be settled (either transferred or paid back) in a current transaction exclusive of direct transaction costs. Different assumptions or changes in future market conditions could significantly affect estimated market value. At times, the Account may assume debt in connection with the purchase of real estate. For debt assumed, the Account allocates a portion of the purchase price to the below or above market debt and amortizes the premium or discount over the remaining life of the debt.

     Foreign currency transactions and translation: Portfolio investments and other assets and liabilities denominated in foreign currencies are translated into U.S. dollars at the exchange rates prevailing at the end of the period. Purchases and sales of securities, income receipts and expense payments made in foreign currencies are translated into U.S. dollars at the exchange rates prevailing on the respective dates of the transactions. The effect of changes in foreign currency exchange rates on portfolio investments are included in the net realized and unrealized gains and losses on investments. Net realized gains and losses on foreign currency transactions include maturities of forward for-

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eign currency contracts, disposition of foreign currencies, and currency gains and losses between the accrual and receipt dates of portfolio investment income and between the trade and settlement dates of portfolio investment transactions.

Forward-Looking Statements

     Some statements in this report which are not historical facts may be “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our expectations, beliefs, intentions or strategies for the future, and the assumptions underlying these forward-looking statements. Forward-looking statements involve risks and uncertainties, some of which are referenced below in “Item 3. Quantitative and Qualitative Disclosures About Market Risk,” that could cause actual results to differ materially from historical experience or management’s present expectations.

     Caution should be taken not to place undue reliance on management’s forward-looking statements, which represent management’s views only as of the date this report is filed. Neither management nor the Account undertake any obligation to update publicly or revise any forward-looking statement, whether as a result of new information, changed assumptions, future events or otherwise.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     The Account’s real estate and real estate-related investments, which as of June 30, 2006 represented 81.96% of the Account’s investments (not including real estate-related marketable securities), expose the Account to a variety of risks. These risks include, but are not limited to:

• General Real Estate Risk — The risk that the Account’s property values or rental and occupancy rates could go down due to general economic conditions, a weak market for real estate generally, and changing supply and demand for certain types of properties;
  
  
• Appraisal Risk — The risk that the sale price of an Account property (i.e., the value that would be determined by negotiations between independent parties) might dif- fer substantially from its estimated or appraised value, leading to losses or reduced profits to the Account upon sale;
  
  
• Risk Relating to Property Sales — the risk that the Account might not be able to sell a property at a particular time for its full value, particularly in a poor market. This might make it difficult to raise cash quickly and also could lead to Account losses; and
  

• Risks of Borrowing — The risk that interest rate changes may impact Account returns if the Account takes out a mortgage on a property or buys a property subject to a mortgage.

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• Foreign Currency Risk — The value of the Account’s foreign investments, related debt or rental income can increase or decrease due to changes in foreign currency exchange rates or foreign currency exchange control regulations, and hedging against such changes, if undertaken by the Account, may entail additional costs and be unsuccessful.

     As of June 30, 2006, 18.04% of the Account’s investments were in market risk sensitive instruments, comprised entirely of marketable securities. These include real estate equity securities, commercial mortgage-backed securities (CMBS), and high-quality short-term debt instruments (i.e., commercial paper and government agency bonds). The Statement of Investments for the Account sets forth the general financial terms of these instruments, along with their fair values, as determined in accordance with procedures described in Note 1 to the Account’s financial statements. Note that the Account does not currently invest in derivative financial instruments.

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

• financial risk — for debt securities, the possibility that the issuer won’t be able to pay principal and interest when due, and for common or preferred stock, the possibility that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value.
  

• market risk — price volatility due to changing conditions in the financial markets and, particularly for debt securities, changes in overall interest rates.
  

• interest rate volatility, which may affect current income from an investment.

     In addition, mortgage-backed securities are subject to prepayment risk or extension risk — i.e., the risk that borrowers will repay the loans early or later than anticipated. If the underlying mortgage assets experience greater than anticipated payments of principal, the Account could fail to recoup some or all of its initial investment in these securities. 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 market value of these securities is also highly sensitive to changes in interest rates. 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.

     In addition to these risks, real estate equity securities and 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. For more information on the risks associated with all of the Account’s investments, see the Account’s most recent prospectus.

ITEM 4. CONTROLS AND PROCEDURES.

     (a) Evaluation of disclosure controls and procedures. The registrant maintains a system of disclosure controls and procedures that are designed to ensure that informa-

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tion required to be disclosed in the registrant’s reports under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to management, including the registrant’s Chief Executive Officer (“CEO”) and the Chief Financial Officer (“CFO”), as appropriate, to allow timely decisions regarding required disclosure. Under the supervision and participation of the registrant’s management, including the registrant’s CEO and CFO, the registrant conducted an evaluation of the effectiveness of the registrant’s disclosure controls and procedures as defined in Rule 13a-15(e) under the Exchange Act as of June 30, 2006. Based upon management’s review, the CEO and the CFO concluded that the registrant’s disclosure controls and procedures were effective as of June 30, 2006.

     (b) Changes in internal controls over financial reporting. There have been no changes in the registrant’s internal controls over financial reporting that occurred during the registrant’s last fiscal quarter that materially affected, or are reasonably likely to materially affect, the registrant’s internal controls over financial reporting.

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PART II. OTHER INFORMATION

Item 1. LEGAL PROCEEDINGS.

     There are no material legal proceedings that the Account is a party to, or to which the Account’s assets are subject.

Item 1A. RISK FACTORS.

     Not applicable.

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

     Not applicable.

Item 3. DEFAULTS UPON SENIOR SECURITIES.

     Not applicable.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     Not applicable.

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Item 5. OTHER INFORMATION.

Not applicable

Item 6. EXHIBITS.

(3)	(A)	Charter of TIAA (as amended)1
	(B)	Bylaws of TIAA (as amended)1
(4)	(A)	Forms of RA, GRA, GSRA, SRA, IRA Real Estate Account Endorsements3, Keogh Contract,4 Retirement Select and Retirement Select Plus Contracts and Endorsements2 and Retirement Choice and Retirement Choice Plus Contracts.4
	(B)	Forms of Income-Paying Contracts3
(10)	(A)	Independent Fiduciary Agreement, dated February 22, 2006, by and among TIAA, the Registrant, and Real Estate Research Corporation5
	(B)	Custodial Services Agreement, dated as of June 1, 1995, by and between TIAA and Morgan Guaranty Trust Company of New York on behalf of the Real Estate Account (Agreement assigned to Bank of New York, January 1996)3
	(C)	Distribution and Administrative Services Agreement, dated September 29, 1995, by and between TIAA and TIAA-CREF Individual & Institutional Services, Inc.3 (as amended effective as of May 1, 2005)4 and as amended, effective April 28, 20066
(31)	Rule 13a-15(e)/15d-15(e) Certifications
(32)	Section 1350 Certifications

¹ - Previously filed and incorporated herein by reference to the Account’s Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed December 21, 2004 (File No. 333-121493).

² - Previously filed and incorporated herein by reference to the Account’s Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed April 29, 2004 (File No. 333-113602).

³ - Previously filed and incorporated herein by reference to the Account’s Post-Effective Amendment No. 2 to the Registration Statement on Form S-1 filed April 30, 1996 (File No. 33-92990).

⁴ - Previously filed and incorporated herein by reference to the Account’s Post-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed May 2, 2005 (File No. 333-121493).

⁵ - Previously filed and incorporated herein by reference to Exhibit 10.(a) to the Annual Report of the Account filed on March 15, 2006 (File No. 033-92990).

⁶ - Previously filed and incorporated herein by reference to Exhibit 1 to the Account’s Pre-Effective Amendment No. 1 to the Registration Statement on Form S-1 filed May 1, 2006 (File No. 333-132580).

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DATE: August 11, 2006

	TIAA REAL ESTATE ACCOUNT
	By:		TEACHERS INSURANCE AND ANNUITY
			ASSOCIATION OF AMERICA
	By:		/s/ Herbert M. Allison, Jr.
			Herbert M. Allison, Jr.
			Chairman of the Board, President
			and Chief Executive Officer
DATE: August 11, 2006
		By:	/s/ Georganne C. Proctor
			Georganne C. Proctor
			Executive Vice President and
			Chief Financial Officer

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EX-31

EXHIBIT 31

CERTIFICATIONS

I, Herbert M. Allison, Jr., certify that:

     1. I have reviewed this quarterly report on Form 10-Q of the TIAA Real Estate Account;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2006
	/s/ Herbert M. Allison, Jr.                Herbert M. Allison, Jr. Chairman of the Board, President and Chief Executive Officer, Teachers Insurance and Annuity Association of America

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I, Georganne C. Proctor, certify that:

     1. I have reviewed this quarterly report on Form 10-Q of the TIAA Real Estate Account;

     2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

     3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

     4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

     a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

     b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

     c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

     5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal controls over financial reporting, to the registrant’s auditors and the audit committee of registrant’s board of directors (or persons performing the equivalent functions):

     a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

     b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 11, 2006
	/s/ Georganne C. Proctor                Georganne C. Proctor Executive Vice President and Chief Financial Officer, Teachers Insurance and Annuity Association of America

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EX-32

EXHIBIT 32

Certification
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

     Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of section 1350, chapter 63 of title 18, United States Code), each of the undersigned officers of Teachers Insurance and Annuity Association of America, do hereby certify, to such officer’s knowledge, that:

     The quarterly report on Form 10-Q of the TIAA Real Estate Account (the “Account”) for the quarter ended June 30, 2006 (the “Form 10-Q”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 and information contained in the Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of the Account.

Dated: August 11, 2006	/s/ Herbert M. Allison, Jr.
	Herbert M. Allison, Jr.
	Chairman of the Board,
	President and Chief Executive Officer,
	Teachers Insurance and
	Annuity Association of America
Dated: August 11, 2006	/s/ Georganne C. Proctor
	Georganne C. Proctor
	Executive Vice President and
	Chief Financial Officer,
	Teachers Insurance and
	Annuity Association of America

     A signed original of this written statement required by Section 906 has been provided to the TIAA Real Estate Account and will be retained by the Account and furnished to the Securities and Exchange Commission or its staff upon request.

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