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

FORM 10-Q

(Mark One)

S QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2010

OR

£ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to

Commission file number: 33-92990; 333-165286

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

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

NOT APPLICABLE
(I.R.S. Employer Identification No.)

C/O TEACHERS INSURANCE AND
ANNUITY ASSOCIATION OF AMERICA
730 THIRD AVENUE
NEW YORK, NEW YORK 10017-3206
(Address of principal executive offices, including zip code)

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

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

YES S NO £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES £ NO £

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

Large accelerated filer £	Accelerated filer £
Non-accelerated filer S	Smaller Reporting Company £
(Do not check if a smaller reporting company)

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

YES £ NO S

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS.

INDEX TO UNAUDITED FINANCIAL STATEMENTS
TIAA REAL ESTATE ACCOUNT
JUNE 30, 2010

	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		23

2

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF ASSETS AND LIABILITIES
(In thousands, except per accumulation unit amounts)

	June 30, 2010			December 31, 2009
	(Unaudited)
ASSETS
Investments, at fair value:
Real estate properties (cost: $9,465,913 and $9,408,978)		$	7,517,316		$	7,437,344
Real estate joint ventures and limited partnerships (cost: $2,354,905 and $2,437,795)			1,574,898			1,514,876
Marketable securities (cost: $1,262,301 and $671,235)			1,262,398			671,267
Mortgage loan receivable (cost: $75,000 and $75,000)			72,712			71,273
Total investments (cost: $13,158,119 and $12,593,008)			10,427,324			9,694,760
Cash and cash equivalents			9,114			24,859
Due from investment advisor			18,561			4,290
Other			154,367			188,794
TOTAL ASSETS			10,609,366			9,912,703
LIABILITIES
Mortgage loans payable—Note 7 (principal outstanding: $1,888,745 and $1,907,090)			1,890,016			1,858,110
Payable for securities transactions			5			49
Accrued real estate property level expenses			134,714			151,808
Security deposits held			23,261			22,822
TOTAL LIABILITIES			2,047,996			2,032,789
NET ASSETS
Accumulation Fund			8,324,270			7,636,115
Annuity Fund			237,100			243,799
TOTAL NET ASSETS		$	8,561,370		$	7,879,914
NUMBER OF ACCUMULATION UNITS OUTSTANDING— Notes 8 and 9			42,017			39,473
NET ASSET VALUE, PER ACCUMULATION UNIT—Note 8		$	198.12		$	193.45

See notes to the financial statements.

3

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF OPERATIONS
(In thousands)
(Unaudited)

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2010				2009				2010				2009
INVESTMENT INCOME
Real estate income, net:
Rental income		$	216,725			$	238,699			$	429,370			$	480,489
Real estate property level expenses and taxes:
Operating expenses			47,755				55,283				107,066				121,379
Real estate taxes			30,026				32,776				59,768				67,953
Interest expense			24,781				26,624				49,401				51,668
Total real estate property level expenses and taxes			102,562				114,683				216,235				241,000
Real estate income, net			114,163				124,016				213,135				239,489
Income from real estate joint ventures and limited partnerships			22,507				30,438				41,489				60,245
Interest			630				483				1,037				995
TOTAL INVESTMENT INCOME			137,300				154,937				255,661				300,729
Expenses—Note 2:
Investment advisory charges			12,045				11,153				22,931				21,021
Administrative and distribution charges			5,329				8,851				12,431				21,213
Mortality and expense risk charges			996				1,232				1,950				2,606
Liquidity guarantee charges			2,990				3,272				5,852				6,020
TOTAL EXPENSES			21,360				24,508				43,164				50,860
INVESTMENT INCOME, NET			115,940				130,429				212,497				249,869
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE
Net realized gain (loss) on investments:
Real estate properties			—				(8	)			(1,238	)			(16,886	)
Real estate joint ventures and limited partnerships			(19	)			—				(153,252	)			—
Marketable securities			—				1				—				1
Net realized loss on investments			(19	)			(7	)			(154,490	)			(16,885	)
Net change in unrealized appreciation (depreciation) on:
Real estate properties			212,713				(609,089	)			23,274				(1,501,837	)
Real estate joint ventures and limited partnerships			35,455				(469,617	)			155,929				(703,083	)
Marketable securities			85				(10	)			65				18
Mortgage loans receivable			1,253				(1,426	)			1,439				(3,488	)
Mortgage loans payable			(8,517	)			(86,010	)			(34,312	)			(15,322	)
Net change in unrealized appreciation (depreciation) on investments and mortgage loans payable			240,989				(1,166,152	)			146,395				(2,223,712	)
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE			240,970				(1,166,159	)			(8,095	)			(2,240,597	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$	356,910			$	(1,035,730	)		$	204,402			$	(1,990,728	)

See notes to the financial statements.

4

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF CHANGES IN NET ASSET
(In thousands)
(Unaudited)

	For the Three Months Ended June 30,								For the Six Months Ended June 30,
	2010				2009				2010				2009
FROM OPERATIONS
Investment income, net		$	115,940			$	130,429			$	212,497			$	249,869
Net realized loss on investments			(19	)			(7	)			(154,490	)			(16,885	)
Net change in unrealized appreciation (depreciation) on investments and mortgage loans payable			240,989				(1,166,152	)			146,395				(2,223,712	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS			356,910				(1,035,730	)			204,402				(1,990,728	)
FROM PARTICIPANT TRANSACTIONS
Premiums			165,965				180,227				327,039				369,865
Purchase of Liquidity Units by TIAA			—				271,700				—				1,058,700
Net transfers from (to) TIAA			91,641				(102,740	)			73,801				(453,190	)
Net transfers from (to) CREF Accounts			244,333				(305,272	)			219,277				(885,626	)
Net transfers from (to) TIAA-CREF Funds			22,178				(43,236	)			6,402				(96,379	)
Annuity and other periodic payments			(8,864	)			(10,429	)			(19,097	)			(25,313	)
Withdrawals and death benefits			(65,744	)			(79,325	)			(130,368	)			(183,804	)
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM PARTICIPANT TRANSACTIONS			449,509				(89,075	)			477,054				(215,747	)
NET INCREASE (DECREASE) IN NET ASSETS			806,419				(1,124,805	)			681,456				(2,206,475	)
NET ASSETS
Beginning of period			7,754,951				10,427,254				7,879,914				11,508,924
End of period		$	8,561,370			$	9,302,449			$	8,561,370			$	9,302,449

See notes to the financial statements.

5

TIAA REAL ESTATE ACCOUNT
STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)

	For the Six Months Ended June 30,
	2010				2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net increase (decrease) in net assets resulting from operations		$	204,402			$	(1,990,728	)
Adjustments to reconcile net increase (decrease) in net assets resulting from operations to net cash (used in) provided by operating activities:
Capital improvements on real estate properties			(49,245	)			(69,547	)
Proceeds from sale of real estate properties			—				28,880
Purchases of long term investments			(88,626	)			(12,012	)
Proceeds from sale of long term investments			24,492				—
(Increase) decrease in other investments			(584,277	)			31,032
Decrease in payable for securities transactions			(44	)			(85	)
Change in due from investment advisor			(14,271	)			(11,608	)
Decrease in other assets			33,424				18,855
Decrease in accrued real estate property level expenses			(24,782	)			(22,517	)
Increase in security deposits held			439				678
Net realized loss on investments			154,490				16,885
Net change in unrealized (appreciation) depreciation on investments and mortgage loans payable			(146,395	)			2,223,712
NET CASH (USED IN) PROVIDED BY OPERATING ACTIVITIES			(490,393	)			213,545
CASH FLOWS FROM FINANCING ACTIVITIES
Principal payments of mortgage loans payable			(2,406	)			(1,655	)
Premiums			327,039				369,865
Purchase of Liquidity Units by TIAA			—				1,058,700
Net transfers from (to) TIAA			73,801				(453,190	)
Net transfers from (to) CREF Accounts			219,277				(885,626	)
Net transfers from (to) TIAA-CREF Funds			6,402				(96,379	)
Annuity and other periodic payments			(19,097	)			(25,313	)
Withdrawals and death benefits			(130,368	)			(183,804	)
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES			474,648				(217,402	)
NET DECREASE IN CASH			(15,745	)			(3,857	)
CASH
Beginning of period			24,859				22,127
End of period		$	9,114			$	18,270
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest		$	49,553			$	51,161

See notes to the financial statements.

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TIAA REAL ESTATE ACCOUNT
NOTES TO THE FINANCIAL STATEMENTS

Note 1—Organization and Significant Accounting Policies

Business: 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 (the “Board”) 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 Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account, and make withdrawals from the Account on a daily basis under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.

The 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 subsidiaries wholly owned by TIAA for the benefit of the Account. The Account also holds interests in real estate joint ventures and limited partnerships in which the Account does not hold a controlling interest; as such, such interests are not consolidated for financial statement purposes. The Account also invests in mortgage loans receivable collateralized by commercial real estate properties. The Account also invests in publicly-traded securities and other instruments to maintain adequate liquidity levels for operating expenses, capital expenditures and to fund benefit payments (withdrawals, transfers and related transactions).

The financial statements were prepared in accordance with accounting principles generally accepted in the United States of America which may require the use of estimates made by management. Actual results may vary from those estimates and such differences may be material. 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 between the Account and such subsidiaries have been eliminated.

Accounting for Investments at Fair Value: The Financial Accounting Standards Board (“FASB”) has provided authoritative guidance for fair value measurements and disclosures. Additionally, the guidance defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and requires certain disclosures about fair value measurements. This guidance indicates, among other things, that a fair value measurement under an exit price model assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

This guidance also permits entities to elect to measure financial instruments and certain financial assets and liabilities at fair value and expand the use of fair value measurements when warranted. The Account reports all investments and mortgage loans payable at fair value.

Valuation Hierarchy: The Account groups financial assets and certain financial liabilities measured at fair value into three levels, based on the markets in which the assets and liabilities are traded, if any, and the observability of the assumptions used to determine fair value. These levels are:

Level 1—Valuations using unadjusted quoted prices for assets traded in active markets, such as stocks listed on the New York Stock Exchange. Active markets are defined as having the following characteristics for the measured asset or liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information regarding the issuer is publicly available. Level 1 assets, which may be held by the Account from time to time, include real estate related marketable securities (such as publicly traded REIT stocks).

Level 2—Valuations for assets and liabilities traded in less active, dealer or broker markets. Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities. Level 2

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inputs for fair value measurements are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include:

a. Quoted prices for similar assets or liabilities in active markets;

b. Quoted prices for identical or similar assets or liabilities in markets that are not active (that is, markets in which there are few transactions for the asset (or liability), the prices are not current, price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly);

c. Inputs other than quoted prices that are observable within the market for the asset (or liability) (for example, interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates that are observable at commonly quoted intervals); and

d. Inputs that are derived principally from or corroborated by observable market data by correlation or other means (for example, market-corroborated inputs).

Examples of securities which may be held by the Account and included in Level 2 include Certificates of Deposit, Commercial Paper, Government Agency Notes and Variable Notes.

Level 3—Valuations for assets and liabilities that are derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market, and require significant professional judgment in determining the fair value assigned to such assets or liabilities. Examples of Level 3 assets and liabilities which may be held by the Account from time to time include investments in real estate, investments in joint ventures and limited partnerships, mortgage loans receivable and mortgage loans payable.

An investment’s categorization within the valuation hierarchy described above is based upon the lowest level of input that is significant to the fair value measurement.

The Account’s investments and mortgage loans payable are stated at fair value. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon vendor-provided, evaluated prices or internally-developed models that primarily use market-based or independently-sourced market data, including interest rate yield curves, market spreads, and currency rates. Valuation adjustments will be made to reflect changes in credit quality, counterparty’s creditworthiness, the Account’s creditworthiness, liquidity, and other observable and unobservable inputs that are applied consistently over time.

The methods described above are considered to produce fair values that represent a good faith estimate of what an unaffiliated buyer in the marketplace would pay to purchase the asset or would receive to transfer the liability. Since fair value calculations involve significant professional judgment in the application of both observable and unobservable attributes, actual realizable values or future fair values may differ from amounts reported. Furthermore, while the Account believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments, while reasonable, could result in different estimates of fair value at the reporting date. As discussed below in more detail, as the Account generally obtains independent external appraisals on a quarterly basis, there may be circumstances in the interim in which the true realizable value of a property is not reflected in the Account’s daily net asset value calculation or in the Account’s periodic financial statements. This disparity may be more apparent when the commercial and/or residential real estate markets experience an overall and possibly dramatic decline (or increase) in property values in a relatively short period of time between appraisals.

The following is a description of the valuation methodologies used for investments measured at fair value.

Valuation of Real Estate Properties: Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. Accordingly, the Account does not record depreciation. The Account’s real estate properties are generally classified within Level 3 of the valuation hierarchy. 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

8

value involves judgment because the actual fair value of real estate can be determined only by negotiation between the parties in a sales transaction. The Account’s primary objective when valuing its real estate investments will be to produce a valuation that represents a reasonable estimate of the fair value of its investments. Implicit in the Account’s definition of fair value is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

• Buyer and seller are typically motivated;

• Both parties are well informed or well advised, and acting in what they consider their best interests;

• A reasonable time is allowed for exposure in the open market;

• Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and

• The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, discount rates and capitalization rates. Valuation techniques include discounted cash flow analysis, prevailing market capitalization rates or multiples applied to earnings from the property, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties. Amounts ultimately realized from each investment may vary significantly from the fair value presented.

Real estate properties owned by the Account are initially valued based on an independent appraisal at the time of the closing of the purchase, which may result in a potential unrealized gain or loss reflecting the difference between an investment’s fair value (i.e., exit price) and its cost basis (which is inclusive of transaction costs).

Subsequently, each property is appraised each quarter by an independent external appraiser. In general, the Account obtains appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments, and thus, adjustments to the valuations of its holdings (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day or month in each period.

Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when bids are obtained for properties held for sale by the Account or when a contract for the sale of a property is executed. In addition, adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant). Alternatively, adjustments may be made to reflect the execution or renewal of a significant lease. Also, adjustments may be made to reflect factors (such as sales values for comparable properties or local employment rate) bearing uniquely on a particular region in which the Account holds properties. TIAA’s internal appraisal staff oversees the entire appraisal process, in conjunction with the Account’s independent fiduciary (the independent fiduciary is more fully described in the paragraph below). Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).

An independent fiduciary, Real Estate Research Corporation has been appointed by a special subcommittee of the Investment Committee of the Board to, among other things, oversee the appraisal process. The independent fiduciary must approve all independent appraisers used by the Account. All 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. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. These independent appraisers are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent, RICS) and state certified appraisers from national or regional firms with relevant

9

property type experience and market knowledge. Under the Account’s current procedures, each independent appraisal firm will be rotated off of a particular property at least every three years, although such appraisal firm may perform appraisals of other Account properties subsequent to such rotation.

Also, the independent fiduciary can require additional appraisals if factors or events have occurred that could materially change a property’s value (including those identified above) and such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued appropriately. The independent fiduciary must also approve any valuation change of real estate related assets where a property’s value changed by more than 6% from the most recent independent annual appraisal, or if the value of the Account would change by more than 4% within any calendar quarter or more than 2% since the prior calendar month. When a real estate property is subject to a mortgage, the property is valued independently of the mortgage and the property and mortgage fair values are reported separately (see—“Valuation of Mortgage Loans Payable” below). The independent fiduciary reviews and approves all mortgage valuation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value until the next valuation review or appraisal.

Valuation of Real Estate Joint Ventures: Real estate joint ventures are stated at the fair value of the Account’s ownership interests of the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related mortgage loans payable, and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. Upon the disposition of all real estate investments by an investee entity, the Account will continue to state its equity in the remaining net assets of the investee entity during the wind down period, if any, which occurs prior to the dissolution of the investee entity. The Account’s real estate joint ventures are generally classified within level 3 of the valuation hierarchy.

Valuation of Real Estate Limited Partnerships: Limited partnership interests are stated at the fair value of the Account’s ownership in the partnership which is based on the most recent net asset value of the partnership, as reported by the sponsor. Since market quotations are not readily available, the limited partnership interests are valued at fair value as determined in good faith under the direction of the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. These investments are generally classified within level 3 of the valuation hierarchy.

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 market or 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 market or exchange, exclusive of transaction costs. Such marketable securities are generally classified within level 1 of the valuation hierarchy.

Debt securities, other than money market instruments, are generally 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. Debt securities are generally classified within level 2 of the valuation hierarchy.

Equity and fixed income securities traded on a foreign exchange or in foreign markets are valued using their closing values under the valuation methods generally accepted in the country where traded, as of the valuation date. This value is converted to U.S. dollars at the exchange rate in effect on the valuation day. Under certain circumstances (for example, if there are significant movements in the United States markets and there is an expectation the securities traded on foreign markets will adjust based on such movements when the foreign markets open the next day), the Account may adjust the value of equity or fixed income securities that trade on a foreign exchange or market after the foreign exchange or market has closed. Equity securities traded on a foreign exchange or in foreign markets are generally classified within level 1 of the valuation hierarchy. Fixed income securities traded on a foreign exchange or in foreign markets are generally classified within level 2 of the valuation hierarchy. Equity and fixed income securities traded in foreign markets that are adjusted based upon significant movements in the United States markets are generally classified within level 2 of the valuation hierarchy.

Valuation of Mortgage Loan 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

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at least quarterly based on market factors, such as market interest rates and spreads for comparable loans, the liquidity for mortgage loans of similar characteristics, the performance of the underlying collateral and the credit quality of the counterparty. The Account’s mortgage loan receivable is classified within level 3 of the valuation hierarchy.

Valuation of Mortgage Loans Payable: Mortgage loans payable are stated at fair value. The estimated fair value of mortgage loans payable is based on the amount at which the liability could be transferred to a third party exclusive of transaction costs. Mortgage loans payable are valued at least quarterly based on market factors, such as market interest rates and spreads for comparable loans, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral), the liquidity for mortgage loans of similar characteristics, the maturity date of the loan, the return demands of the market, and the credit quality of the Account. The Account’s mortgage loans payable are generally classified within level 3 of the valuation hierarchy. Interest expense for mortgage loans payable is recorded on the accrual basis taking into account the outstanding principal and contractual interest rates.

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 any changes in foreign currency exchange rates on portfolio investments and mortgage loans payable is included in net realized and unrealized gains and losses on investments and mortgage loans payable. Net realized gains and losses on foreign currency transactions include 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 and, when applicable, include maturities of forward foreign currency contracts.

Accumulation and Annuity Funds: The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment (“Accumulation Fund”). The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments (“Annuity Fund”). 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 pursuant to which the Account is offered are required to stipulate the maximum expense charge for all Account level expenses that can be assessed, which is equal to 2.5% of average net assets per year. The Account pays a fee to TIAA to assume these mortality and expense 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). The Account recognizes a realized gain on the sale of a real estate property to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A realized loss occurs when the cost-to-date exceeds the sales price. Any accumulated unrealized gains and losses are reversed in the calculation of realized gains and losses.

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 when actual operating results are determined.

The Account has limited ownership interests in various private real estate funds (limited partnerships and one limited liability corporation) and a private real estate investment trust (collectively, the “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 based upon the net asset value of the limited partnership and recorded when the financial statements of the limited partnerships are received by the Account; however, as circumstances warrant, prior to the receipt of financial statements of the limited

11

partnership, the Account will estimate the value of its interests in good faith and will from time to time seek input from the issuer or the sponsor of the investment vehicle. Changes in value based on such estimates are recorded by the Account as unrealized gains and losses.

Income from real estate joint ventures is recorded based on the Account’s proportional interest of the income distributed by the joint venture. Income earned by the joint venture, but not yet distributed to the Account by the joint venture investment, is recorded as unrealized gains and losses on real estate joint ventures.

Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. 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.

The Account’s net assets as of the close of each valuation day are valued by taking the sum of:

• the value of the Account’s cash, cash equivalents, and investments in short-term and other debt instruments;

• the value of the Account’s other securities and other non real estate assets;

• the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;

• an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non real estate-related investments since the end of the prior valuation day (including short-term marketable securities); and

• actual net operating income earned from the Account’s properties, other real estate-related investments and non real estate-related investments (but only to the extent any such item of income differs from the estimated income accrued for on such investments).

and then reducing the sum by the Account’s liabilities, including the daily investment management fee, administration and distribution fees and certain other expenses attributable to operating the Account.

After the end of every quarter, the Account reconciles the amount of expenses deducted from the Account (which is established in order to approximate the costs that the Account will incur) with the expenses the Account actually incurred. If there is a difference, the Account adds it to or deducts it from the Account in equal daily installments over the remaining days of the following quarter. Material differences may be repaid in the current calendar quarter. The Account’s at-cost deductions are based on projections of Account assets and overall expenses, and the size of any adjusting payments will be directly affected by the difference between management’s projections and the Account’s actual assets or expenses.

Cash: The Account maintains cash balances in bank deposit accounts which, at times, exceed federally insured limits. The Account’s management monitors these balances to mitigate the exposure of risk due to concentration and has not experienced any losses from such concentration.

Federal Income Taxes: Based on provisions of the Internal Revenue Code, Section 817, the Account is taxed as a segregated asset account of TIAA and as such, the Account should incur no federal income tax attributable to the net investment activity of the Account. Management has concluded that the Account does not have any uncertain tax positions as of June 30, 2010.

Due to/from Investment Advisor: Due to/from investment advisor represents amounts that were paid or received by TIAA on behalf of the Account. Amounts generally are paid or received by the Account within one or two business days and no interest is charged on these amounts.

Note 2—Management Agreements and Arrangements

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

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The Account is a party to the Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account (the “Distribution Agreement”), dated January 1, 2008, by and among TIAA, for itself and on behalf of the Account, and TIAA-CREF Individual and Institutional Services, LLC (“Services”), a wholly owned subsidiary of TIAA, a registered broker-dealer and a member of the Financial Industry Regulatory Authority. Pursuant to the Distribution Agreement, Services performs distribution services for the Account which include, among other things, (i) distribution of annuity contracts issued by TIAA and funded by the Account, (ii) advising existing annuity contract owners in connection with their accumulations and (iii) helping employers implement and manage retirement plans. In addition, TIAA performs administrative functions for the Account, which include, among other things, (i) computing the Account’s daily unit value, (ii) maintaining accounting records and performing accounting services, (iii) receiving and allocating premiums, (iv) calculating and making annuity payments, (v) processing withdrawal requests, (vi) providing regulatory compliance and reporting services, (vii) maintaining the Account’s records of contract ownership and (viii) otherwise assisting generally in all aspects of the Account’s operations. Both distribution services (pursuant to the Distribution Agreement) and administrative services are provided to the Account by Services and TIAA, as applicable, on an at cost basis.

The Distribution Agreement is terminable by either party upon 60 days written notice and terminates automatically upon any assignment thereof.

TIAA and Services provide their services at cost. TIAA and Services receive payments from the Account on a daily basis according to formulas established each year and adjusted periodically with the objective of keeping the payments as close as possible to the Account’s expenses actually incurred. Any differences between actual expenses and the amounts paid by the Account 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 ensures sufficient funds are available for such transfer and withdrawal requests by purchasing accumulation units of the Account. See Note 3—Related Party Transactions below.

To the extent TIAA owns accumulation units issued pursuant to the liquidity guarantee, the independent fiduciary monitors and oversees, among other things, TIAA’s ownership interest in the Account and may require TIAA to eventually redeem some of its units, particularly when the Account has uninvested cash or liquid investments available. 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 Services are identified in the accompanying Statements of Operations and are reflected in Note 8–Condensed Financial Information.

Note 3—Related Party Transactions

Pursuant to its existing liquidity guarantee obligation, as of June 30, 2010, the TIAA General Account owned 4.7 million accumulation units (which are generally referred to as “Liquidity Units”) issued by the Account. Since December 2008 and through June 30, 2010, TIAA has paid an aggregate of $1.2 billion to purchase these Liquidity Units in multiple transactions.

In accordance with this liquidity guarantee obligation, TIAA guarantees that all participants in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is received in good order. Liquidity Units owned by TIAA are valued in the same manner as accumulation units owned by the Account’s participants. Management believes that TIAA has the ability to meet its obligations under the liquidity guarantee.

As discussed in the Account’s prospectus and in accordance with a prohibited transaction exemption from the U.S. Department of Labor (PTE 96-76), the Account’s independent fiduciary, Real Estate Research Corporation, has certain responsibilities with respect to the Account that it has undertaken or is currently undertaking with respect to TIAA’s purchase of Liquidity Units, including among other things, reviewing the purchase and redemption of Liquidity Units by TIAA to ensure the Account uses the correct unit values. In addition, as set forth in PTE 96-76, the independent fiduciary’s responsibilities include:

13

• establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for changing the trigger point;

• approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of Liquidity Units reaches the trigger point; and

• once the trigger point has been reached, participating in any program to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. The independent fiduciary’s role in participating in any such asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of Liquidity Units.

The independent fiduciary, which has the right to adjust the trigger point, has established the trigger point at 45% of the outstanding accumulation units and it will continue to monitor TIAA’s ownership interest in the Account and provide further recommendations as necessary. As of June 30, 2010, TIAA owned approximately 11.2% of the outstanding accumulation units of the Account.

As discussed in Note 2—Management Agreements and Arrangements, TIAA and Services provide services to the Account on an at cost basis. See Note 8—Condensed Financial Information for details of the expense charge and expense ratio.

Note 4—Credit Risk Concentrations

Concentrations of credit risk may arise when a number of properties or tenants are located in a similar geographic region such that the economic conditions of that region could impact tenants’ obligations to meet their contractual obligations or cause the values of individual properties to decline. The Account has no significant concentrations of tenants as no single tenant has annual contract rent that makes up more than 2% of the Rental Income of the Account.

The substantial majority of the Account’s wholly owned real estate investments and investments in joint ventures are located in the United States. The following table represents the diversification of the Account’s portfolio by region and property type:

Diversification by Fair Value⁽¹⁾

	East			West			South			Midwest			Foreign(2)			Total
Office		24.8	%		17.0	%		11.5	%		1.2	%		2.8	%		57.3	%
Apartment		2.6	%		5.8	%		5.4	%		0.0	%		0.0	%		13.8	%
Industrial		1.3	%		6.6	%		4.1	%		1.2	%		0.0	%		13.2	%
Retail		3.3	%		0.9	%		8.7	%		0.4	%		1.8	%		15.1	%
Storage Facilities		0.2	%		0.2	%		0.1	%		0.1	%		0.0	%		0.6	%
Total		32.2	%		30.5	%		29.8	%		2.9	%		4.6	%		100.0	%

(1)	Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.
(2)	Represents real estate investments in the United Kingdom and France.

Properties in the “East” region are located in: CT, DC, DE, KY, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV

Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY

Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX

Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI

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Note 5—Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following tables show the major categories of assets and liabilities measured at fair value on a recurring basis as of June 30, 2010 and December 31, 2009, using unadjusted quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3) (in thousands, unaudited):

Description	Level 1: Quoted Prices in Active Markets for Identical Assets			Level 2: Significant Other Observable Inputs			Level 3: Significant Unobservable Inputs				Total at June 30, 2010
Real estate properties		$	—		$	—		$	7,517,316			$	7,517,316
Real estate joint ventures			—			—			1,347,670				1,347,670
Limited partnerships			—			—			227,228				227,228
Marketable securities:
Government Agency Notes			—			724,302			—				724,302
United States Treasury Bills			—			538,096			—				538,096
Mortgage loan receivable			—			—			72,712				72,712
Total Investments at June 30, 2010		$	—		$	1,262,398		$	9,164,926			$	10,427,324
Mortgage loans payable		$	—		$	—		$	(1,890,016	)		$	(1,890,016	)

Description	Level 1: Quoted Prices in Active Markets for Identical Assets			Level 2: Significant Other Observable Inputs			Level 3: Significant Unobservable Inputs				Total at December 31, 2009
Real estate properties		$	—		$	—		$	7,437,344			$	7,437,344
Real estate joint ventures			—			—			1,314,603				1,314,603
Limited partnerships			—			—			200,273				200,273
Marketable securities:
Government Agency Notes			—			465,092			—				465,092
United States Treasury Bills			—			206,175			—				206,175
Mortgage loan receivable			—			—			71,273				71,273
Total Investments at December 31, 2009		$	—		$	671,267		$	9,023,493			$	9,694,760
Mortgage loans payable		$	—		$	—		$	(1,858,110	)		$	(1,858,110	)

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The following tables show the reconciliation of the beginning and ending balances for assets and liabilities measured at fair value on a recurring basis using significant unobservable inputs (Level 3) during the three and six months ended June 30, 2010 and June 30, 2009 (in thousands, unaudited):

	Real Estate Properties				Real Estate Joint Ventures				Limited Partnerships				Mortgage Loan Receivable				Total Level 3 Investments				Mortgage Loans Payable
For the three months ended June 30, 2010:
Beginning balance April 1, 2010		$	7,280,352			$	1,248,562			$	204,960			$	71,459			$	8,805,333			$	(1,882,479	)
Total realized and unrealized gains (losses) included in changes in net assets			212,713				19,962				15,474				1,253				249,402				(8,517	)
Purchases, sales, issuances, and settlements(1)			24,251				79,146				6,794				—				110,191				980
Ending balance June 30, 2010		$	7,517,316			$	1,347,670			$	227,228			$	72,712			$	9,164,926			$	(1,890,016	)
For the six months ended June 30, 2010:
Beginning balance January 1, 2010		$	7,437,344			$	1,314,603			$	200,273			$	71,273			$	9,023,493			$	(1,858,110	)
Total realized and unrealized gains (losses) included in changes in net assets			22,036				(15,816	)			18,493				1,439				26,152				(34,312	)
Purchases, sales, issuances, and settlements(1)			57,936				48,883				8,462				—				115,281				2,406
Ending balance June 30, 2010		$	7,517,316			$	1,347,670			$	227,228			$	72,712			$	9,164,926			$	(1,890,016	)
For the three months ended June 30, 2009:
Beginning balance April 1, 2009		$	9,365,810			$	1,994,477			$	227,204			$	69,705			$	11,657,196			$	(1,758,488	)
Total realized and unrealized gains (losses) included in changes in net assets			(609,097	)			(436,705	)			(32,912	)			(1,426	)			(1,080,140	)			(86,010	)
Purchases, sales, issuances, and settlements(1)			22,640				(70	)			10,735				—				33,305				791
Ending balance June 30, 2009		$	8,779,353			$	1,557,702			$	205,027			$	68,279			$	10,610,361			$	(1,843,707	)
For the six months ended June 30, 2009:
Beginning balance January 1, 2009		$	10,305,040			$	2,176,711			$	286,485			$	71,767			$	12,840,003			$	(1,830,040	)
Total realized and unrealized gains (losses) included in changes in net assets			(1,518,723	)			(610,890	)			(92,193	)			(3,488	)			(2,225,294	)			(15,322	)
Purchases, sales, issuances, and settlements(1)			(6,964	)			(8,119	)			10,735				—				(4,348	)			1,655
Ending balance June 30, 2009		$	8,779,353			$	1,557,702			$	205,027			$	68,279			$	10,610,361			$	(1,843,707	)

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⁽¹⁾ This line includes the net of contributions, distributions, and accrued operating income for real estate joint ventures and limited partnerships as well as principal payments on mortgage loans payable.

The amount of total gains (losses) included in changes in net assets attributable to the change in unrealized gains (losses) relating to investments and mortgage loans payable using significant unobservable inputs still held as of the reporting date is as follows (in thousands, unaudited):

	Real Estate Properties				Real Estate Joint Ventures				Limited Partnerships				Mortgage Loan Receivable				Total Level 3 Investments				Mortgage Loans Payable
For the three months ended June 30, 2010		$	212,713			$	19,981			$	15,474			$	1,253			$	249,421			$	(8,517	)
For the six months ended June 30, 2010		$	23,274			$	(10,537	)		$	18,493			$	1,439			$	32,669			$	(34,312	)
For the three months ended June 30, 2009		$	(609,089	)		$	(436,705	)		$	(32,912	)		$	(1,426	)		$	(1,080,132	)		$	(86,010	)
For the six months ended June 30, 2009		$	(1,518,464	)		$	(610,890	)		$	(92,193	)		$	(3,488	)		$	(2,225,035	)		$	(15,322	)

Note 6—Investments in Joint Ventures and Limited Partnerships

The Account owns interests in 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 loans payable on the properties owned. At June 30, 2010, the Account held 12 investments in joint ventures with non-controlling ownership interest percentages that ranged from 50% to 85%. Certain joint ventures and limited partnerships are subject to adjusted distribution percentages when earnings in the investment reach a pre-determined threshold. The Account’s equity in the joint ventures at June 30, 2010 and December 31, 2009 was $1.4 billion and $1.3 billion, respectively. The Account’s most significant joint venture investment is the DDR TC LLC joint venture (the “DDR joint venture”), which is the third largest investment in the Account as of June 30, 2010.

The Account’s share of the mortgage loans payable within the joint venture investments at fair value was approximately $1.5 billion and $1.8 billion at June 30, 2010 and December 31, 2009, respectively. The Account’s share in the outstanding principal of the mortgage loans payable on joint ventures was approximately $1.6 billion and $2.0 billion at June 30, 2010 and December 31, 2009, respectively.

On February 26, 2010, the maturity date of a loan in the outstanding principal amount of $168.3 million (with the Account’s share totaling $143.1 million) with respect to certain of the properties held in the Account’s joint venture with DDR was extended from 2010 to 2011. The maximum amount that may be drawn under this loan is $213.0 million. During the second quarter of 2010, the Account contributed a total of approximately $79.0 million to the DDR joint venture to fund the Account’s share of debt that came due and was paid off during the second quarter.

A condensed summary of the financial position and results of operations of the joint ventures is shown below (in thousands).

	June 30, 2010			June 30, 2009			December 31, 2009
	(Unaudited)			(Unaudited)
Assets
Real estate properties, at fair value		$	4,273,431		$	5,041,195		$	4,618,202
Other assets			130,115			94,336			89,569
Total assets		$	4,403,546		$	5,135,531		$	4,707,771
Liabilities and Equity
Mortgage loans payable, at fair value		$	2,101,490		$	2,565,310		$	2,526,666
Other liabilities			52,596			63,061			52,639
Total liabilities			2,154,086			2,628,371			2,579,305
Equity			2,249,460			2,507,160			2,128,466
Total liabilities and equity		$	4,403,546		$	5,135,531		$	4,707,771

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	For the Six Months Ended June 30, 2010			For the Six Months Ended June 30, 2009			Year Ended December 31, 2009
	(Unaudited)			(Unaudited)
Operating Revenues and Expenses
Revenues		$	236,680		$	265,050		$	519,239
Expenses			147,169			158,650			317,428
Excess of revenues over expenses		$	89,511		$	106,400		$	201,811

On April 30, 2010 one of the properties within the DDR joint venture defaulted on an interest payment in respect of a $7.4 million mortgage secured by such property. On April 30, 2010, the loan matured in accordance with its terms and the venture did not make the required pay off on such date. Currently, the managing member of the venture is in negotiations with the lender regarding such defaults. These defaults on this non-recourse loan did not impact any of the other properties within the venture, the venture itself, or the Account.

Management of the Account monitors the financial position of the Account’s joint venture partners. To the extent that management of the Account determines that a joint venture partner has financial or liquidity concerns, management will evaluate all actions and remedies available to the Account under the applicable joint venture agreement to minimize any potential adverse implications to the Account.

The Account invests in limited partnerships that own real estate properties and real estate-related securities and the Account receives distributions from the limited partnerships based on the Account’s ownership interest percentages. At June 30, 2010, the Account held five limited partnership investments and one private real estate equity investment trust (all of which featured non-controlling ownership interests) with ownership interest percentages that ranged from 5.3% to 18.5%. Under the terms of the partnership agreements governing such investments, and based upon the expected term of each such partnership, the partnerships could engage in liquidation activities beginning in 2012 through 2015. The Account’s ownership interest in limited partnerships was $227.2 million and $200.3 million at June 30, 2010 and December 31, 2009, respectively.

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Note 7—Mortgage Loans Payable

At June 30, 2010, the Account had outstanding mortgage loans payable secured by the following properties (in thousands):

Property	Interest Rate and Payment Frequency(5)	Principal Amounts as of June 30, 2010			Maturity
		(Unaudited)
701 Brickell(1)(8)	2.25% paid monthly(6)		$	126,000		October 1, 2010
Four Oaks Place(2)(8)	2.25% paid monthly(6)			200,000		October 1, 2010
Ontario Industrial Portfolio(3)	7.42% paid monthly			8,344		May 1, 2011
1 & 7 Westferry Circus(4)(8)	5.40% paid quarterly			200,815		November 15, 2012
Reserve at Sugarloaf(3)(8)	5.49% paid monthly			24,942		June 1, 2013
South Frisco Village	5.85% paid monthly			26,251		June 1, 2013
Fourth & Madison	6.40% paid monthly			145,000		August 21, 2013
1001 Pennsylvania Avenue	6.40% paid monthly			210,000		August 21, 2013
50 Fremont	6.40% paid monthly			135,000		August 21, 2013
Pacific Plaza(3)(8)	5.55% paid monthly			8,491		September 1, 2013
Wilshire Rodeo Plaza(8)	5.28% paid monthly			112,700		April 11, 2014
1401 H Street(3)(8)	5.97% paid monthly			114,339		December 7, 2014
The Colorado(3)(8)	5.65% paid monthly			86,145		November 1, 2015
99 High Street	5.52% paid monthly			185,000		November 11, 2015
The Legacy at Westwood(3)(8)	5.95% paid monthly			41,258		December 1, 2015
Regents Court(3)(8)	5.76% paid monthly			35,240		December 1, 2015
The Caruth(3)(8)	5.71% paid monthly			41,220		December 1, 2015
Lincoln Centre	5.51% paid monthly			153,000		February 1, 2016
Publix at Weston Commons(8)	5.08% paid monthly			35,000		January 1, 2036
Total Principal Outstanding				1,888,745
Fair Value Adjustment(7)				1,271
Total mortgage loans payable			$	1,890,016

(1)	The Account entered into a debt agreement that included an interest rate cap with its lender to reduce its exposure to the variability of changes in interest rates until maturity of the underlying debt. The interest rate on the entire $126 million mortgage is capped at 6.50%.
(2)	The Account entered into a debt agreement that included an interest rate cap with its lender to reduce its exposure to the variability of changes in interest rates until maturity of the underlying debt. The interest rate on the entire $200 million mortgage is capped at 6.50%.
(3)	The mortgage is adjusted monthly for principal payments.
(4)	The mortgage is denominated in British pounds and the principal payment has been converted to U.S. dollars using the exchange rate as of June 30, 2010. The quarterly payments are interest only, with a balloon payment at maturity. The interest rate is fixed. The cumulative foreign currency translation adjustment (since inception) is an unrealized gain of $32 million.
(5)	Interest rates are fixed, unless stated otherwise.
(6)	The interest rate for these mortgages is a variable rate at the one month London Interbank Offered Rate (“LIBOR”) plus 200 basis points and is reset monthly.
(7)	The fair value adjustment consists of the difference (positive or negative) between the principal amount of the outstanding debt and the fair value of the outstanding debt. See Note 1 of these financials statements.
(8)	These properties are each owned by separate wholly owned subsidiaries of TIAA for benefit of the Account. The assets and credit of each of these borrowing entities are not available to satisfy the debts and other obligations of the Account or any other entity or person other than such borrowing entity.

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Note 8—Condensed Financial Information

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

	For the Six Months Ended June 30, 2010				Years Ended December 31,
					2009				2008				2007
	(Unaudited)
Per Accumulation Unit data:
Rental income		$	10.376			$	22.649			$	18.794			$	17.975
Real estate property level expenses and taxes			5.225				11.193				9.190				8.338
Real estate income, net			5.151				11.456				9.604				9.637
Other income			1.028				2.778				3.808				4.289
Total income			6.179				14.234				13.412				13.926
Expense charges(1)			1.043				2.280				2.937				2.554
Investment income, net			5.136				11.954				10.475				11.372
Net realized and unrealized gain (loss) on investments and mortgage loans payable			(0.473	)			(85.848	)			(54.541	)			26.389
Net (decrease) increase in Accumulation Unit Value			4.663				(73.894	)			(44.066	)			37.761
Accumulation Unit Value:
Beginning of period			193.454				267.348				311.414				273.653
End of period		$	198.117			$	193.454			$	267.348			$	311.414
Total return(2)			2.41	%			-27.64	%			-14.15	%			13.80	%
Ratios to average net assets(2)
Expenses(1)			0.55	%			1.01	%			0.95	%			0.87	%
Investment income, net			2.70	%			5.29	%			3.38	%			3.88	%
Portfolio turnover rate(2)
Real estate investments(3)			0.26	%			0.75	%			0.64	%			5.59	%
Marketable securities(4)			—				0.00	%			25.67	%			13.03	%
Accumulation Units outstanding at end of period (in thousands)			42,017				39,473				41,542				55,106
Net assets end of period (in thousands)		$	8,561,370			$	7,879,914			$	11,508,924			$	17,660,537

(1)	Expense charges per Accumulation Unit and the Ratio of Expenses to average net assets reflect the year to date Account-level expenses and exclude real estate property level expenses which are included in net real estate income. If the real estate property level expenses were included, the expense charge per Accumulation Unit for the six months ended June 30, 2010 would be $6.268 ($13.473, $12.127, $10.892, and $9.478, for the years ended December 31, 2009, 2008, 2007 and 2006, respectively), and the Ratio of Expenses to average net assets for the six months ended June 30, 2010 would be 3.296% (5.96%, 3.91%, 3.71%, and 3.81% for the years ended December 31, 2009, 2008, 2007, and 2006, respectively).
(2)	Amounts for the six month period ended June 30, 2010 are not annualized.
(3)	Real estate investment portfolio turnover rate is calculated by dividing the lesser of purchases or sales of real estate property investments (including contributions to, or return of capital distributions received from, existing joint venture and limited partnership investments) by the average value of the portfolio of real estate investments held during the period. Amounts for the six months ended June 30, 2010 are not annualized.
(4)	Marketable securities portfolio turnover rate is calculated by dividing the lesser of purchase or sales of securities, excluding securities having maturity dates at acquisition of one year, or less, by the average value of the portfolio securities held during the period. Amounts for the six months ended June 30, 2010 are not annualized.

20

Note 9—Accumulation Units

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

	For the Six Months Ended June 30, 2010		For the Year Ended December 31, 2009
	(Unaudited)
Outstanding:
Beginning of period		39,473		41,542
Credited for premiums		1,713		3,141
Credited for Purchase of units by TIAA (see Note 3)		—		4,139
Net units credited (cancelled) for transfers, net disbursements and amounts applied to the Annuity Fund		831		(9,349	)
End of period		42,017		39,473

Note 10—Commitments and Subsequent Events

As of June 30, 2010, the Account had outstanding commitments to purchase interests in three of its limited partnership investments with approximately $33.7 million remaining to be funded under these commitments, which could be called in full or in part by the limited partnership at any time.

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

On July 2 and July 9, 2010, the Account obtained approximately $273.3 million in financing through ten separate interest-only debt transactions. These obligations mature in five to ten years and have fixed interest rates ranging from 4.47% to 5.34%.

During the normal course of business, the Account enters into discussions and agreements to purchase or sell real estate properties. On July 9, 2010, the Account sold its 50% interest in a joint venture property located in Tyson Corner, VA for a sale price of $28.5 million and realized a cumulative loss of approximately $3.5 million.

On July 28, 2010, pursuant to the terms and conditions of the mortgage, the borrower notified the Account of its intent to repay, in full, the mortgage loan receivable in the amount of approximately $75 million on or about August 30, 2010.

On August 10, 2010, a joint venture located in Orlando, FL, in which the Account maintains a 50% ownership interest, obtained approximately $375.0 million in financing through two loans of approximately $187.5 million each. A portion of the proceeds were used to pay off an existing debt obligation within the joint venture of approximately $240.6 million and had a fixed interest rate of 7.55%. These new obligations mature in 10 years and have fixed interest rates of 5.25%.

Note 11—New Accounting Pronouncements

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS No. 167”), which amends guidance related to the identification of a variable interest entity, variable interests, the primary beneficiary, and expands required note disclosures to provide greater transparency to the users of financial statements. In December 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which amended the Codification with the guidance contained in SFAS No. 167. In February 2010, the FASB issued ASU No. 2010-10, “Amendments for Certain Investment Funds,” which defers the applicability of ASU No. 2009-17 in certain instances. These standards were effective on January 1, 2010 and did not result in a significant impact to the Account’s financial position or results of operations.

21

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” which requires new disclosures related to transfers in and out of levels 1 and 2, and the separate disclosure of purchases, sales, issuances and settlements when reconciling activity in level 3. This ASU also amends prior disclosure requirements to call for the disaggregation of assets and liabilities into appropriate subsets, and the disclosure of valuation techniques and inputs for recurring and nonrecurring fair value measurements in levels 2 and 3. The new disclosure requirement for reconciling level 3 activity is effective January 1, 2011. All other new or amended disclosure requirements were effective January 1, 2010 for the Account and are reflected in the notes to the financial statements. These changes did not impact the Account’s financial position or results of operations.

22

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2010 and December 31, 2009
(Dollar values shown in thousands)

REAL ESTATE PROPERTIES—72.09% and 76.71%

Location/Description	Type	Fair Value
		2010				2009
		(Unaudited)
Alabama:
Inverness Center	Office		$	90,106			$	90,315
Arizona:
Camelback Center	Office			33,062				37,774
Kierland Apartment Portfolio	Apartments			87,429				78,060
Phoenix Apartment Portfolio	Apartments			23,100				21,767
California:
3 Hutton Centre Drive	Office			28,750				28,752
50 Fremont Street	Office			289,111	(1)			284,283	(1)
88 Kearny Street	Office			59,004				61,600
275 Battery Street	Office			160,968				164,390
Rancho Cucamonga Industrial Portfolio	Industrial			72,134				57,327
Centerside I	Office			29,009				27,012
Centre Pointe and Valley View	Industrial			18,867				18,929
Great West Industrial Portfolio	Industrial			66,100				65,000
Larkspur Courts	Apartments			57,148				50,111
Northern CA RA Industrial Portfolio	Industrial			38,843				42,437
Ontario Industrial Portfolio	Industrial			188,362	(1)			167,998	(1)
Pacific Plaza	Office			55,155	(1)			60,075	(1)
Regents Court	Apartments			58,006	(1)			50,505	(1)
Southern CA RA Industrial Portfolio	Industrial			70,990				75,817
The Legacy at Westwood	Apartments			80,644	(1)			77,836	(1)
Wellpoint	Office			37,700				37,400
Westcreek	Apartments			23,811				23,061
West Lake North Business Park	Office			32,651				32,407
Westwood Marketplace	Retail			77,031				77,077
Wilshire Rodeo Plaza	Office			146,113	(1)			151,209	(1)
Colorado:
Palomino Park	Apartments			148,868				143,907
The Lodge at Willow Creek	Apartments			35,026				31,624
Connecticut:
Ten & Twenty Westport Road	Office			112,425				126,860
Florida:
701 Brickell Avenue	Office			188,863	(1)			198,630	(1)
North 40 Office Complex	Office			37,310				33,969
Plantation Grove	Retail			9,600				9,600
Pointe on Tampa Bay	Office			30,821				35,060
Publix at Weston Commons	Retail			38,106	(1)			38,100	(1)
Quiet Waters at Coquina Lakes	Apartments			20,718				19,918
Seneca Industrial Park	Industrial			59,448				62,341
South Florida Apartment Portfolio	Apartments			52,018				48,366
Suncrest Village Shopping Center	Retail			12,300				12,329

See notes to the financial statements.

23

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2010 and December 31, 2009
(Dollar values shown in thousands)

Location/Description	Type	Fair Value
		2010				2009
		(Unaudited)
Florida: (continued)
The Fairways of Carolina	Apartments		$	19,709			$	18,628
Urban Centre	Office			78,327				80,282
France:
Printemps de L’Homme	Retail			164,503				200,995
Georgia:
Atlanta Industrial Portfolio	Industrial			38,351				39,519
Glenridge Walk	Apartments			31,066				30,326
Reserve at Sugarloaf	Apartments			40,000	(1)			37,710	(1)
Shawnee Ridge Industrial Portfolio	Industrial			51,504				52,219
Windsor at Lenox Park	Apartments			46,713				48,223
Illinois:
Chicago Caleast Industrial Portfolio	Industrial			47,600				48,304
Chicago Industrial Portfolio	Industrial			56,412				60,908
Oak Brook Regency Towers	Office			60,299				64,265
Parkview Plaza	Office			42,300				44,360
Maryland:
Broadlands Business Park	Industrial			23,800				23,600
GE Appliance East Coast Distribution Facility	Industrial			28,300				28,900
Massachusetts:
99 High Street	Office			238,551	(1)			253,557	(1)
Needham Corporate Center	Office			14,819				16,196
Northeast RA Industrial Portfolio	Industrial			21,596				24,845
The Newbry	Office			214,483				230,375
Minnesota:
Champlin Marketplace	Retail			12,750				13,801
Nevada:
Fernley Distribution Facility	Industrial			7,600				7,600
New Jersey:
Konica Photo Imaging Headquarters	Industrial			14,300				15,100
Marketfair	Retail			62,850				65,594
Morris Corporate Center III	Office			64,840				66,478
Plainsboro Plaza	Retail			27,090				26,962
South River Road Industrial	Industrial			30,000				28,656
New York:
780 Third Avenue	Office			270,282				240,077
The Colorado	Apartments			119,606	(1)			110,144	(1)
Pennsylvania:
Lincoln Woods	Apartments			26,412				28,728
Tennessee:
Airways Distribution Center	Industrial			12,451				12,600
Summit Distribution Center	Industrial			15,110				12,300

See notes to the financial statements.

24

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2010 and December 31, 2009
(Dollar values shown in thousands)

Location/Description	Type	Fair Value
		2010				2009
		(Unaudited)
Texas:
Dallas Industrial Portfolio	Industrial		$	123,907			$	125,275
Four Oaks Place	Office			364,525	(1)			409,027	(1)
Houston Apartment Portfolio	Apartments			183,008				179,717
Lincoln Centre	Office			196,309	(1)			202,029	(1)
Pinnacle Industrial Portfolio	Industrial			32,200				34,148
South Frisco Village	Retail			26,900	(1)			26,900	(1)
The Caruth	Apartments			50,643	(1)			49,641	(1)
The Maroneal	Apartments			33,634				32,179
United Kingdom:
1 & 7 Westferry Circus	Office			244,910	(1)			239,036	(1)
Virginia:
8270 Greensboro Drive	Office			30,565				34,200
Ashford Meadows Apartments	Apartments			80,055				71,105
One Virginia Square	Office			46,608				40,503
The Ellipse at Ballston	Office			71,974				65,505
Washington:
Creeksides at Centerpoint	Office			16,565				18,724
Fourth and Madison	Office			299,002	(1)			295,000	(1)
Millennium Corporate Park	Office			118,520				116,548
Northwest RA Industrial Portfolio	Industrial			14,400				17,800
Rainier Corporate Park	Industrial			58,026				65,277
Regal Logistics Campus	Industrial			46,400				47,955
Washington DC:
1001 Pennsylvania Avenue	Office			579,900	(1)			480,622	(1)
1401 H Street, NW	Office			143,039	(1)			143,555	(1)
1900 K Street, NW	Office			240,005				204,000
Mazza Gallerie	Retail			65,000				65,500
TOTAL REAL ESTATE PROPERTIES
(Cost $9,465,913 and $9,408,978)			$	7,517,316			$	7,437,344

See notes to the financial statements.

25

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2010 and December 31, 2009
(Dollar values shown in thousands)

OTHER REAL ESTATE-RELATED INVESTMENTS—15.10% and 15.63%
REAL ESTATE JOINT VENTURES—12.92% and 13.56%

Location/Description	Fair Value
	2010				2009
	(Unaudited)
California:
CA—Colorado Center LP
Yahoo Center (50% Account Interest)		$	144,236	(2)		$	133,227	(2)
CA—Treat Towers LP
Treat Towers (75% Account Interest)			61,789				66,435
Florida:
Florida Mall Associates, Ltd
The Florida Mall (50% Account Interest)			272,183	(2)			252,432	(2)
TREA Florida Retail, LLC
Florida Retail Portfolio (80% Account Interest)			147,158				162,204
West Dade Associates
Miami International Mall (50% Account Interest)			80,627	(2)			76,856	(2)
Georgia:
GA—Buckhead LLC
Prominence in Buckhead (75% Account Interest)			34,108				30,952
Massachusetts:
MA—One Boston Place REIT
One Boston Place (50.25% Account Interest)			142,114				129,922
Tennessee:
West Town Mall, LLC
West Town Mall (50% Account Interest)			42,649	(2)			37,262	(2)
Virginia:
Teachers REA IV, LLC
Tyson’s Executive Plaza II (50% Account Interest)			28,238				26,275
Various:
DDR TC LLC
DDR Joint Venture (85% Account Interest)			306,331	(2,3)			312,182	(2,3)
Storage Portfolio I, LLC
Storage Portfolio (75% Account Interest)			50,009	(2,3)			46,269	(2,3)
Strategic Ind Portfolio I, LLC
IDI Nationwide Industrial Portfolio (60% Account Interest)			38,228	(2,3)			40,587	(2,3)
TOTAL REAL ESTATE JOINT VENTURES (Cost $2,050,665 and $2,142,016 )			1,347,670				1,314,603
LIMITED PARTNERSHIPS—2.18% and 2.07%
Cobalt Industrial REIT (10.998% Account Interest)			20,848				20,341
Colony Realty Partners LP (5.27% Account Interest)			14,500				12,123
Heitman Value Partners Fund (8.43% Account Interest)			14,656				13,736
Lion Gables Apartment Fund (18.46% Account Interest)			159,065				142,999
MONY/Transwestern Mezz RP II (16.67% Account Interest)			9,531				9,267
Transwestern Mezz Realty Partners III, LLC (11.708% Account Interest)			8,628				1,807
TOTAL LIMITED PARTNERSHIPS
(Cost $304,240 and $295,779)			227,228				200,273
TOTAL REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS
(Cost $2,354,905 and $2,437,795)			1,574,898				1,514,876

See notes to the financial statements.

26

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2010 and December 31, 2009
(Dollar values shown in thousands)

MARKETABLE SECURITIES—12.11% and 6.93%
GOVERNMENT AGENCY NOTES—6.95% and 4.80%

Principal						Issuer	Yield(4)		Maturity Date		Fair Value
2010			2009								2010			2009
											(Unaudited)
	$	—		$	4,700	Fannie Mae Discount Notes		0.041%		1/13/10		$	—		$	4,700
		—			25,000	Fannie Mae Discount Notes		0.091%		1/19/10			—			25,000
		—			49,300	Fannie Mae Discount Notes		0.020%		1/27/10			—			49,299
		—			25,000	Fannie Mae Discount Notes		0.051%		2/4/10			—			24,999
		—			20,000	Fannie Mae Discount Notes		0.091%		2/8/10			—			19,999
		—			18,873	Fannie Mae Discount Notes		0.071%		2/16/10			—			18,872
		—			10,000	Fannie Mae Discount Notes		0.101%		3/1/10			—			9,999
		—			17,470	Fannie Mae Discount Notes		0.167%		5/5/10			—			17,463
		32,925			—	Fannie Mae Discount Notes		0.183%		7/7/10			32,925			—
		22,333			—	Fannie Mae Discount Notes		0.172%		7/14/10			22,333			—
		30,530			—	Fannie Mae Discount Notes		0.208%		8/11/10			30,528			—
		26,600			—	Fannie Mae Discount Notes		0.208%		8/30/10			26,597			—
		13,993			—	Fannie Mae Discount Notes		0.223%		9/20/10			13,990			—
		25,815			—	Fannie Mae Discount Notes		0.162%		9/29/10			25,809			—
		33,430			—	Fannie Mae Discount Notes		0.249%		11/8/10			33,406			—
		20,520			—	Fannie Mae Discount Notes		0.218%		11/24/10			20,503			—
		—			10,990	Federal Home Loan Bank Discount Notes		0.001%		1/4/10			—			10,990
		—			4,419	Federal Home Loan Bank Discount Notes		0.041%		1/13/10			—			4,419
		—			44,000	Federal Home Loan Bank Discount Notes		0.081%		1/15/10			—			44,000
		—			25,300	Federal Home Loan Bank Discount Notes		0.071%		1/22/10			—			25,300
		—			41,200	Federal Home Loan Bank Discount Notes		0.051%		2/24/10			—			41,200
		—			15,770	Federal Home Loan Bank Discount Notes		0.081%		3/5/10			—			15,770
		34,500			—	Federal Home Loan Bank Discount Notes		0.071%		7/14/10			34,500			—
		30,000			—	Federal Home Loan Bank Discount Notes		0.193%		7/21/10			29,999			—
		11,200			—	Federal Home Loan Bank Discount Notes		0.188%		7/23/10			11,200			—
		25,000			—	Federal Home Loan Bank Discount Notes		0.183%		7/26/10			24,999			—
		22,700			—	Federal Home Loan Bank Discount Notes		0.188%		7/28/10			22,699			—
		20,000			—	Federal Home Loan Bank Discount Notes		0.193%		7/30/10			20,000			—
		25,000			—	Federal Home Loan Bank Discount Notes		0.198%		8/4/10			24,999			—
		4,100			—	Federal Home Loan Bank Discount Notes		0.172%		8/11/10			4,100			—
		14,900			—	Federal Home Loan Bank Discount Notes		0.132%		8/25/10			14,899			—
		29,900			—	Federal Home Loan Bank Discount Notes		0.167%		9/8/10			29,894			—
		30,000			—	Federal Home Loan Bank Discount Notes		0.157%		9/10/10			29,994			—
		15,000			—	Federal Home Loan Bank Discount Notes		0.157%		9/15/10			14,997			—
		10,400			—	Federal Home Loan Bank Discount Notes		0.162%		9/17/10			10,398			—
		—			10,000	Freddie Mac Discount Notes		0.091%		1/20/10			—			10,000
		—			50,541	Freddie Mac Discount Notes		0.041%-0.076%		1/25/10			—			50,540
		—			11,800	Freddie Mac Discount Notes		0.051%		2/2/10			—			11,800
		—			47,000	Freddie Mac Discount Notes		0.030%		2/16/10			—			46,998
		—			19,010	Freddie Mac Discount Notes		0.132%		2/26/10			—			19,009
		—			5,736	Freddie Mac Discount Notes		0.081%		3/1/10			—			5,736
		—			9,000	Freddie Mac Discount Notes		0.071%		3/8/10			—			8,999
		40,000			—	Freddie Mac Discount Notes		0.183%		7/12/10			40,000			—
		18,000			—	Freddie Mac Discount Notes		0.188%		7/19/10			18,000			—

See notes to the financial statements.

27

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2010 and December 31, 2009
(Dollar values shown in thousands)

Principal						Issuer	Yield(4)		Maturity Date		Fair Value
2010			2009								2010			2009
											(Unaudited)
	$	13,410		$	—	Freddie Mac Discount Notes		0.193%		8/2/10		$	13,409		$	—
		25,000			—	Freddie Mac Discount Notes		0.198%		8/3/10			24,999			—
		12,300			—	Freddie Mac Discount Notes		0.193%		8/13/10			12,299			—
		15,520			—	Freddie Mac Discount Notes		0.203%		8/16/10			15,519			—
		15,900			—	Freddie Mac Discount Notes		0.183%		8/23/10			15,899			—
		18,000			—	Freddie Mac Discount Notes		0.162%		9/7/10			17,997			—
		12,500			—	Freddie Mac Discount Notes		0.157%		9/20/10			12,497			—
		43,235			—	Freddie Mac Discount Notes		0.213%-0.223%		9/27/10			43,224			—
		31,700			—	Freddie Mac Discount Notes		0.193%		9/28/10			31,690			—
TOTAL GOVERNMENT AGENCY NOTES (Cost $724,208 and $465,072)												$	724,302		$	465,092

UNITED STATES TREASURY BILLS—5.16% and 2.13%

Principal						Issuer	Yield(4)		Maturity Date		Fair Value
2010			2009								2010			2009
											(Unaudited)
	$	—		$	24,515	United States Treasury Bills		0.066%-0.152%		2/25/10		$	—		$	24,514
		—			47,200	United States Treasury Bills		0.137%-0.162%		4/22/10			—			47,189
		—			52,530	United States Treasury Bills		0.122%-0.147%		5/13/10			—			52,506
		—			62,015	United States Treasury Bills		0.127%-0.147%		5/20/10			—			61,981
		—			20,000	United States Treasury Bills		0.137%		5/27/10			—			19,985
		30,000			—	United States Treasury Bills		0.153%		7/1/10			30,000			—
		26,000			—	United States Treasury Bills		0.148%		7/8/10			26,000			—
		26,610			—	United States Treasury Bills		0.153%		7/15/10			26,609			—
		26,300			—	United States Treasury Bills		0.158%-0.164%		7/29/10			26,297			—
		30,000			—	United States Treasury Bills		0.164%		8/5/10			29,995			—
		32,600			—	United States Treasury Bills		0.152%-0.193%		8/12/10			32,594			—
		46,545			—	United States Treasury Bills		0.112%-0.184%		8/19/10			46,535			—
		82,040			—	United States Treasury Bills		0.167%-0.188%		8/26/10			82,018			—
		34,500			—	United States Treasury Bills		0.162%-0.175%		9/2/10			34,491			—
		37,325			—	United States Treasury Bills		0.152%-0.163%		9/16/10			37,313			—
		50,000			—	United States Treasury Bills		0.128%		9/23/10			49,981			—
		25,000			—	United States Treasury Bills		0.147%		9/30/10			24,989			—
		28,325			—	United States Treasury Bills		0.227%		10/14/10			28,312			—
		30,000			—	United States Treasury Bills		0.228%		10/21/10			29,985			—
		33,000			—	United States Treasury Bills		0.147%		11/12/10			32,977			—
TOTAL UNITED STATES TREASURY BILLS (Cost $538,093 and $206,163)													538,096			206,175
TOTAL MARKETABLE SECURITIES (Cost $1,262,301 and $671,235)													1,262,398			671,267

See notes to the financial statements.

28

TIAA REAL ESTATE ACCOUNT
STATEMENT OF INVESTMENTS
June 30, 2010 and December 31, 2009
(Dollar values shown in thousands)

MORTGAGE LOAN RECEIVABLE—0.70% and 0.73%

Principal						Borrower	Current Rate(5)		Maturity Date		Fair Value
2010			2009								2010			2009
											(Unaudited)
	$	75,000		$	75,000	Klingle Corporation		1.097%		7/10/11		$	72,712		$	71,273
TOTAL MORTGAGE LOAN RECEIVABLE (Cost $75,000 and $75,000)													72,712			71,273
TOTAL INVESTMENTS (Cost $13,158,119 and $12,593,008)												$	10,427,324		$	9,694,760

(1)	The investment has a mortgage loan payable outstanding, as indicated in Note 7.
(2)	The market value reflects the Account’s interest in the joint venture and is net of debt.
(3)	Properties within this investment are located throughout the United States.
(4)	Yield represents the annualized yield at the date of purchase.
(5)	Current rate represents the interest rate on this investment at June 30, 2010. As of December 31, 2009, the interest rate on this investment was 1.04%.

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 and with consideration to the sub-section entitled “Forward-Looking Statements,” which begins below, and the section of the Account’s Annual Report on Form 10-K for the year ended December 31, 2009 (the “Form 10-K”) entitled “Item 1A. Risk Factors.” The past performance of the Account is not indicative of future results.

Forward-Looking Statements

Some statements in this Form 10-Q which are not historical facts may be “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements include statements about management’s expectations, beliefs, intentions or strategies for the future, include the assumptions underlying these forward-looking statements, and are based on current expectations, estimates and projections about the real estate industry, markets in which the Account operates, general economic conditions and the strength of the capital and credit markets, management’s beliefs, assumptions made by management and the transactions described in this Form 10-Q. While management believes the assumptions underlying any of its forward-looking statements and information to be reasonable, such information may be subject to uncertainties and may involve certain risks which may be difficult to predict and are beyond management’s control. These risks and uncertainties could cause actual results to differ materially from those contained in any forward-looking statement. These risks and uncertainties include, but are not limited to, the following:

• Acquiring and Owning Real Estate: The risks associated with acquiring and owning real property, including general economic and real estate market conditions, the availability of, and economic cost associated with, financing the Account’s properties, the risk that the Account’s properties become too concentrated (whether by geography, sector or by tenant mix), competition for acquiring real estate properties, leasing risk (including tenant defaults) and the risk of uninsured losses at properties (including due to terrorism and acts of violence);

• Selling Real Estate: The risk that the sales price of a property might differ, perhaps significantly, from its estimated or appraised value, leading to losses or reduced profits to the Account, the risk that the Account might not be able to sell a property at a particular time for a price which management believes represents its fair or full value, the lack of availability of financing (for potential purchasers of the Account’s properties), disruptions in the credit and capital markets, and the risk that the Account may be required to make significant expenditures before the Account is able to market and/or sell a property;

• Valuation: The risks associated with property valuations, including the fact that appraisals can be subjective in a number of respects, the fact that the Account’s appraisals are generally obtained on a quarterly basis and the fact that there may be periods in between appraisals of a property during which the value attributed to the property for purposes of the Account’s daily accumulation unit value may be more or less than the actual realizable value of the property;

• Borrowing: Risks associated with financing the Account’s properties, including the risk of default on loans secured by the Account’s properties (which could lead to foreclosure), the risk associated with high loan to value ratios on the Account’s properties (including the fact that the Account may have limited, or no net value in such a property), the risk that significant sums of cash could be required to make principal and interest payments on the loans and the risk that the Account may not have the ability to obtain financing or refinancing on favorable terms (or at all), which may be aggravated by general disruptions in credit and capital markets;

• Participant Transactions: Investment risk associated with participant transactions, including the fact that significant net participant transfers out of the Account may impair its ability to pursue or consummate new investment opportunities that are otherwise attractive to the Account or that significant net participant transfers into the Account may take time to invest in attractive investment opportunities;

• Joint Venture Investments: The risks associated with joint venture partnerships, including the risk that a co-venturer may have interests or goals inconsistent with that of the Account, that a co-venturer may

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	have financial difficulties, and the risk that the Account may have limited rights with respect to operation of the property and transfer of the Account’s interest;
•	Regulatory Matters: Uncertainties associated with environmental and other regulatory matters;
•	Foreign Investments: The risks associated with purchasing, owning and disposing foreign investments (primarily real estate properties), including political risk and the risk associated with currency fluctuations;
•	Conflicts of Interests: Conflicts of interest associated with TIAA serving as investment manager of the Account and provider of the liquidity guarantee at the same time as TIAA and its affiliates are serving as an investment manager to other real estate accounts or funds, including conflicts associated with satisfying its fiduciary duties to all such accounts and funds associated with purchasing, selling and leasing of properties;
•	Required Property Sales: The risk that, if TIAA were to own too large a percentage of the Account’s accumulation units through funding the liquidity guarantee, the independent fiduciary could require the sales of properties to reduce TIAA’s ownership interest, which sales could occur at times and at prices that depress the sale proceeds to the Account;
•	Liquid Assets and Securities: Risks associated with investments in liquid assets or investment securities (which could include, from time to time, corporate bonds, REIT securities and CMBS), including financial/credit risk, market volatility risk, interest rate volatility risk and deposit/money market risk; and
•	Other factors, including the risk factors discussed in “Item 1A. Risk Factors” in the Form 10-K.

More detailed discussions of certain of those risk factors are also contained in this Form 10-Q including in the section entitled “Item 3. Quantitative and Qualitative Disclosures About Market Risk.”

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 that 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.

ABOUT THE TIAA REAL ESTATE ACCOUNT

The TIAA Real Estate Account was established in February 1995 as a separate account of TIAA and interests in the Account were first offered to eligible participants on October 2, 1995. The Account offers individual and group accumulating annuity contracts (with contributions made on a pre-tax or after-tax basis), as well as individual lifetime and term-certain variable payout annuity contracts (including the payment of death benefits to beneficiaries). Investors are entitled to transfer funds to or from the Account under certain circumstances. Funds invested in the Account for each category of contract are expressed in terms of units, and unit values will fluctuate depending on the Account’s performance.

Investment Objective and Strategy

The Account seeks favorable long-term returns primarily through rental income and appreciation of real estate investments owned by the Account. The Account will also invest in publicly traded securities and short-term higher quality liquid investments that are easily converted to cash to enable the Account to meet participant redemption requests, purchase or improve properties or cover other expense needs.

Real Estate-Related Investments. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. The Account’s principal strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail, and multi-family residential properties. The Account can also invest in real estate or real estate-related investments through joint ventures, real estate partnerships or common or preferred stock or other equity securities of companies whose operations involve real estate (i.e., that primarily own or manage real estate), including real estate investment trusts (“REITs”). To a limited extent, the Account can also invest in conventional mortgage loans, participating mortgage loans, and collateralized mortgage obligations, including

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commercial mortgage-backed securities (“CMBS”) and other similar investments. Under the Account’s current investment guidelines, the Account is authorized to hold up to 10% of its invested assets in commercial mortgage loans (of all types), and up to 10% of its invested assets in CMBS. The Account from time to time will also make foreign real estate investments, which, together with foreign real estate related and foreign liquid investments, are expected to comprise no more than 25% of the Account’s total assets.

Non Real Estate-Related Investments. The Account will invest the remaining portion of its assets (intended to be between 15% and 25% of its net assets) in liquid investments; namely, securities issued by U.S. government agencies or U.S. government sponsored entities, corporate debt securities, money market instruments and, at times, stock of companies that do not primarily own or manage real estate. There will be periods of time (including in late 2008 and throughout 2009) during which the Account’s liquid investments will comprise less than 15% (and possibly less than 10%) of its assets (on a net basis and/or a gross basis), especially during and immediately following periods of significant net participant outflows. Alternatively, in some circumstances, the portion of the Account’s net assets invested in liquid investments may exceed 25%. This could happen, for example, if the Account receives a large inflow of money in a short period of time, there is a lack of attractive real estate investments available on the market, and/or the Account anticipates more near-term cash needs.

SECOND QUARTER 2010 U.S. ECONOMIC AND COMMERCIAL REAL ESTATE OVERVIEW

The TIAA Real Estate Account (the “Account”) invests primarily in high-quality, core commercial real estate in order to meet its investment objective of obtaining favorable long-term returns through rental income and the appreciation of its real estate holdings. The Account does not directly invest in either single-family residential real estate or residential mortgage-backed securities.

The economic recovery continued at a moderate pace in the second quarter of 2010. While available data suggest that the rate of growth has slowed in recent months, most economists believe that the recovery remains largely on track. Advance estimates from the Bureau of Economic Analysis indicated that U.S. GDP grew at a 2.4% annual rate in the second quarter of 2010, which marked the fourth consecutive quarter of GDP growth. However, growth slowed in the second quarter as compared with GDP growth of 3.7% in the first quarter of 2010. The deceleration of growth was largely due to a surge in imports which are a subtraction from the GDP calculation. The 29% increase in imports was partly offset by increases in residential and non-residential fixed investment and increases in local, state and federal government spending. Other bright spots included ongoing corporate spending on equipment and software and healthy growth in exports. Data on consumer expenditures indicated that consumers have become more cautious as spending increased 1.6% in the second quarter of 2010 as compared with 1.9% in the first quarter of 2010. Despite four consecutive quarters of GDP growth, employment growth has been modest and sporadic aside from a temporary boost related to hiring for the 2010 Census. Private payrolls have expanded each month so far in 2010, but not with consistent month-to-month gains that would suggest that labor market conditions are strengthening.

Prospects for the global recovery also weakened during the quarter as a result of Europe’s sovereign debt crisis. The crisis, which was triggered by the potential default of Greece, spread to other European countries and soon undermined the value of the euro. Despite a $1.0 trillion rescue fund assembled by the European Union and International Monetary Fund to purchase sovereign debt and bolster the value of the euro, concerns about the European economy grew, and in particular that the slowdown in Europe could hamper the global and national recovery. In response, equity markets took a step back. The Dow Jones Industrial Average fell below the psychologically important 10,000 mark several times during the quarter, and ended the quarter down 10%. Similarly, the S&P 500 lost 12% during the quarter. Heightened global uncertainty and instability in the financial markets triggered a flight to safety which pushed 10-year Treasury yield down to 3.2%, its lowest rate in more than a year; yields dipped even further to below 3.0% during July. Mortgage rates followed suit, settling in below 5.0% during the month of June. At the same time, the dollar strengthened against other key currencies.

The weakness of the recovery is expected to keep interest rates low for the foreseeable future. At its June 22-23, 2010 meeting, The Federal Reserve’s Federal Open Market Committee (“FOMC”) stated its commitment to maintain an accommodative monetary policy as members believed “…that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

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While members felt that “the economic outlook had softened somewhat,” the committee generally agreed that the current expansion was strong enough to support continued growth, albeit at a more moderate pace than originally estimated. Committee members indicated a willingness to consider additional policy stimulus should the economy falter significantly but changes to the economic outlook were considered modest enough to forgo additional policy response for the present time.

Overall, some economists became more concerned that risks to the recovery tilted towards the downside during latter part of the second quarter. For example, the prospects for weaker growth in Europe and a stronger dollar could have a dampening impact on U.S. export activity, while volatility in the equity markets and the uncertain economic environment could prompt U.S. consumers and businesses to reign in spending. The housing sector continues to hamper the recovery as values are stagnant at best and sales have slowed following the expiration of government incentive programs. Housing construction has dwindled to historic lows as a glut of new and existing homes sit awaiting buyers; non-residential construction has also fallen sharply due to high vacancy rates and depressed rents. In addition, growing State and local government budget deficits are necessitating cuts in employment, spending and services which may depress economic activity at local levels.

Recent trends in key economic indicators are summarized in the table below. The 621,000 jobs added during the second quarter of 2010 was an impressive gain over the 261,000 in the first quarter, although hiring for the 2010 Census accounted for a large portion of the gains. Indeed, over 200,000 of these temporary government workers came off the payrolls in June, and more will follow in the coming months. By comparison, private sector employment has grown modestly, and has increased for six consecutive months. Temporary employment, a primary indicator of future job growth, has expanded for nine consecutive months. Professional and business services, a significant driver of office market fundamentals, have begun to grow modestly as well. Even with the recent growth, the labor market has significant ground to make up as more than eight million jobs were lost during the “Great Recession.” Economists at Economy.com, a widely-cited source of economic forecasts, expect employment will have grown by roughly 125,000 jobs per month in 2010. Not only is this a very modest pace, but it is well short of labor force growth of 150,000 per month. Until job growth measurably improves compared to its current pace for an extended period, the unemployment rate is likely to remain elevated through the end of 2010 and into 2011.

Economic Indicators*

	2009			2009Q3			2009Q4			2010Q1			2010Q2			Forecast
																2010			2011
Economy(1)
Gross Domestic Product (GDP)		-2.6	%		1.6	%		5.0	%		3.7	%		2.4	%		3.1	%		3.1	%
Employment Growth (Thousands)		-4,740			-783			-269			261			621			1,500			3,000
Interest Rates(2)
10 Year Treasury		3.26	%		3.52	%		3.46	%		3.72	%		3.49	%		3.50	%		4.00	%
Federal Funds Rate		0.0-0.25	%		0.0-0.25	%		0.0-0.25	%		0.0-0.25	%		0.0-0.25	%		N/A			N/A

Sources: BEA, BLS, Federal Reserve, Blue Chip Consensus Forecasts, and Economy.com.

*	Data subject to revision
(1)	GDP growth rates are annual rates; employment numbers are monthly changes, except forecasts, which are annual totals.
(2)	The Treasury rates are an average over the stated time period. The Federal Funds rates are as of the end of the stated time period.

N/A indicates data not available.

Other indicators of U.S. economic health, such as those summarized in the table below, highlight the weaknesses that remain in the U.S. economy. Consumer confidence, after increasing slightly in April and May, dipped in June and remains entrenched at historically low levels. Similarly, the housing market has yet to show any consistent signs of improvement. Following the expiration of a tax credit program for first-time buyers, sales of new and existing homes have slumped. Existing home sales declined 5% in June, falling to a 3-month low. New home sales fell 37% in May and even following a gain in June, were at the second lowest level on record. In response, housing starts fell to an 8-month low as builders are unwilling to compete with a glut of new and existing homes being offered for sale. While the unemployment rate decreased slightly during the second quarter, the drop was primarily due to temporary hiring for the 2010 Census and discouraged jobseekers leaving the labor force.

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Broad Economic Indicators*

Index 1985=100	Full Year						April 2010			May 2010			June 2010
	2008			2009
Consumer Confidence		58.0			45.2			57.7			62.7			52.9
% Change(1)
Inflation (Consumer Price Index)		3.8	%		-0.4	%		-0.1	%		-0.2	%		-0.1	%
Retail Sales (excl. auto, parts & gas)		1.2	%		-1.9	%		0.3	%		-1.0	%		0.1	%
Existing Home Sales		-13.1	%		4.9	%		8.0	%		-2.2	%		-5.1	%
New Home Sales		-37.5	%		-22.7	%		9.9	%		-36.7	%		23.6	%
Single-family Housing Starts		-40.5	%		-28.4	%		5.2	%		-18.8	%		-0.7	%
Unemployment Rate		5.8	%		9.3	%		9.9	%		9.7	%		9.5	%

*	Data subject to revision
(1)	Monthly figures represent change from the preceding month.

Annual inflation is calculated as the year over year percent change in the unadjusted annual average. Unemployment rates are the annual avg.

Sources: Conference Board, Census Bureau, Bureau of Labor Statistics, National Association of Realtors

Reports from the twelve Federal Reserve Districts (“Districts”) contained in the July 2010 Beige Book indicated that economic conditions generally improved or held steady across the country since the June report. However, those Districts reporting growth noted that it was either very modest or had slowed recently. Retail sales generally increased modestly, with many Districts citing stronger spending on necessities relative to big-ticket items. Expectations for retail sales growth in the second half were mixed: continued modest improvement was expected in many Districts, while others were less optimistic. Labor market conditions appeared to be slowly improving across many Districts, although businesses reportedly continued to rely primarily on temporary hires rather than permanent employees. Manufacturing activity expanded in most Districts, although several noted that the pace had slowed or stagnated. Given the available workforce and idle production capacity, inflationary pressures remained subdued.

Housing market activity was characterized as sluggish following the expiration of the home buyer tax credit program in April. Home sales were generally expected to weaken further and construction has slowed significantly. Commercial real estate markets were uniformly characterized as weak with vacancy rates ranging from stagnant to up slightly which continued to push rents down. The overall outlook for commercial real estate was poor; with expectations of continued decline or modest growth at best.

During the latter part of the second quarter and early part of the third quarter, data for several key economic indicators weakened, which suggested a slowdown in the pace of the recovery and prompted some economists to downgrade their forecasts of economic growth for the remainder of 2010 and the first half of 2011. While the consensus of economists surveyed as part of the July 10th Blue Chip Economic Indicators publication is for GDP to grow 3.1% in both 2010 and 2011, the number of the economists that lowered their forecasts of GDP growth exceeded the number that raised their forecasts by a wide margin. Despite their concern, few thought that a “double-dip” recession was likely absent any unforeseen major shock to the economy or financial markets. Nonetheless, weaker growth is expected in the second half of the year, with third and fourth quarter GDP projections of 2.7% and 2.8%, respectively. Similarly, a summary of economic projections prepared for the June 22-23 FOMC meeting showed that FOMC members had modestly lowered expectations for GDP growth in 2010 but to a still healthy 3.0%-3.5%. While committee members felt that the economy and labor market were both improving, members believed that weak consumer confidence, real estate market imbalances, high unemployment and continued tight credit conditions would collectively dampen the pace of recovery for some time. Committee members expect GDP growth in 2011 to be on the order of 3.5%-4.0% as a result of stronger consumer and business spending, improved credit availability, and a more established recovery. Near-term inflation expectations were considered subdued, while unemployment was expected to remain above 9% through the end of 2010.

Real Estate Market Conditions and Outlook

Commercial real estate market statistics discussed in this section are obtained by the Account from sources that management considers reliable, but some of the data are preliminary for the quarter ended June 30, 2010 and may subsequently be revised. Prior period numbers may have been adjusted to reflect updated data.

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Industry sources such as CB Richard Ellis Economic Advisors calculate vacancy based on square footage. Except where otherwise noted, the Account’s vacancy data is calculated as a percentage of net rentable space leased, weighted by square footage, in keeping with industry standards. Investors should not rely exclusively on the data presented below in forming a judgment regarding the current or prospective performance of the real estate market generally.

During the second quarter of 2010, commercial property sales totaled $18.8 billion, a gain of 32.0% compared to first quarter 2010 and 77% from depressed second quarter 2009 sales activity. As transaction activity begins to improve, there are varying perspectives on current price levels. According to the Moody’s/REAL Commercial Property Price Index (“Moody’s CPPI”), prices rose 3.6% in May, which was the second consecutive monthly increase. However, the table below shows that May 2010 prices on average were still 6% below those in May 2009, which is reflective of the fact that values continued to decline through the end of 2009, and remain well below prices at the peak of the market. Other commercial price indices, however, indicate larger price gains. For example, Green Street Advisors’ Commercial Property Price Index (“GSA CPPI”) increased 1% in June, the twelfth consecutive monthly increase, and the index is now 20% above its lows of May 2009. The difference between Moody’s and Green Street Advisors indices is primarily due to methodology as Green Street Advisors incorporates changes in REIT values and information from industry contacts as well as transactional activity in its calculations. To a large degree, Green Street Advisors estimates appear to be a more precise assessment of market activity, at least with respect to top properties, which have attracted considerable interest and numerous aggressive bids. Moreover, the increased level of sales activity, greater interest in commercial real estate from institutions, foreign buyers and funds, and improved credit market conditions have collectively contributed to the apparent increase in prices from their lows. According to Green Street Advisors, three factors are responsible for the rebound in prices: (1) a quicker than expected rebound in fundamentals for some property sectors, (2) low return hurdles across all capital markets, and (3) less instances of distressed sellers. Improvements in property sector fundamentals include retail sales growth and improved apartment demand, whereas investors are searching for higher yielding investments given the recent declines in Treasury and bond yields. Lastly, the lack of distressed sales of high quality property has forced investors to widen their investment parameters. Further clarity on the commercial property price trends will be evident as sales activity is expected to increase further over the remainder of 2010.

	Sales Price Change
	National						Top 10 MSAs*
	May 2009-May 2010			1Q09-1Q10			1Q09-1Q10
All Property Types		-6.3	%
Apartments					-17.5	%		-18.8	%
Industrial					-22.2	%		-23.5	%
Office					-4.6	%		-15.0	%
Retail					-11.4	%		-23.3	%

* Based on the total value of property sold by Metropolitan Statistical Area (“MSA”)

Source: Moody’s/REAL CPPI

Commercial real estate is historically a lagging industry in economic cycles, and accordingly, real estate returns have shown only modest improvement even while economic and capital markets conditions have strengthened. National Council of Real Estate Investment Fiduciaries (“NCREIF”) Property Index (“NPI”) returns for the second quarter of 2010 were 3.3%, consisting of a 1.6% capital return and a 1.7% income return. This marked the second consecutive positive return for the NPI, which had previously been negative since the third quarter of 2008.

Commercial real estate fundamentals are still weak, though there has been some modest improvement in demand. Vacancy rates are starting to stabilize, yet remain at or above historic averages for all property types. As such, tenants have a variety of space options and consequently many tenants have significant negotiating power with landlords. As a result, rents remain under downward pressure and generous concessions are frequently required to secure tenants. Property values for high quality properties in top markets have stabilized and some have increased. While transaction volume is still modest, prospective buyers are out in force for institutional quality properties that come to market whereas there is much lesser interest in lower quality properties in secondary and tertiary markets. The level of distress is rising, but there

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has thus far been only minimal market impact. Overall, though the improvement is gradual, the commercial property market appears to have bottomed.

Data for the Account’s top five markets in terms of market value as of June 30, 2010 are provided below. These markets represent 41.5% of the Account’s total real estate portfolio and occupancies of the properties owned in each of the top markets, except Boston, remained above 90% leased overall.

Metropolitan Area	Percent Leased Market Value Weighted*		# of Property Investments		Metro Areas as a % of Total Real Estate Portfolio		Metro Area as a % of Total Investments
Washington-Arlington- Alexandria DC-VA-MD-WV		95.3%		9		14.5%		12.3%
Boston-Quincy MA		85.0%		5		7.1%		6.1%
Los Angeles-Long Beach-Glendale CA		91.0%		8		6.9%		5.8%
Houston-Bay Town-Sugar Land TX		95.6%		3		6.6%		5.6%
San Francisco-San Mateo-Redwood City CA		92.5%		4		6.4%		5.4%

* Weighted by market value, which differs from the calculations provided for market comparisons to CBRE-EA data and are used here to reflect the fair market value of the Account’s monetary investments in those markets.

Office

According to CB Richard Ellis Economic Advisors (“CBRE-EA”), the national office vacancy rate averaged 16.7% in the second quarter of 2010, up slightly from 16.6% in first quarter of 2010. By comparison, the vacancy rate for the Account’s office portfolio was 11.9% as of the second quarter of 2010, as compared with 11.3% in first quarter of 2010. As shown in the table below, vacancy rates of the Account’s properties in most of its top markets either increased modestly or were stable during the quarter. The increase in Boston was due to the loss of a large tenant, which pushed the Account’s market vacancy rate up to 14.4% as of the second quarter of 2010. A portion of that space has subsequently been re-leased. Similarly, the lease expiration of a large tenant combined with the departure of a few small tenants in one building caused the vacancy rate across the Account’s San Francisco properties to rise to 8.3%; however, over 70% of the larger tenant’s space has been re-leased. The Account’s office results are largely consistent with conditions at the national level. Demand for office space is driven primarily by job growth in the financial and professional and business services sectors. Despite marked improvement in the balance sheets of most major banks, employment in the finance industry declined by 25,000 jobs in the second quarter of 2010, in addition to a loss of 48,000 during the first quarter of 2010. Professional and business services employment grew by 141,000 jobs in the second quarter of 2010 as compared to growth of 80,000 jobs in the first quarter of 2010. However, much of that growth was attributable to hiring of temporary workers, which often does not require companies to lease additional space. Office market conditions are likely to remain lackluster until job growth in the financial and professional and business services sectors recovers.

							Account Weighted Average Vacancy				Metropolitan Area Vacancy*
Sector	Metropolitan Area	Total Sector by Metro Area ($M)			% of Total Investments		2010Q1		2010Q2		2010Q1		2010Q2
Office	National							11.3%		11.9%		16.6%		16.7%
1	Washington-Arlington-Alexandria DC-VA-MD-WV		$	1,140.3		10.9%		5.4%		6.0%		14.0%		13.5%
2	Boston-Quincy MA		$	610.0		5.9%		9.2%		14.4%		13.3%		13.1%
3	San Francisco-San Mateo- Redwood City CA		$	509.1		4.9%		5.6%		8.3%		14.7%		14.7%
4	Seattle-Bellevue-Everett WA		$	434.1		4.2%		8.8%		9.3%		17.5%		17.4%
5	Houston-Bay Town-Sugar Land TX		$	364.5		3.5%		5.4%		5.4%		16.3%		16.5%

* Source: CBRE-EA. Vacancy is defined as the percentage of space vacant. The Account’s vacancy is defined as the weighted percentage of unleased space.

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Industrial

Conditions in the industrial market are influenced to a large degree by GDP growth, industrial production and international trade flows. While macroeconomic indicators such as GDP growth and survey readings from the Institute for Supply Management show improvement, industrial market conditions remain weak. According to CBRE-EA, the national industrial availability rate averaged 14.1% during the second quarter of 2010, as compared to 14.0% during the first quarter of 2010. By comparison, the vacancy rate for the Account’s industrial property portfolio averaged 7.2% in the second quarter of 2010 as compared with 13.0% in the first quarter of 2010. The decline in the vacancy rate was largely attributable to leasing of large blocks of available space in the Account’s Riverside CA properties, which are now fully leased despite an oversupply of space in that market. As shown in the table below, the vacancy rate of the Account’s properties in Dallas, Chicago and Atlanta were all well below their respective market averages. The Account’s properties in Los Angeles continued to lag the market but saw vacancies decline during the second quarter of 2010.

							Account Weighted Average Vacancy				Metropolitan Area Vacancy*
Sector	Metropolitan Area	Total Sector by Metro Area ($M)			% of Total Investments		2010Q1		2010Q2		2010Q1		2010Q2
Industrial	National							13.0%		7.2%		14.0%		14.1%
1	Riverside-San Bernardino-Ontario CA		$	326.6		3.1%		16.2%		0.0%		15.9%		15.7%
2	Dallas-Plano-Irving TX		$	156.1		1.5%		4.8%		4.5%		16.6%		16.1%
3	Chicago-Naperville-Joliet IL		$	104.0		1.0%		2.6%		2.3%		14.8%		15.2%
4	Los Angeles-Long Beach-Glendale CA		$	89.9		0.9%		12.0%		11.3%		8.1%		8.0%
5	Atlanta-Sandy Springs-Marietta GA		$	89.9		0.9%		2.8%		1.8%		18.0%		18.3%

* Source: CBRE-EA. Availability is defined as the percentage of space available for rent. The Account’s vacancy is defined as the weighted percentage of unleased space.

Multi-Family

Preliminary data from CBRE-EA indicate that apartment market fundamentals continued to improve upon first quarter 2010 gains. The U.S. apartment vacancy rate averaged 6.0% as of the second quarter of 2010 versus 7.4% in the second quarter of 2009. (Year-over-year comparisons are necessary to account for seasonal leasing patterns.) Improvements in the labor market, along with a decline in the supply of both traditional rental units and “shadow” rental units (condominiums and single-family homes being offered for rent) were cited as contributing factors. Additionally, the rise in foreclosures has resulted in new demand for rental units in some markets. Consistent with national trends, the Account’s multi-family vacancy rate declined to an average of 2.6% in the second quarter of 2010 versus 3.8% in the first quarter of 2010. As shown in the table below, the average vacancy rates for the Account’s properties in its top apartment markets were all well below their respective market averages.

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							Account Weighted Average Vacancy				Metropolitan Area Vacancy*
Sector	Metropolitan Statistical Area	Total Sector by Metro Area ($M)			% of Total Investments		2010Q1		2010Q2		2010Q1		2010Q2
Apartment	National							3.8%		2.6%		6.8%		6.0%
1	Houston-Bay Town-Sugar Land TX		$	216.6		2.1%		5.0%		2.7%		10.3%		9.8%
2	Denver-Aurora CO		$	183.9		1.8%		3.1%		2.6%		5.5%		5.5%
3	New York-Wayne-White Plains NY-NJ		$	119.6		1.2%		0.0%		0.0%		6.2%		6.1%
4	Atlanta-Sandy Springs-Marietta GA		$	117.8		1.1%		2.3%		1.9%		10.4%		9.2%
5	Phoenix-Mesa-Scottsdale AZ		$	110.5		1.1%		4.1%		4.3%		9.7%		10.0%

* Source: CBRE-EA. Vacancy is defined as the percentage of units vacant. The Account’s vacancy is defined as the weighted percentage of unleased space.

Retail

Macro-economic indicators for the retail sector first turned positive in the fall of 2009, but have weakened in recent months. For example, retail sales excluding motor vehicles and gas have grown steadily on a year-over-year basis through the first half of 2010, though comparisons are favorable largely because 2009 sales were extremely weak. Similarly, “same store sales growth,” a key industry metric, turned positive for leading retailers after significant declines throughout much of the past three years. However, sales have slowed in recent months as the tentative recovery of the labor market, equity market volatility, and stagnant housing values have all contributed to a pullback in consumer spending. Consumers typically lead the economy out of recession but most economists expect consumer spending to increase at a moderate pace over the near term given consumers’ uncertainty about jobs, home prices and the recovery. According to CBRE-EA, availability rates in community and neighborhood shopping centers averaged 13.2% in the second quarter of 2010 versus 13.1% in the first quarter of 2010. Vacancies have been difficult to fill as retailers have closed underperforming stores and reduced the number of new store openings until retail sales growth firms. Reflective of the challenging economic and leasing environment, the vacancy rate for the Account’s retail portfolio remained elevated, but declined to an average of 15.0% during the second quarter of 2010 from 15.5% in the first quarter of 2010.

Outlook

During the first half of 2010, U.S. commercial real estate market conditions generally improved but continued to lag broader economic trends. Recent indications that the pace of the economic recovery has slowed has raised the possibility of further weakness in real estate market fundamentals. Presently, however, it still appears that market conditions have stabilized and are likely to improve at a modest pace over the remainder of 2010. While most economists do not expect job growth to accelerate significantly until 2011, modest employment growth coupled with minimal construction would be a favorable backdrop for U.S. real estate markets over the near term. Further, CBRE-EA expects construction of all property types to fall to historic lows over the next two to three years. Minimal supply coupled with growing employment has historically helped property market conditions recover relatively quickly.

Management has navigated through the recent downturn by focusing on maintaining the Account’s income returns through aggressive property management and leasing in combination with expense management. As of the second quarter of 2010, the Account’s commercial property portfolio was 89.3% leased and the Account’s second quarter quarterly income return was 2.14%. Notably, significant positive contributions came from the office and apartment sectors. The Account’s quarterly return was also bolstered by a 3.26% capital return, which was the first positive capital return since the fourth quarter of 2007. As shown in the graph below, returns for the second quarter of 2010 were the strongest quarterly return since the second quarter of 2006.

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Management continues to work towards the realignment of the Account’s geographic and property sector allocations to achieve desired concentrations in target major markets and a portfolio comprised of an optimal mix of property types. This realignment strategy is geared to position the Account’s portfolio to benefit from an expected recovery in the commercial real estate market. In addition, the Account has implemented a financing strategy designed to reduce the overall level of debt, extend the debt maturity schedule, and lower the overall interest rate. Recent inflows to the Account, which have enhanced liquidity, may be used to further reduce the overall level of debt, acquire new properties, purchase real-estate related investments such as REIT securities, and/or redeem General Account liquidity units. To the extent that available cash is used to acquire property, prospective acquisitions will be evaluated in the context of overall fund objectives, including target market concentrations, property sector allocations, and a “core” investment strategy with an emphasis on institutional quality properties, particularly those that have a strong occupancy history and favorable tenant rollover schedules.

Investments as of June 30, 2010

As of June 30, 2010, the Account had total net assets of $8.6 billion, an 8.6% increase from December 31, 2009, and an 8.0% decrease from June 30, 2009. The increase in the Account’s net assets as of June 30, 2010 as compared to December 31, 2009 was primarily caused by the appreciation in value of the Account’s wholly owned real estate properties and those owned in joint venture investments, as well as the increase in participant transfers in and decrease in transfers out of the Account for this period.

As of June 30, 2010, the Account owned a total of 101 real estate property investments (89 of which were wholly owned, 12 of which were held in joint ventures). The real estate portfolio included 40 office property investments (five of which were held in joint ventures and one located in London, England), 25 industrial property investments (including one held in a joint venture), 20 apartment complexes, 15 retail property investments (including five held in joint ventures and one located in Paris, France), and a 75% joint venture interest in a portfolio of storage facilities. Of the 101 real estate property investments, 27 are subject to debt (including seven joint venture property investments).

Total debt on the Account’s wholly owned real estate portfolio as of June 30, 2010 was $1.9 billion. The Account’s share of joint venture debt ($1.5 billion) is netted against the underlying properties when determining the joint venture values presented on the Statement of Investments. When the joint venture debt is also considered, total debt on the Account’s portfolio as of June 30, 2010 was $3.4 billion, representing a loan to value ratio of 28.8%. The Account currently has no Account-level debt.

Management believes that the Account’s real estate portfolio is diversified by location and property type. The Account’s largest investment, 1001 Pennsylvania Avenue located in Washington, DC, represented 6.5% of total real estate investments and 5.6% of total investments. As discussed in the Account’s prospectus, the Account does not intend to buy and sell its real estate investments simply to make short-term profits. Rather, the Account’s general strategy in selling real estate investments is to dispose of those assets that management believes: (i) have either maximized in value, (ii) have underperformed or face deteriorating

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property-specific or market conditions, (iii) need significant capital infusions in the future, (iv) are appropriate to dispose of in order to remain consistent with its intent to diversify the Account by property type and geographic location, or to reallocate the Account’s exposure to or away from certain property types in certain geographic locations. The Account intends to reinvest any sale proceeds that it does not need to pay operating expenses or to meet debt service or redemption requests (e.g., cash withdrawals or transfers, and any redemption of TIAA’s liquidity units in the future).

The following charts reflect the diversification of the Account’s real estate assets by region and property type and list its ten largest investments. All information is based on the fair values of the investments at June 30, 2010.

Diversification by Fair Value⁽¹⁾

	East			West			South			Midwest			Foreign(2)			Total
Office		24.8	%		17.0	%		11.5	%		1.2	%		2.8	%		57.3	%
Apartment		2.6	%		5.8	%		5.4	%		0.0	%		0.0	%		13.8	%
Industrial		1.3	%		6.6	%		4.1	%		1.2	%		0.0	%		13.2	%
Retail		3.3	%		0.9	%		8.7	%		0.4	%		1.8	%		15.1	%
Storage Facilities		0.2	%		0.2	%		0.1	%		0.1	%		0.0	%		0.6	%
Total		32.2	%		30.5	%		29.8	%		2.9	%		4.6	%		100.0	%

(1)	Wholly-owned properties are represented at fair value and gross of any debt, while joint venture properties are represented at the net equity value.
(2)	Represents real estate investments in the United Kingdom and France.

Properties in the “East” region are located in: CT, DC, DE, KY, MA, MD, ME, NC, NH, NJ, NY, PA, RI, SC, VA, VT, WV

Properties in the “West” region are located in: AK, AZ, CA, CO, HI, ID, MT, NM, NV, OR, UT, WA, WY

Properties in the “South” region are located in: AL, AR, FL, GA, LA, MS, OK, TN, TX

Properties in the “Midwest” region are located in: IA, IL, IN, KS, MI, MN, MO, ND, NE, OH, SD, WI

Top Ten Largest Real Estate Investments

Property Investment Name	City	State	Type	Value ($M)(a)			Property as a % of Total Real Estate Portfolio(b)		Property as a % of Total Investments
1001 Pennsylvania Avenue	Washington	DC	Office		579.9	(c)		6.54		5.56
Four Oaks Place	Houston	TX	Office		364.5	(d)		4.11		3.50
DDR Joint Venture	Various	USA	Retail		306.3	(e)		3.46		2.94
Fourth and Madison	Seattle	WA	Office		299.0	(f)		3.37		2.87
50 Fremont	San Francisco	CA	Office		289.1	(g)		3.26		2.77
The Florida Mall	Orlando	FL	Retail		272.2	(h)		3.07		2.61
780 Third Avenue	New York City	NY	Office		270.3			3.05		2.59
Westferry Circus	London	UK	Office		244.9	(i)		2.76		2.35
1900 K Street	Washington	DC	Office		240.0			2.71		2.30
99 High Street	Boston	MA	Office		238.6	(j)		2.69		2.29

(a)	Value as reported in the June, 30, 2010 Statement of Investments. Investments owned 100% by the Account are reported based on fair value. Investments in joint ventures are reported at fair value and are presented at the Account’s net equity and ownership interest.
(b)	Total Real Estate Portfolio excludes the mortgage loan receivable.
(c)	This property investment is presented gross of debt. The value of the Account’s interest less the fair value of leverage is $362.5M.
(d)	This property investment is presented gross of debt. The value of the Account’s interest less the fair value of leverage is $164.5M.
(e)	This property is held in a 85%/15% joint venture with Developers Diversified Realty Corporation (“DDR”), and consists of 49 retail properties located in 13 states and is presented net of debt of $967.6 million.
(f)	This property investment is presented gross of debt. The value of the Account’s interest less the fair value of leverage is $153.6M.
(g)	This property investment is presented gross of debt. The value of the Account’s interest less the fair value of leverage is $153.3M.
(h)	This property investment is a 50%/50% joint venture with Simon Property Group, L.P., and is presented net of debt of $120.5 million.
(i)	This property investment is presented gross of debt. The value of the Account’s interest less the fair value of leverage is $44.8M.
(j)	This property investment is presented gross of debt. The value of the Account’s interest less the fair value of leverage is $52.2M.

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As of June 30, 2010, the Account also held investments in a mortgage loan receivable representing 0.7% of total investments, real estate limited partnerships representing 2.2% of total investments, U.S. Treasury Bills representing 5.2% of total investments, and government agency notes representing 7.0% of total investments.

Results of Operations

Six months ended June 30, 2010 compared to Six months ended June 30, 2009

Performance

The Account’s total return was 2.4% for the six months ended June 30, 2010 as compared to -17.5% for the six months ended June 30, 2009. The Account’s performance in the second quarter of 2010 reflects an increase in the aggregate net asset value of the Account’s real estate property investments, including investments owned in joint ventures, higher income from marketable securities, and an increase in unrealized gains on investments, while slightly offset by decrease in mortgage loans payable.

The Account’s annualized total returns (after expenses) over the past one, three, five, and ten year periods ended June 30, 2010 were -10.2%, -12.3%, -2.3%, and 2.8%, respectively. As of June 30, 2010, the Account’s annualized total return since inception was 4.7%.

The Account’s total net assets decreased from $9.3 billion at June 30, 2009 to $8.6 billion at June 30, 2010. The primary driver of this 8.0% decrease was depreciation in value of the Account’s wholly owned, joint venture, and limited partnership real estate investments. Net participant activity out of the Account during 2009 and through the first quarter of 2010 also contributed to this decrease; however, net participant activity into the Account during the second quarter of 2010 has helped to moderate the decline.

Net Investment Income

The table below shows the results of operations for the six months ended June 30, 2010 and 2009 and the dollar and percentage changes for those periods (dollars in thousands).

	For the Six Months Ended June 30,						Change
	2010			2009			$				%
INVESTMENT INCOME
Real estate income, net:
Rental income		$	429,370		$	480,489		$	(51,119	)		-10.64	%
Real estate property level expenses and taxes:
Operating expenses			107,066			121,379			(14,313	)		-11.79	%
Real estate taxes			59,768			67,953			(8,185	)		-12.05	%
Interest expense			49,401			51,668			(2,267	)		-4.39	%
Total real estate property level expenses and taxes			216,235			241,000			(24,765	)		-10.28	%
Real estate income, net			213,135			239,489			(26,354	)		-11.00	%
Income from real estate joint ventures and limited partnerships			41,489			60,245			(18,756	)		-31.13	%
Interest			1,037			995			42			4.22	%
TOTAL INVESTMENT INCOME			255,661			300,729			(45,068	)		-14.99	%
Expenses—Note 2:
Investment advisory charges			22,931			21,021			1,910			9.09	%
Administrative and distribution charges			12,431			21,213			(8,782	)		-41.40	%
Mortality and expense risk charges			1,950			2,606			(656	)		-25.17	%
Liquidity guarantee charges			5,852			6,020			(168	)		-2.79	%
TOTAL EXPENSES			43,164			50,860			(7,696	)		-15.13	%
INVESTMENT INCOME, NET		$	212,497		$	249,869		$	(37,372	)		-14.96	%

The $51.1 million decrease in real estate rental income for the six months ended June 30, 2010 as compared to the same period in 2009 is primarily a result of the seven full and six partial wholly owned

41

property investment sales that occurred in the second half of 2009. These disposed properties accounted for approximately $31.6 million, or 61.8%, of the $51.1 million total change. The remaining $19.5 million is attributed to increased vacancies at certain properties, reduced rental rates, and rent concessions for renewed leases, as well as lower common area charges resulting from the properties maintaining lower property operating expenses.

Operating expenses declined approximately 11.8% for the six months ended June 30, 2010 as a result of fewer property investments under management. Property investments that were sold accounted for approximately $7.6 million, or 53.1%, of the total decline in operating expenses. Approximately $3.5 million of the remaining decrease in operating expense was the result of lower insurance and general building and maintenance expenses.

Real estate taxes experienced a 12.1% decrease for the period ended June 30, 2010 as compared to the same period in the prior year. This is a result of fewer property investments under management and lower tax assessments across the existing properties held by the Account.

The $18.8 million decline in income from real estate joint ventures and limited partnerships was primarily attributed to a decrease in revenues as a result of an increase in vacancies as well as rent concessions across the joint venture portfolios held by the Account. Furthermore, the decrease in income from joint ventures and limited partnerships can be attributed to the sale of 16 properties from within the DDR joint venture in early 2010. This resulted in less income to the Account as compared to the same period ended June 30, 2009.

The Account experienced a 15.1%, or $7.7 million, decrease in overall Account level expenses for the period ended June 30, 2010 as compared to the period ended June 30, 2009. The decrease in overall expenses is principally due to lower average net assets as compared to the same period in the prior year. Administrative and distribution charges, which closely follow average net assets, accounted for a significant portion of the decrease with approximately $8.8 million, or 41.4%, lower than the period ended June 30, 2009.

Net Realized and Unrealized Gains and Losses on Investments and Mortgage Loans Payable

The table below shows the net realized and unrealized gains and loss on investments and mortgage loans payable for the six months ended June 30, 2010 and 2009 and the dollar and percentage changes for those periods (dollars in thousands).

	For the Six Months Ended June 30,								Change
	2010				2009				$				%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE
Net realized loss on investments:
Real estate properties		$	(1,238	)		$	(16,886	)		$	15,648			-92.67	%
Real estate joint ventures and limited partnerships			(153,252	)			—				(153,252	)		—
Marketable securities			—				1				(1	)		-100.00	%
Total realized loss on investments			(154,490	)			(16,885	)			(137,605	)		814.95	%
Net change in unrealized appreciation (depreciation) on:
Real estate properties			23,274				(1,501,837	)			1,525,111			-101.55	%
Real estate joint ventures and limited partnerships			155,929				(703,083	)			859,012			-122.18	%
Marketable securities			65				18				47			261.11	%
Mortgage loans receivable			1,439				(3,488	)			4,927			-141.26	%
Mortgage loans payable			(34,312	)			(15,322	)			(18,990	)		123.94	%
Net change in unrealized appreciation (depreciation) on investments and mortgage loans payable			146,395				(2,223,712	)			2,370,107			-106.58	%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE			(8,095	)			(2,240,597	)			2,232,502			-99.64	%
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$	204,402			$	(1,990,728	)		$	2,195,130			-110.27	%

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During the six months ended June 30, 2010, the Account experienced a net realized and unrealized loss on investments and mortgage loans payable of $8.1 million compared to a net realized and unrealized loss of $2.2 billion for the period ended June 30, 2009. The overall change in net loss was driven by an increase in the values of the wholly owned real estate properties and investments in real estate joint ventures compared to declining values in the same period in 2009.

The net realized and unrealized losses on the Account’s wholly owned real estate property investments and those held in joint ventures experienced a moderation in the rate of valuation decline with some properties within the portfolio experiencing valuation increases. The valuation increases were generally due to decreases in overall market capitalization rates as well as property specific reasons such as new leases, improved local market rents, and decreases in projected taxes and other property operating expenses. The Account’s unrealized losses in the first quarter of 2010 were almost entirely reversed during the second quarter of 2010. Almost half of the Account’s unrealized gains during the second quarter of 2010 were experienced at two office property investments within the Washington D.C. market. Furthermore, almost half of the Account’s wholly owned real estate properties experienced no change or increased in fair value during the first half of 2010, compared to only one wholly owned real estate property experiencing an increase during the first half of 2009.

The net realized and unrealized losses on wholly owned investments declined significantly in the six months ended June 30, 2010 compared to the period ended June 30, 2009. Of the $22.0 million of net change in realized and unrealized gains during the six months ended June 30, 2010, the majority was related to valuation gains ($85.6 million) partially offset by losses related to foreign currency translation ($62.4 million). The foreign currency losses are primarily a result of the strengthening U.S. dollar.

Real estate joint ventures and limited partnerships experienced a net realized and unrealized gain of approximately $2.7 million for the six months ended June 30, 2010. As a result of the sale of 16 property investments from within the DDR TC LLC joint venture, approximately $148.0 million of cumulative unrealized loss was reclassified from unrealized loss to realized loss. In total, the Account experienced a net realized and unrealized gain on investments in joint ventures and limited partnerships as compared to the $703.1 million loss experienced during the six months ended June 30, 2009. Furthermore, eight joint venture and five limited partnership investments experienced increases in fair value during the first half of 2010.

Mortgage loans payable experienced an unrealized loss of approximately $34.3 million during the first half of 2010 compared to an unrealized loss of approximately $15.3 million in the same period of 2009. The unrealized loss experienced during the first half of 2010 consists of upward debt valuation adjustments (presented as losses to the Account) of approximately $50.3 million offset by approximately $16.0 million of valuation gains as a result of foreign currency translation (due to the strengthening U.S. dollar). The valuation adjustments were a result of changes in property values for properties encumbered by debt across the portfolio and their affects on loan to value ratios, which directly impacts property debt valuation.

Three months ended June 30, 2010 compared to Three months ended June 30, 2009

The Account’s total return was 4.4% for the three months ended June 30, 2010 as compared to -10.0% for the three months ended June 30, 2009. The Account’s performance in the second quarter of 2010 reflects an increase in the aggregate net asset value of the Account’s real estate property investments, including investments owned in joint ventures, higher net real estate income, and unrealized gains on investments, while slightly offset by unrealized losses related to mortgage loans payable.

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The table below shows the results of operations for the three months ended June 30, 2010 and 2009 and the dollar and percentage changes for those periods (dollars in thousands).

	For the Three Months Ended June 30,						Change
	2010			2009			$				%
INVESTMENT INCOME
Real estate income, net:
Rental income		$	216,725		$	238,699		$	(21,974	)		-9.21	%
Real estate property level expenses and taxes:
Operating expenses			47,755			55,283			(7,528	)		-13.62	%
Real estate taxes			30,026			32,776			(2,750	)		-8.39	%
Interest expense			24,781			26,624			(1,843	)		-6.92	%
Total real estate property level expenses and taxes			102,562			114,683			(12,121	)		-10.57	%
Real estate income, net			114,163			124,016			(9,853	)		-7.94	%
Income from real estate joint ventures and limited partnerships			22,507			30,438			(7,931	)		-26.06	%
Interest			630			483			147			30.52	%
TOTAL INVESTMENT INCOME			137,300			154,937			(17,637	)		-11.38	%
Expenses—Note 2:
Investment advisory charges			12,045			11,153			892			7.99	%
Administrative and distribution charges			5,329			8,851			(3,522	)		-39.79	%
Mortality and expense risk charges			996			1,232			(236	)		-19.17	%
Liquidity guarantee charges			2,990			3,272			(282	)		-8.61	%
TOTAL EXPENSES			21,360			24,508			(3,148	)		-12.84	%
INVESTMENT INCOME, NET		$	115,940		$	130,429		$	(14,489	)		-11.11	%

The $22.0 million, or 9.2%, decrease in real estate rental income for the three months ended June 30, 2010 as compared to the same period in 2009 is primarily a result of the seven full and six partial wholly owned property investment sales that occurred in the second half of 2009. The disposed properties accounted for approximately $15.6 million, or 70.9%, of the $22.0 million total change. The remaining $6.4 million is attributed to increased vacancies at certain properties, reduced rental rates and concessions for renewed leases, and lower common area charges resulting from the properties maintaining lower property operating expenses.

Operating expenses declined for the three months ended June 30, 2010 as a result of fewer property investments under management. Property investments that were sold accounted for approximately $4.2 million, or 56.2% of the total decline in operating expenses. The remaining $3.3 million of the decrease in operating expense was primarily attributed to decreases in security and bad debt expenses when compared to the same period in 2009.

Real estate taxes experienced a slight decrease for the period ended June 30, 2010 as compared to the same period in the prior year. This is a result of fewer property investments under management, accounting for approximately $2.2 million of the $2.8 million decrease, as well as lower tax assessments at certain properties.

The $7.9 million decline in income from real estate joint ventures and limited partnerships was primarily attributed to a decrease in revenues as a result of an increase in vacancies as well as rent concessions across the joint venture portfolios held by the Account. Furthermore, the decrease in income from joint ventures and limited partnerships can be attributed to the sale of 16 properties from the DDR joint venture in early 2010. This resulted in less income to the Account as compared to the same period ended June 30, 2009.

The Account incurred a 12.8% or $3.1 million decrease in overall Account level expenses for the three month period ended June 30, 2010 as compared to the period ended June 30, 2009. The decrease in overall expenses is principally due to lower average net assets as compared to the same period in the prior year. Administrative and distribution charges, which closely follow average net assets, accounted for a significant portion of the decrease with approximately $3.5 million or 39.8% lower than the quarter ended June 30, 2009.

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The table below shows the net realized and unrealized gains and loss on investments and mortgage loans payable for the three months ended June 30, 2010 and 2009 and the dollar and percentage changes for those periods (dollars in thousands).

	For the Three Months Ended June 30,								Change
	2010				2009				$				%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE
Net realized loss on investments:
Real estate properties		$	—			$	(8	)		$	8			-100.00	%
Real estate joint ventures and limited partnerships			(19	)			—				(19	)		—
Marketable securities			—				1				(1	)		-100.00	%
Total realized loss on investments			(19	)			(7	)			(12	)		171.43	%
Net change in unrealized appreciation (depreciation) on:
Real estate properties			212,713				(609,089	)			821,802			-134.92	%
Real estate joint ventures and limited partnerships			35,455				(469,617	)			505,072			-107.55	%
Marketable securities			85				(10	)			95			-950.00	%
Mortgage loans receivable			1,253				(1,426	)			2,679			-187.86	%
Mortgage loans payable			(8,517	)			(86,010	)			77,493			-90.10	%
Net change in unrealized appreciation (depreciation) on investments and mortgage loans payable			240,989				(1,166,152	)			1,407,141			-120.67	%
NET REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND MORTGAGE LOANS PAYABLE			240,970				(1,166,159	)			1,407,129			-120.66	%
NET INCREASE (DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS		$	356,910			$	(1,035,730	)		$	1,392,640			-134.46	%

During the quarter ended June 30, 2010, the Account experienced a net realized and unrealized gain on investments and mortgage loans payable of $241.0 million compared to a net realized and unrealized loss of $1.2 billion for the quarter ended June 30, 2009. The overall change was driven by an increase in the values of the wholly owned real estate properties and investments in real estate joint ventures in the first half of 2010 compared to declining values in the same period in 2009.

The Account’s wholly owned real estate property investments and those held in joint ventures experienced a net realized and unrealized gains during the quarter ended June 30, 2010 as several properties within the portfolio experienced valuation increases. The valuation increases were generally due to property specific reasons such as new leases, improved local market rents, and decreases in projected taxes and other property operating expenses. Almost half of the Account’s unrealized gains during the second quarter of 2010 were experienced at two office property investments within the Washington D.C. market. Approximately 66.3% of the Account’s wholly owned real estate properties experienced no change or increased in fair value during the second quarter of 2010, compared to only 8.3% of wholly owned real estate properties experiencing increases during the second quarter of 2009.

The net unrealized gains on wholly owned investments improved significantly in the three months ended June 30, 2010 compared to the same period ended June 30, 2009. Of the $212.7 million of unrealized gain during the three months ended June 30, 2010, the majority was related to valuation gains ($237.6 million) offset by losses related to foreign currency translation ($24.9 million) as a result of the strengthening U.S. dollar.

Real estate joint ventures and limited partnerships experienced a net realized and unrealized gain of approximately $35.5 million for the three months ended June 30, 2010. In total, net realized and unrealized gains on investments in joint ventures and limited partnerships was significantly improved compared to the $469.6 million loss experienced during the quarter ended June 30, 2009. Ten joint venture and five limited partnership investments experienced increases in fair value during the second quarter of 2010.

Mortgage loans payable experienced an unrealized loss of approximately $8.5 million during the second quarter of 2010 compared to an unrealized loss of approximately $86.0 million in the same period of 2009. The unrealized loss experienced during the second quarter of 2010 consists of upward debt valuation adjustments (presented as losses to the Account) of approximately $11.3 million offset by approximately $2.8

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million of valuation gains as a result of foreign currency translation (due to the strengthening U.S. dollar). The slight valuation adjustments were a result of changes in property values for properties encumbered by debt across the portfolio and their affects on loan to value ratios, which directly impacts property debt valuation

Liquidity and Capital Resources

As of June 30, 2010 and 2009, the Account’s liquid assets (i.e., cash, marketable securities, and receivables for short-term securities sold) had a value of $1.3 billion and $0.5 billion, respectively (approximately 12.2% and 4.6% of the Account’s total investments at such dates, respectively). When compared to June 30, 2009 and December 31, 2009, the Account’s liquid assets have increased by approximately $0.8 billion and $0.6 billion, respectively. These increases are primarily the result of increased net participant activity into the Account and are also the result of income generated from its real estate investments, and income earned from joint venture investments.

During the six months ended June 30, 2010, the Account received $327.0 million in premiums and had an inflow of $299.5 million in net participant transfers from TIAA, the CREF accounts, and TIAA-CREF affiliated mutual funds, while during the six months ended June 30, 2009, the Account received $369.9 million in premiums and had an outflow of $1.4 billion in net participant transfers to TIAA, the CREF accounts, and TIAA-CREF funds (excluding the $1.1 billion of purchases of Liquidity Units by TIAA).

Liquidity Guarantee

Primarily as a result of significant net participant transfers out of the Account during late 2008 and early 2009, pursuant to TIAA’s existing liquidity guarantee obligation, the TIAA general account purchased approximately $1.2 billion of Liquidity Units issued by the Account in a number of separate transactions between December 24, 2008 and June 1, 2009. During the period June 2, 2009 through August 12, 2010, the TIAA general account did not purchase any additional Liquidity Units. As disclosed under “Establishing and Managing the Account—the Role of TIAA—Liquidity Guarantee” in the Account’s prospectus, in accordance with this liquidity guarantee obligation, TIAA guarantees that all participants in the Account may redeem their accumulation units at their accumulation unit value next determined after their transfer or cash withdrawal request is received in good order.

Net redemption activity has significantly slowed since the first quarter of 2009 and has turned to inflows in 2010. As a result, while management cannot predict whether any future TIAA Liquidity Unit purchases will be required under this liquidity guarantee it is unlikely that additional purchases will be required in the near term. While the Account experienced net participant inflows during the second quarter of 2010, management cannot predict whether the net inflows will continue. If net outflows were to occur (even if not at the same intensity as in 2008 and early 2009), it could have a negative impact on the Account’s operations and returns. Additionally, net outflow activity could require TIAA to purchase additional Liquidity Units, perhaps to a significant degree.

TIAA’s obligation to provide Account participants liquidity through purchases of Liquidity Units is not subject to an express regulatory or contractual limitation, although as described in the paragraph below, the independent fiduciary may (but is not obligated to) require the reduction of TIAA’s interest through sales of assets from the Account if TIAA’s interest exceeds the trigger point. Even if the independent fiduciary so requires, TIAA’s obligation to provide liquidity under the guarantee, which is required by the New York State Insurance Department, will continue. Management believes that TIAA has the ability to meet its obligations under this liquidity guarantee.

Whenever TIAA owns Liquidity Units, the duties of the Account’s independent fiduciary, as part of its monitoring of the Account, include reviewing the purchase and redemption of Liquidity Units by TIAA to ensure the Account uses the correct accumulation unit values. In addition, the independent fiduciary’s responsibilities include:

• establishing the percentage of total accumulation units that TIAA’s ownership should not exceed (the “trigger point”) and creating a method for reviewing the trigger point;

• approving any adjustment of TIAA’s ownership interest in the Account and, in its discretion, requiring an adjustment if TIAA’s ownership of Liquidity Units reaches the trigger point; and

46

• once the trigger point has been reached, participating in any program to reduce TIAA’s ownership in the Account by utilizing cash flow or liquid investments in the Account, or by utilizing the proceeds from asset sales. If the independent fiduciary were to determine that TIAA’s ownership should be reduced following the trigger point, its role in participating in any asset sales program would include (i) participating in the selection of properties for sale, (ii) providing sales guidelines and (iii) approving those sales if, in the independent fiduciary’s opinion, such sales are desirable to reduce TIAA’s ownership of Liquidity Units.

As of the date of this Form 10-Q, the independent fiduciary, which has the right to adjust the trigger point, has established the trigger point at 45% of the outstanding accumulation units and it will continue to monitor TIAA’s ownership interest in the Account and provide further recommendations as necessary. As of June 30, 2010, TIAA owned approximately 11.2% of the outstanding accumulation units of the Account. In establishing the appropriate trigger point, including whether or not to require certain actions once the trigger point has been reached, the independent fiduciary will assess, among other things and to the extent consistent with the Prohibited Transaction Exemption (PTE 96-76) issued by the U.S. Department of Labor in 1996 with respect to the liquidity guarantee and the independent fiduciary’s duties under ERISA, the risk that a conflict of interest could arise due to the level of TIAA’s ownership interest in the Account.

Management expects, unless the trigger point has been reached, redemptions of Liquidity Units would only occur: (i) once the Account has experienced net participant inflows for an extended period of time and (ii) if the Account is otherwise projected to maintain a level of liquid assets, taking into account any pending and near term cash needs (including for capital expenditures, property cash needs, debt service, and outstanding principal balances at maturity), at or close to its long-term investment goal (currently at least 15% of the Account’s net assets). The independent fiduciary oversees the guarantee features, will approve all redemption of liquidity units, and may authorize or direct the redemption of TIAA’s liquidity units (or a portion thereof) at any time. Upon termination and liquidation of the Account (wind-up), any liquidity units held by TIAA will be the last units redeemed, unless the independent fiduciary directs otherwise.

The Account’s net investment income continues to be an additional source of liquidity for the Account even though it has decreased from $249.9 million for the six months ended June 30, 2009 to $212.5 million for the six months ended June 30, 2010.

While the Account’s liquid investments dropped below 15% of its total investments during this recent period of significant net participant outflows, the Account’s investment strategy remains to invest between 75% and 85% of its net assets directly in real estate or real estate-related investments with the goal of producing favorable long-term returns primarily through rental income and appreciation. In the near term, the Account’s cash and marketable securities could comprise less than 15% of the Account’s net assets, but management intends to increase and maintain the Account’s holdings in cash and short-term marketable securities to the extent practicable, consistent with its investment strategy and objective. As of June 30, 2010, cash and short-term marketable securities comprised approximately 14.9% of the Account’s net assets and as of July 31, 2010, cash and short-term marketable securities comprised approximately 20.5% of the Account’s net assets.

The Account’s liquid assets continue to be available to purchase additional suitable real estate properties and to meet the Account’s debt obligations, expense needs, and participant redemption requests (i.e., cash withdrawals, benefit payments, or transfers). As of December 31, 2009, the Account had approximately $704.3 million in principal amount of debt obligations due during 2010 related to wholly owned real estate investments and the Account’s share of debt associated with its investments in joint ventures. On February 26, 2010, the maturity date of a loan in the outstanding principal amount of $168.3 million (with the Account’s share totaling $143.1 million) with respect to certain of the properties held in the Account’s joint venture with DDR was extended from 2010 to 2011. The maximum amount that may be drawn under this loan is $213.0 million. The principal amount of debt obligations coming due in the last half of 2010 was $448.6 million.

Management believes that the Account, and the joint venture entities in which the Account invests, will have the ability to address these obligations in a number of ways, including among others, refinancing or extending such debt or repaying the principal due at maturity.

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Leverage

The Account 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 that may be unsecured and/or contain terms that may require the Account to secure the loan with one or more of its properties.

The Account is authorized to borrow money in accordance with its investment guidelines. Under the Account’s current investment guidelines, which were modified as to borrowing in mid-2009, the Account’s loan to value ratio (as defined below) is to be maintained at or below 30%. However, until December 31, 2011, the Account is authorized to incur and/or maintain indebtedness on its properties in an aggregate principal amount not to exceed the aggregate principal amount of debt outstanding as of the date of adoption of such guidelines (approximately $4.0 billion). Such incurrences of debt from time to time may include:

• placing new debt on properties;

• refinancing outstanding debt;

• assuming debt on acquired properties or interests in the Account’s properties; and/or

• extending the maturity date of outstanding debt.

In calculating this limit, only the Account’s actual percentage interest in any borrowings is included, and not that percentage interest held by any joint venture partner. Further, the Account may only borrow up to 70% of the then-current value of a property, although construction loans may be for 100% of the costs incurred in developing a property. As of June 30, 2010 the Account did not have any construction loans. Also, at the time the Account (or a joint venture in which the Account is a partner) enters into a revolving line of credit, management deems the maximum amount which may be drawn under that line of credit as fully incurred, regardless of whether the maximum amount available has been drawn from time to time.

In addition, by December 31, 2011, management intends to reduce the Account’s ratio of outstanding principal amount of debt to total gross asset value (i.e., a “loan to value ratio”) to 30% or less and thereafter intends to maintain its loan to value ratio at or below 30% (measured at the time of incurrence and after giving effect thereto). The Account’s total gross asset value, for these purposes, is equal to the total fair value of the Account’s assets (including the fair value of the Account’s interest in joint ventures), with no reduction associated with any indebtedness on such assets.

As of June 30, 2010, the Account’s loan to value ratio was approximately 28.8%. As discussed in Note 10—Commitments and Subsequent Events, the Account and a joint venture in which the Account maintains an interest obtained additional financing subsequent to June 30, 2010. Taking into account these subsequent events, the Account’s loan to value ratio increased to approximately 30.1%.

Recent Transactions

The following describes property transactions by the Account in the second quarter of 2010. Except as noted, the expenses for operating the properties purchased are either borne or reimbursed, in whole or in part, by the property tenants, although the terms vary under each lease. The Account is responsible for operating expenses not reimbursed under the terms of a lease. All rental rates are quoted on an annual basis unless otherwise noted.

Purchases

None.

Sales

None.

Financings

None.

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Critical Accounting Policies

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

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.

Accounting for Investments at Fair Value

Accounting for Investments at Fair Value: The Financial Accounting Standards Board (“FASB”) has provided authoritative guidance for fair value measurements and disclosures. Additionally, the guidance defines fair value, establishes a framework for measuring fair value under generally accepted accounting principles in the United States, and requires certain disclosures about fair value measurements. This guidance indicates, among other things, that a fair value measurement under an exit price model assumes that the transaction to sell an asset or transfer a liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market for the asset or liability.

This guidance also permits entities to elect to measure financial instruments and certain financial assets and liabilities at fair value and expand the use of fair value measurements when warranted. The Account reports all investments and mortgage loans payable at fair value.

Valuation Hierarchy: The Account groups financial assets and certain financial liabilities measured at fair value into three levels, based on the markets in which the assets and liabilities are traded, if any, and the observability of the assumptions used to determine fair value. These levels are:

Level 1—Valuations using unadjusted quoted prices for assets traded in active markets, such as stocks listed on the New York Stock Exchange. Active markets are defined as having the following characteristics for the measured asset or liability: (i) many transactions, (ii) current prices, (iii) price quotes not varying substantially among market makers, (iv) narrow bid/ask spreads and (v) most information regarding the issuer is publicly available. Level 1 assets, which may be held by the Account from time to time, include real estate related marketable securities (such as publicly traded REIT stocks).

Level 2—Valuations for assets and liabilities traded in less active, dealer or broker markets. Fair values are primarily obtained from third party pricing services for identical or comparable assets or liabilities. Level 2 inputs for fair value measurements are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include:

a.	Quoted prices for similar assets or liabilities in active markets;
b.	Quoted prices for identical or similar assets or liabilities in markets that are not active (that is, markets in which there are few transactions for the asset (or liability), the prices are not current, price quotations vary substantially either over time or among market makers (for example, some brokered markets), or in which little information is released publicly);
c.	Inputs other than quoted prices that are observable within the market for the asset (or liability) (for example, interest rates and yield curves, volatilities, prepayment speeds, loss severities, credit risks, and default rates that are observable at commonly quoted intervals); and
d.	Inputs that are derived principally from or corroborated by observable market data by correlation or other means (for example, market-corroborated inputs).

Examples of securities which may be held by the Account and included in Level 2 include Certificates of Deposit, Commercial Paper, Government Agency Notes and Variable Notes.

Level 3—Valuations for assets and liabilities that are derived from other valuation methodologies, including pricing models, discounted cash flow models and similar techniques, and are not based on market exchange, dealer, or broker-traded transactions. Level 3 valuations incorporate certain assumptions and projections that are not observable in the market, and require significant professional judgment in

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determining the fair value assigned to such assets or liabilities. Examples of Level 3 assets and liabilities which may be held by the Account from time to time include investments in real estate, investments in joint ventures and limited partnerships, mortgage loans receivable and mortgage loans payable.

An investment’s categorization within the valuation hierarchy described above is based upon the lowest level of input that is significant to the fair value measurement.

The Account’s investments and mortgage loans payable are stated at fair value. Fair value is based upon quoted market prices, where available. If listed prices or quotes are not available, fair value is based upon vendor-provided, evaluated prices or internally-developed models that primarily use market-based or independently-sourced market data, including interest rate yield curves, market spreads, and currency rates. Valuation adjustments will be made to reflect changes in credit quality, counterparty’s creditworthiness, the Account’s creditworthiness, liquidity, and other observable and unobservable inputs that are applied consistently over time.

The methods described above are considered to produce fair values that represent a good faith estimate of what an unaffiliated buyer in the marketplace would pay to purchase the asset or would receive to transfer the liability. Since fair value calculations involve significant professional judgment in the application of both observable and unobservable attributes, actual realizable values or future fair values may differ from amounts reported. Furthermore, while the Account believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments, while reasonable, could result in different estimates of fair value at the reporting date. As discussed below in more detail, as the Account generally obtains independent external appraisals on a quarterly basis, there may be circumstances in the interim in which the true realizable value of a property is not reflected in the Account’s daily net asset value calculation or in the Account’s periodic financial statements. This disparity may be more apparent when the commercial and/or residential real estate markets experience an overall and possibly dramatic decline (or increase) in property values in a relatively short period of time between appraisals.

The following is a description of the valuation methodologies used for investments measured at fair value.

Valuation of Real Estate Properties

Investments in real estate properties are stated at fair value, as determined in accordance with policies and procedures reviewed by the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. Accordingly, the Account does not record depreciation. The Account’s real estate properties are generally classified within Level 3 of the valuation hierarchy. 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 judgment because the actual fair value of real estate can be determined only by negotiation between the parties in a sales transaction. The Account’s primary objective when valuing its real estate investments will be to produce a valuation that represents a reasonable estimate of the fair value of its investments. Implicit in the Account’s definition of fair value is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby:

• Buyer and seller are typically motivated;

• Both parties are well informed or well advised, and acting in what they consider their best interests;

• A reasonable time is allowed for exposure in the open market;

• Payment is made in terms of cash or in terms of financial arrangements comparable thereto; and

• The price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Property and investment values are affected by, among other things, the availability of capital, occupancy rates, rental rates, and interest and inflation rates. As a result, determining real estate and investment values involves many assumptions. Key inputs and assumptions include rental income and expense amounts, related rental income and expense growth rates, discount rates and capitalization rates. Valuation techniques include discounted cash flow analysis, prevailing market capitalization rates or

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multiples applied to earnings from the property, analysis of recent comparable sales transactions, actual sale negotiations and bona fide purchase offers received from third parties. Amounts ultimately realized from each investment may vary significantly from the fair value presented. Actual results could differ significantly from those estimates.

Real estate properties owned by the Account are initially valued based on an independent appraisal at the time of the closing of the purchase, which may result in a potential unrealized gain or loss reflecting the difference between an investment’s fair value (i.e., exit price) and its cost basis (which is inclusive of transaction costs).

Subsequently, each property is appraised each quarter by an independent external appraiser. In general, the Account obtains appraisals of its real estate properties spread out throughout the quarter, which is intended to result in appraisal adjustments, and thus, adjustments to the valuations of its holdings (to the extent such adjustments are made) that happen regularly throughout each quarter and not on one specific day in each period.

Further, management reserves the right to order an appraisal and/or conduct another valuation outside of the normal quarterly process when facts or circumstances at a specific property change. For example, under certain circumstances a valuation adjustment could be made when bids are obtained for properties held for sale by the Account or when a contract for the sale of a property is executed. In addition, adjustments may be made for events or circumstances indicating an impairment of a tenant’s ability to pay amounts due to the Account under a lease (including due to a bankruptcy filing of that tenant). Also, adjustments may be made to reflect factors (such as sales values for comparable properties or local employment rate) bearing uniquely on a particular region in which the Account holds properties. TIAA’s internal appraisal staff oversees the entire appraisal process, in conjunction with the Account’s independent fiduciary (the independent fiduciary is more fully described in the paragraph below). Any differences in the conclusions of TIAA’s internal appraisal staff and the independent appraiser will be reviewed by the independent fiduciary, which will make a final determination on the matter (which may include ordering a subsequent independent appraisal).

An independent fiduciary, Real Estate Research Corporation, has been appointed by a special subcommittee of the Investment Committee of the Board to, among other things, oversee the appraisal process. The independent fiduciary must approve all independent appraisers used by the Account. All 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. Appraisals of properties held outside of the U.S. are performed in accordance with industry standards commonly applied in the applicable jurisdiction. These independent appraisers are always expected to be MAI-designated members of the Appraisal Institute (or its European equivalent, RICS) and state certified appraisers from national or regional firms with relevant property type experience and market knowledge. Under the Account’s current procedures, each independent appraisal firm will be rotated off of a particular property at least every three years, although such appraisal firm may perform appraisals of other Account properties subsequent to such rotation.

Also, the independent fiduciary can require additional appraisals if factors or events have occurred that could materially change a property’s value and such change is not reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued appropriately. The independent fiduciary must also approve any valuation change of real estate related assets where a property’s value changed by more than 6% from the most recent independent annual appraisal, or if the value of the Account would change by more than 4% within any calendar quarter or more than 2.% since the prior calendar month. When a real estate property is subject to a mortgage, the property is valued independently of the mortgage and the property and mortgage fair values are reported separately (see—“Valuation of Mortgage Loans Payable” below). The independent fiduciary reviews and approves all mortgage valuation adjustments before such adjustments are recorded by the Account. The Account continues to use the revised value for each real estate property and mortgage loan payable to calculate the Account’s daily net asset value until the next valuation review or appraisal.

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Valuation of Real Estate Joint Ventures:

Real estate joint ventures are stated at the fair value of the Account’s ownership interests of the underlying entities. The Account’s ownership interests are valued based on the fair value of the underlying real estate, any related mortgage loans payable, and other factors, such as ownership percentage, ownership rights, buy/sell agreements, distribution provisions and capital call obligations. Upon the disposition of all real estate investments by an investee entity, the Account will continue to state its equity in the remaining net assets of the investee entity during the wind down period, if any, which occurs prior to the dissolution of the investee entity. The Account’s real estate joint ventures are generally classified within level 3 of the valuation hierarchy.

Valuation of Real Estate Limited Partnerships:

Limited partnership interests are stated at the fair value of the Account’s ownership in the partnership which is based on the most recent net asset value of the partnership, as reported by the sponsor. Since market quotations are not readily available, the limited partnership interests are valued at fair value as determined in good faith under the direction of the Investment Committee of the Board and in accordance with the responsibilities of the Board as a whole. These investments are generally classified within level 3 of the valuation hierarchy.

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 market or 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 market or exchange, exclusive of transaction costs. Such marketable securities are generally classified within level 1 of the valuation hierarchy.

Debt securities, other than money market instruments, are generally 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. Debt securities are generally classified within level 2 of the valuation hierarchy.

Equity and fixed income securities traded on a foreign exchange or in foreign markets are valued using their closing values under the valuation methods generally accepted in the country where traded, as of the valuation date. This value is converted to U.S. dollars at the exchange rate in effect on the valuation day. Under certain circumstances (for example, if there are significant movements in the United States markets and there is an expectation the securities traded on foreign markets will adjust based on such movements when the foreign markets open the next day), the Account may adjust the value of equity or fixed income securities that trade on a foreign exchange or market after the foreign exchange or market has closed. Equity securities traded on a foreign exchange or in foreign markets are generally classified within level 1 of the valuation hierarchy. Fixed income securities traded on a foreign exchange or in foreign markets are generally classified within level 2 of the valuation hierarchy. Equity and fixed income securities traded in foreign markets that are adjusted based upon significant movements in the United States markets are generally classified within level 2 of the valuation hierarchy.

Valuation of Mortgage Loan 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 at least quarterly based on market factors, such as market interest rates and spreads for comparable loans, the liquidity for mortgage loans of similar characteristics, the performance of the underlying collateral and the credit quality of the counterparty. The Account’s mortgage loan receivable is classified within level 3 of the valuation hierarchy.

Valuation of Mortgage Loans Payable

Mortgage loans payable are stated at fair value. The estimated fair value of mortgage loans payable is based on the amount at which the liability could be transferred to a third party exclusive of transaction costs. Mortgage loans payable are valued at least quarterly based on market factors, such as market interest rates

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and spreads for comparable loans, the performance of the underlying collateral (such as the loan-to-value ratio and the cash flow of the underlying collateral), the liquidity for mortgage loans of similar characteristics, the maturity date of the loan, the return demands of the market, and the credit quality of the Account. The Account’s mortgage loans payable are generally classified within level 3 of the valuation hierarchy. Interest expense for mortgage loans payable is recorded on the accrual basis taking into account the outstanding principal and contractual interest rates.

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 any changes in foreign currency exchange rates on portfolio investments and mortgage loans payable is included in net realized and unrealized gains and losses on investments and mortgage loans payable. Net realized gains and losses on foreign currency transactions include 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 and, when applicable, include maturities of forward foreign currency contracts.

Accumulation and Annuity Funds

The Accumulation Fund represents the net assets attributable to participants in the accumulation phase of their investment (“Accumulation Fund”). The Annuity Fund represents the net assets attributable to the participants currently receiving annuity payments (“Annuity Fund”). 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 pursuant to which the Account is offered are required to stipulate the maximum expense charge for all Account level expenses that can be assessed, which is equal to 2.5% of average net assets per year. The Account pays a fee to TIAA to assume these mortality and expense 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). The Account recognizes a realized gain on the sale of a real estate property to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A realized loss occurs when the cost-to-date exceeds the sales price. Any accumulated unrealized gains and losses are reversed in the calculation of realized gains and losses.

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 when actual operating results are determined.

The Account has limited ownership interests in various private real estate funds (limited partnerships and one limited liability corporation) and a private real estate investment trust (collectively, the “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 based upon the net asset value of the limited partnership and recorded when the financial statements of the limited partnerships are received by the Account; however, as circumstances warrant, prior to the receipt of financial statements of the limited partnership, the Account will estimate the value of its interests in good faith and will from time to time seek

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input from the issuer or the sponsor of the investment vehicle. Changes in value based on such estimates are recorded by the Account as unrealized gains and losses.

Income from real estate joint ventures is recorded based on the Account’s proportional interest of the income distributed by the joint venture. Income earned by the joint venture, but not yet distributed to the Account by the joint venture investment, is recorded as unrealized gains and losses on real estate joint ventures.

Transactions in marketable securities are accounted for as of the date the securities are purchased or sold (trade date). Interest income is recorded as earned. 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.

The Account’s net assets as of the close of each valuation day are valued by taking the sum of:

• the value of the Account’s cash, cash equivalents, and investments in short-term and other debt instruments;

• the value of the Account’s other securities and other non real estate assets;

• the value of the individual real properties (based on the most recent valuation of that property) and other real estate-related investments owned by the Account;

• an estimate of the net operating income accrued by the Account from its properties, other real estate-related investments and non real estate-related investments since the end of the prior valuation day (including short-term marketable securities); and

• actual net operating income earned from the Account’s properties, other real estate-related investments and non real estate-related investments (but only to the extent any such item of income differs from the estimated income accrued for on such investments).

and then reducing the sum by the Account’s liabilities, including the daily investment management fee, administration and distribution fees and certain other expenses attributable to operating the Account.

After the end of every quarter, the Account reconciles the amount of expenses deducted from the Account (which is established in order to approximate the costs that the Account will incur) with the expenses the Account actually incurred. If there is a difference, the Account adds it to or deducts it from the Account in equal daily installments over the remaining days of the following quarter. Material differences may be repaid in the current calendar quarter. The Account’s at-cost deductions are based on projections of Account assets and overall expenses, and the size of any adjusting payments will be directly affected by the difference between management’s projections and the Account’s actual assets or expenses.

New Accounting Pronouncements

In June 2009, the FASB issued Statement of Financial Accounting Standards No. 167, Amendments to FASB Interpretation No. 46(R) (“SFAS No. 167”), which amends guidance related to the identification of a variable interest entity, variable interests, the primary beneficiary, and expands required note disclosures to provide greater transparency to the users of financial statements. In December 2009, the FASB issued Accounting Standards Update (“ASU”) No. 2009-17, “Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities,” which amended the Codification with the guidance contained in SFAS No. 167. In February 2010, the FASB issued ASU No. 2010-10, “Amendments for Certain Investment Funds,” which defers the applicability of ASU No. 2009-17 in certain instances. These standards were effective on January 1, 2010 and did not result in a significant impact to the Account’s financial position or results of operations.

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” which requires new disclosures related to transfers in and out of levels 1 and 2, and the separate disclosure of purchases, sales, issuances and settlements when reconciling activity in level 3. This ASU also amends prior disclosure requirements to call for the disaggregation of assets and liabilities into appropriate subsets, and the disclosure of valuation techniques and inputs for recurring and nonrecurring fair value measurements in levels 2 and 3. The new disclosure requirement for reconciling level 3 activity is effective January 1, 2011. All other new or amended disclosure requirements were effective January 1, 2010

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for the Account and are reflected in the notes to the financial statements. These changes did not impact the Account’s financial position or results of operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The Account’s real estate holdings, including real estate joint ventures and limited partnerships, which, as of June 30, 2010, represented 87.2% of the Account’s total investments, 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, disruptions in the credit and/or capital markets, or 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 differ 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;

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

• Foreign Currency Risk—The risk that the value of the Account’s foreign investments, related debt, or rental income could 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.

Given the significant concentration (87.2% as of June 30, 2010) of the Account’s total investments being held in real estate and real estate related assets, the Account’s net asset value will experience a more pronounced impact from valuation adjustments to its real properties than it would during periods in which the Account held its target of between 75% and 85% of its net assets in real estate and real estate related assets. The Account believes the diversification of its real estate portfolio, both geographically and by sector, along with its quarterly valuation procedure, helps manage the real estate and appraisal risks described above.

As of June 30, 2010, 12.8% of the Account’s total investments were comprised of marketable securities and an adjustable rate mortgage loan receivable. As of June 30, 2010, marketable securities include high-quality short-term debt instruments (i.e., government agency notes). 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. The Account’s marketable securities other than its mortgage loan receivable are considered held for trading purposes. Currently, the Account does not invest in derivative financial investments, nor does the Account engage in any hedging activity other than the interest rate cap agreements contained in two mortgage loans payable the Account entered into during the third quarter of 2008. These interest rate cap agreements (which cap the interest rate on each mortgage loan payable at 6.5%) are discussed in Note 7 to the Account’s financial statements contained herein.

The Account’s investments in cash equivalents, marketable securities (whether debt or equity), and mortgage loans receivable are subject to the following general risks:

• Financial/Credit Risk—The risk, for debt securities, that the issuer will not be able to pay principal and interest when due (and/or declare bankruptcy or be subject to receivership) and, for equity securities such as common or preferred stock, that the issuer’s current earnings will fall or that its overall financial soundness will decline, reducing the security’s value.

• Market Volatility Risk—The risk that the Account’s investments will experience price volatility due to changing conditions in the financial markets regardless of the credit quality or financial condition of

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	the underlying issuer. This risk is particularly acute to the extent the Account holds equity securities, which have experienced significant short-term price volatility over the past year. Also, to the extent the Account holds debt securities, changes in overall interest rates can cause price fluctuations.
•	Interest Rate Volatility—The risk that interest rate volatility may affect the Account’s current income from an investment.
•	Deposit/Money Market Risk—The risk that, to the extent the Account’s cash held in bank deposit accounts exceeds federally insured limits as to that bank, the Account could experience losses if banks fail. The Account does not believe it has exposure to significant concentration of deposit risk. In addition, there is some risk that investments held in money market accounts can suffer losses.

In addition, to the extent the Account were to hold mortgage-backed securities (including CMBS, these securities are subject to prepayment risk or extension risk (i.e., the risk that borrowers will repay the loans earlier or later than anticipated). If the underlying mortgage assets experience faster than anticipated repayments of principal, the Account could fail to recoup some or all of its initial investment in these securities, since the original price paid by the Account was based in part on assumptions regarding the receipt of interest payments. If the underlying mortgage assets are repaid later than anticipated, the Account could lose the opportunity to reinvest the anticipated cash flows at a time when interest rates might be rising. The rate of prepayment depends on a variety of geographic, social and other functions, including prevailing market interest rates and general economic factors. The fair 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. These securities may be harder to sell than other securities.

In addition to these risks, real estate equity securities (such as REIT stocks) and mortgage-backed securities would be 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) The registrant maintains a system of disclosure controls and procedures that are designed to provide reasonable assurance that information 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 and the Chief Financial Officer, 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, 2010. 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, 2010.

(b) Changes in internal control over financial reporting. There have been no changes in the registrant’s internal control 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 control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS.

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

ITEM 1A. RISK FACTORS.

There have been no material changes from our risk factors as previously reported in the Account’s Annual Report on Form 10-K for the year ended December 31, 2009.

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

Not applicable.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

Not applicable.

ITEM 4. [REMOVED AND RESERVED].

ITEM 5. OTHER INFORMATION.

The Code of Ethics for TIAA’s senior financial officers, including its principal executive officer, principal financial officer, principal accounting officer, or controller, and persons performing similar functions, has been filed as an exhibit to the Form 10-K and can also be found on the following two web sites, http://www.tiaa-cref.org/prospectuses/index.html and http://www.tiaa-cref.org/about/governance/corporate/ topics/annual_reports.html.

Information included in such websites is expressly not incorporated by reference into this Quarterly Report on Form 10-Q.

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ITEM 6. EXHIBITS

(1)	(A)	Distribution Agreement for the Contracts Funded by the TIAA Real Estate Account, dated as of January 1, 2008, by and among Teachers Insurance and Annuity Association of America, for itself and on behalf of the Account, and TIAA-CREF Individual & Institutional Services, LLC.(5)
(3)	(A)	Charter of TIAA.(8)
	(B)	Restated Bylaws of TIAA (as amended).(9)
(4)	(A)	Forms of RA, GRA, GSRA, SRA, IRA Real Estate Account Endorsements(2), Keogh Contract,(3) Retirement Select and Retirement Select Plus Contracts and Endorsements(1) and Retirement Choice and Retirement Choice Plus Contracts.(3)
	(B)	Forms of Income-Paying Contracts(2)
(10)	(A)	Independent Fiduciary Agreement, dated February 22, 2006, by and among TIAA, the Registrant, and Real Estate Research Corporation(4)
	(B)	Amendment to Independent Fiduciary Agreement, dated December 17, 2008, between TIAA, on behalf of the Registrant, and Real Estate Research Corporation(6)
	(C)	Custodian Agreement, dated as of March 3, 2008, by and between TIAA, on behalf of the Registrant, and State Street Bank and Trust Company, N.A.(7)
(31)*		Rule 13a-15(e)/15d-15(e) Certifications
(32)*		Section 1350 Certifications

*	Filed herewith.
(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 April 29, 2004 (File No. 333-113602).
(2)	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).
(3)	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).
(4)	Previously filed and incorporated herein by reference to Exhibit 10.(a) to the Annual Report on Form 10-K of the Account for the period ended December 31, 2005, filed with the Commission on March 15, 2006 (File No. 33-92990).
(5)	Previously filed and incorporated herein by reference to the Account’s Current Report on Form 8-K, filed with the Commission on January 7, 2008 (File No. 33-92990).
(6)	Previously filed and incorporated herein by reference to the Account’s Current Report on Form 8-K, filed with the Commission on December 22, 2008 (File No. 33-92990).
(7)	Previously filed and incorporated herein by reference to Exhibit 10.(b) to the Annual Report on Form 10-K of the Account for the fiscal year ended December 31, 2007 and filed with the Commission on March 20, 2008 (File No. 33-92990).
(8)	Previously filed and incorporated by reference to Exhibit 3(A) to the Account’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 and filed with the Commission on August 13, 2009 (File No. 33-92990).
(9)	Previously filed and incorporated by reference to Exhibit 3(B) to the Account’s Quarterly Report on Form 10-Q for the quarter ended June 30, 2009 and filed with the Commission on August 13, 2009 (File No. 33-92990).

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant, TIAA Real Estate Account, has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized, in New York, New York, on the 12th day of August, 2010.

	TIAA REAL ESTATE ACCOUNT
	By:	TEACHERS INSURANCE AND ANNUITY ASSOCIATION OF AMERICA
August 12, 2010	By:	/s/ Roger W. Ferguson, Jr.
		Roger W. Ferguson, Jr. President and Chief Executive Officer
August 12, 2010	By:	/s/ Virginia M. Wilson
		Virginia M. Wilson Executive Vice President and Chief Financial Officer

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