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UNITED STATES
SECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

|           |                                                                                            
|---------- | -------------------------------------------------------------------------------------------
|(Mark One)
|x          | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
 
 SECURITIES EXCHANGE ACT OF 1934    
|           | For the fiscal year ended December 31, 2007                                                
|           |                                                                                            
|           | OR                                                                                         
|           |                                                                                            
|o          | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
 THE 
 SECURITIES EXCHANGE ACT OF 1934
|           | For the transition period from __________ to
 __________                                   
|           |                                                                                            
|           | Commission
 file number: 33-92990; 333-141513                                              

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

|                                  |                    
|--------------------------------- | -------------------
|New York                          | Not Applicable     
|(State or other jurisdiction      | (I.R.S. Employer   
|of incorporation or organization) | Identification No.)

c/o Teachers Insurance and Annuity
Association of America 
730 Third Avenue 
New York, New York 10017-3206 
(Address of principal executive offices, including zip code)

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

Securities registered pursuant to Section
12(b) of the Act: None

Securities registered pursuant to Section
12(g) of the Act: None

Indicate by check mark if the
registrant is a well-known seasoned issuer, as defined in Rule 405 of the
Securities Act.

YES oNO x

Indicate by check mark if the
registrant is not required to file reports pursuant to Section 13 or Section
15(d) of the Exchange Act:

YES o            NO
x

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

YES x            NO
o

Indicate by check mark if
disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not
contained herein, and will not be contained, to the best of registrants
knowledge, in definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K or any amendment to this Form 10-K: x   o
Not Applicable

Indicate by check mark whether the registrant is a large
accelerated filer, an accelerated filer, or a non-accelerated filer. See
definition of accelerated filer and large accelerated filer in Rule 12b-2 of
the Exchange Act.

Large accelerated filer      Accelerated filer
     Non-accelerated filer x      Smaller
Reporting Company

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

YES o            NO
x

Aggregate market value of
voting stock held by non-affiliates: Not Applicable

Documents Incorporated by
Reference: None

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TABLE OF CONTENTS

|         |          |                                                                                                               |  |      | 
|-------- | -------- | ------------------------------------------------------------------------------------------------------------- |  | ---- | 
|         | Item     |                                                                                                               |  | Page
|         |          |                                                                                                               |  |     
|Part I   |          |                                                                                                               |  |      | 
|         | Item 1.  | Business                                                                                                      |  | 2    | 
|         | Item 1A. | Risk Factors                                                                                                  |  | 4    | 
|         | Item 1B. | Unresolved Staff Comments                                                                                     |  | 14   | 
|         | Item 2.  | Properties                                                                                                    |  | 14   | 
|         | Item 3.  | Legal Proceedings                                                                                             |  | 23   | 
|         | Item 4.  | Submission of Matters to a Vote of Security Holders                                                           |  | 23   | 
|Part II  |          |                                                                                                               |  |      | 
|         | Item 5.  | Market for Registrants Common Stock, Related Stockholder Matters,
 and Issuer Purchases of Equity Securities |  | 24   | 
|         | Item 6.  | Selected Financial Data                                                                                       |  | 25   | 
|         | Item 7.  | Managements Discussion and Analysis of Accounts Financial Condition
 and Operating Results                  |  | 27   | 
|         | Item 7A. | Quantitative and Qualitative Disclosures about Market Risk                                                    |  | 49   | 
|         | Item 8.  | Financial Statements and Supplementary Data                                                                   |  | 51   | 
|         | Item 9.  | Changes in and Disagreements with Accountants on Accounting and
 Financial Disclosure                         |  | 87   | 
|         | Item 9A. | Controls and Procedures                                                                                       |  | 87   | 
|Part III |          |                                                                                                               |  |      | 

| |                  |                                                                                                    |  |    | 
| | ---------------- | -------------------------------------------------------------------------------------------------- |  | -- | 
| | Items 10 and 11. | Directors, Executive Officers, and Corporate Governance of the
 Registrant; Executive Compensation |  | 89 | 

|           |          |                                                                                                 |  |    | 
|---------- | -------- | ----------------------------------------------------------------------------------------------- |  | -- | 
|           | Item 12. | Security Ownership of Certain Beneficial Owners and Management and
 Related Stockholder Matters |  | 92 | 
|           | Item 13. | Certain Relationships and Related Transactions, and Director
 Independence                      |  | 92 | 
|           | Item 14. | Principal Accountant Fees and Services                                                          |  | 93 | 
|Part IV    |          |                                                                                                 |  |    | 
|           | Item 15. | Exhibits and Financial Statement Schedules                                                      |  | 94 | 
|Signatures |          | 95                                                                                              | 

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PART I

|        |          
|------- | ---------
|ITEM 1. | BUSINESS.

General.
The TIAA Real Estate Account (the Real Estate Account, the Account or the
Registrant) was established on February 22, 1995, as a separate investment
account of Teachers Insurance and Annuity Association of America (TIAA), a
New York insurance company, by resolution of TIAAs Board of Trustees. The
Account, which invests mainly in real estate and real estate-related
investments, is a variable annuity investment option offered through
individual, group and tax-deferred annuity contracts available to employees of
educational and research institutions. The Account commenced operations on July
3, 1995, and interests in the Account were first offered to eligible
participants on October 2, 1995.

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

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

|  |                                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------
| | RA and GRAs
  (Retirement Annuities and Group Retirement Annuities)                                               
|  |                                                                                                                   
| | SRAs
  (Supplemental Retirement Annuities)                                                                        
|  |                                                                                                                   
| | GSRAs (Group
  Supplemental Retirement Annuities)                                                                 
|  |                                                                                                                   
| | Retirement
  Choice and Retirement Choice Plus Annuity                                                            
|  |                                                                                                                   
| | GAs (Group
  Annuities) and Institutionally-Owned GSRAs                                                           
|  |                                                                                                                   
| | Classic and
  Roth IRAs (Individual Retirement Annuities) including SEP IRAs (Simplified
  Employee Pension Plans)
|  |                                                                                                                   
| | Keoghs                                                                                                            
|  |                                                                                                                   
| | ATRAs
  (After-Tax Retirement Annuities)                                                                          

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

Investment
Objective. The Real Estate Account seeks favorable long-term returns
primarily through rental income and appreciation of real estate investments
owned by the Account. The Account also invests in publicly-traded securities
and other investments that are easily converted to cash to make redemptions,
purchase or improve properties, or cover expenses.

2

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Investment
Strategy. The Account intends to invest between 75 percent and 85 percent
of its assets directly in real estate or real estate-related investments. The
Accounts principal strategy is to purchase direct ownership interests in
income-producing real estate, such as office, industrial, retail, and multi-family
residential properties. The Account can also invest in other real estate or
real estate-related investments through joint ventures, real estate
partnerships or real estate equity securities. To a limited extent, the Account
can also invest in conventional mortgage loans, participating mortgage loans,
common or preferred stock of companies whose operations involve real estate (i.e., that primarily own or manage real
estate), and collateralized mortgage obligations, including commercial
mortgage-backed securities and other similar instruments. The Account may also
make foreign investments, which are expected to comprise no more than 25% of
the Accounts total assets.

The
Account will invest the remaining portion of its assets in government and
corporate debt securities, money market instruments, and, at times, stock of
companies that do not primarily own or manage real estate. In some
circumstances, the Account can increase the portion of its assets invested in
debt securities or money market instruments. This could happen if the Account
receives a large inflow of money in a short period of time, there is a lack of
attractive real estate investments available on the market, or the Account
anticipates a need to have more cash available.

The
amount the Account invests in real estate and real estate-related investments
at a given time will vary depending on market conditions and real estate
prospects, among other factors.

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

Net
Assets and Portfolio Investments. As of December 31, 2007, the Accounts
net assets totaled $ 17,660,536,799. At December 31, 2007, the Account held a
total of 111 real estate property investments (including its interests in 12
real estate-related joint ventures) and one remaining equity interest in a
joint venture in which the Account sold its real estate investment during the
third quarter of 2007, representing 77.91% of the Accounts total investment
portfolio (Total Investments). As of that date, the Account also held
investments in a mortgage loan receivable, representing 0.38% of Total
Investments, real estate equity securities, representing 2.24% of Total
Investments, real estate limited partnerships, representing 1.74% of Total
Investments, commercial paper representing 9.23% of Total Investments,
certificates of deposit, representing 2.22% of Total Investments, variable
notes, representing 0.26% of Total Investments, bankers acceptance,
representing 0.20% of Total Investments, and government agency bonds,
representing 5.82% of Total Investments.

Risk
Factors. The Accounts assets and income can be affected by a variety of
risk factors. These risks are more fully described under Item 1A of this report
and in the Accounts prospectus (as supplemented from time to time).

Personnel
and Management. The Real Estate Account does not directly employ any
persons nor does the Account have its own management or board of directors.
Rather, TIAA employees, under the direction and control of TIAAs Board of
Trustees and Investment

3

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Committee
thereof, manage the investment of the Accounts assets pursuant to investment
management procedures adopted by TIAA for the Account. TIAA and TIAA-CREF
Individual & Institutional Services, LLC (Services), a wholly-owned
subsidiary of TIAA, provide all portfolio accounting, custodial, distribution,
administrative and related services for the Account at cost.

Available
Information. The Accounts annual report on Form 10-K, quarterly reports on
Form 10-Q and current reports on Form 8-K, and any amendments to those reports,
filed by the Account with the Securities and Exchange Commission on or after
the date hereof, can be accessed free of charge at www.tiaa-cref.org.
Information contained on this website is expressly not incorporated by
reference into this Annual Report on Form 10-K.

|         |              
|-------- | -------------
|ITEM 1A. | RISK FACTORS.

The
value of an investment in the Account will fluctuate based on the value of the
Accounts assets and the income the assets generate.
The Accounts assets and income can be affected by many factors, and investors
should consider the specific risks presented below, among others, before
investing in the Account. Investors can lose money by investing in the Account
and there is risk associated with an investor attempting to time an
investment in the Accounts units, or effecting a redemption of an investors
units. In this section, the Account is sometimes referred to as we and our.
Please refer to the section entitled Statements Regarding Forward-Looking
Information, which is contained in the section entitled Managements
Discussion and Analysis of Financial Condition and Results of Operations.

Risks of Real Estate Investing

General
Risks of Acquiring and Owning Real Property: The Account is subject to the
risks inherent in acquiring and owning real property, including in particular
the following:

|  |                                                                                                                                                                |                                                                                        
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------
| | Economic Conditions. The economic conditions
  in the markets where the Accounts properties are located may be adversely
  impacted by factors which include:
|  |                                                                                                                                                               
|  |                                                                                                                                                               | general
  global economic conditions;                                                  
|  |                                                                                                                                                                |                                                                                        
|  |                                                                                                                                                               | a weak
  market for real estate generally and/or in specific locations;                
|  |                                                                                                                                                                |                                                                                        
|  |                                                                                                                                                               | availability
  of financing;                                                           
|  |                                                                                                                                                                |                                                                                        
|  |                                                                                                                                                               | an
  oversupply of, or a reduced demand for, certain types of real estate
  properties;
|  |                                                                                                                                                                |                                                                                        
|  |                                                                                                                                                               | business closings, and industry slowdowns, employment losses
  and related factors;    
|  |                                                                                                                                                                |                                                                                        
|  |                                                                                                                                                               | natural disasters, terrorist attacks and/or other
  man-made events;                   
|  |                                                                                                                                                                |                                                                                        
|  |                                                                                                                                                               | decline in population or shifting demographics.                                        

4

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | The
  incidence of some or all of these factors could reduce occupancy or rental
  rates and the market value of the Accounts real properties. Further, the
  Account may experience periods in which its investments are geographically
  concentrated, either regionally or in certain markets with similar demographics.
  Also, the Account may experience periods in which its tenant base is
  concentrated within a particular industry sector. In these events, the
  Accounts income and performance may be adversely impacted disproportionately
  by deteriorating economic conditions in those areas or industry sectors in
  which the Accounts investments are concentrated.                                                                                                                                                                                                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | Competition. The Account may face
  competition for real estate investments from multiple sources, including
  individuals, corporations, insurance companies or other insurance company
  separate accounts, as well as real estate limited partnerships, real estate
  investment funds, commercial developers, pension plans, other institutional
  and foreign investors and other entities engaged in real estate investment
  activities. Some of these competitors may have similar financial and other
  resources as the Account, and/or they may have investment strategies that
  allow them to compete more aggressively for real estate investment
  opportunities, which could result in the Account paying higher prices for
  investments, experiencing delays in acquiring investments or failing to
  consummate such purchases. Any resulting delays in the acquisition of
  investments, or the failure to consummate acquisitions the Account deems
  desirable, may increase the Accounts costs or otherwise adversely affect the
  Accounts investment results.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  | In addition,
  the Accounts properties may be located close to properties that are owned by
  other real estate investors and that compete with the Account for tenants.
  These competing properties may be better located and more suitable for
  tenants than our properties, resulting in a competitive advantage for these
  other properties. We may also face similar competition from other properties
  that may be developed in the future. This competition may limit the Accounts
  ability to lease space, increase its costs of securing tenants, limit our
  ability to maximize our rents and/or require the Account to make capital
  improvements it otherwise would not, in order to make its properties more
  attractive to prospective tenants.                                                                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                
| | Leasing Risk.A number of factors could
  cause the Accounts rental income, a key source of the Accounts revenue, to
  decline, which would adversely impact the Accounts results and investment returns.
  These factors include:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | A property
  may be unable to attract or retain tenants. This situation could be
  exacerbated if a concentration of lease expirations occurred during any one
  time period.  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | The Account
  could lose revenue if tenants do not pay rent when contractually obligated,
  or if the Account is forced to terminate a lease for nonpayment.                   
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |                                                                                                                                                                                
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         | Tenants may
  default under a lease at one of the Acccounts properties, and in the event
  of any such default, we may experience a delay in, or an inability to effect,
  the

5

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              | enforcement
  of our rights against that tenant. Further, any disputes with tenants could
  involve costly litigation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | In the event
  a tenant vacates its space at an Account property, whether as a result of a default,
  the expiration of the lease term or otherwise, we may not be able to release
  the vacant space for as much as the rent payable under the previous lease or
  not at all. Also, we may not be able to re-lease such space without incurring
  substantial expenditures for tenant improvements and other lease-up related
  costs, while still being obligated for any mortgage payments, real estate
  taxes and other expenditures related to the property.                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | In some
  instances, our properties may be specifically suited to and/or outfitted for
  the particular needs of a certain tenant based on the type of business the
  tenant operates. For example, many companies desire space with an open floor
  plan. We may have difficulty obtaining a new tenant for any vacant space in our
  properties, particularly if the floor plan limits the types of businesses
  that can use the space without major renovation, which may require us to
  incur substantial expense in replanning the space.                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             | The Account
  owns and operates retail properties, which, in addition to the risks listed
  above, are subject to specific risks, including variations in rental revenues
  due to customary percentage rent clauses which may be in place for retail
  tenants and the insolvency and/or closing of an anchor tenant. Under certain
  circumstances, the leases may allow other tenants in a retail property to
  terminate their leases or reduce or withhold rental payments. The insolvency
  and/or closing of an anchor tenant may also cause such tenants to fail to
  renew their leases at expiration.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
| | Operating Costs. A propertys cash flow
  could decrease if operating costs, such as property taxes, utilities,
  maintenance and insurance costs that are not reimbursed by tenants increase
  in relation to gross rental income, or if the property needs unanticipated
  repairs and renovations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | Terrorism and Acts of War and Violence.
  Terrorist attacks may harm our property investments and therefore your
  investment return. The Account cannot assure you that there will not be
  further terrorist attacks against the United States, U.S. businesses or
  elsewhere in the world. These attacks or armed conflicts may directly or
  indirectly impact the value of the property we own or that secure our loans.
  Losses resulting from these types of events may be uninsurable or not
  insurable to the full extent of the loss suffered. Moreover, any of these
  events could cause consumer confidence and spending to decrease or result in
  increased volatility in the United States and worldwide financial markets and
  economy. Such events could also result in economic uncertainty in the United
  States or abroad. Adverse economic conditions resulting from terrorist
  activities could reduce demand for space in the Accounts properties and
  thereby reduce the value of the Accounts properties.

6

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

|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The sale
  price of an Account property might differ from its estimated or appraised
  value, leading to losses or reduced profits to the Account.                                                                                                                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | Due to the
  cyclical nature of real estate, general economic conditions impacting the
  location of the property, potential disruption in the credit markets and the
    availability of financing on favorable terms or at all, and the supply of
    and demand for available tenant space, among other reasons, the Account might
    not be able to sell a property at a particular time for its full value. This
    might make it difficult to raise cash quickly and also could lead to Account
    losses.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | The Account
  may need to provide financing to a purchaser if no cash buyers are available.                                                                                                                                                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | For any
  particular property, the Account may be required to make expenditures for
  improvements to, or to correct defects in, the property before the Account is
  able to market and/or sell the property.                                                                                                                                                                                                                                                                                                     

Appraisal
Risks: Real estate appraisals are estimates of
property values based on a professionals opinion and may not be accurate
predictors of the amount the Account would actually receive if it sold a
property. Appraisals can be subjective in certain respects and rely on a
variety of assumptions and conditions at that property or in the market
(including, without limitation, a potential lack of recent transaction activity
in such market) in which the property is located, which may change materially
after the appraisal is conducted. If an appraisal is too high, the Accounts
value could go down upon reappraisal or if the property is sold for a lower
price than the appraisal. If an appraisal is too low, those who redeem prior to
an adjustment to the valuation or a property sale will have received less than
their pro rata share of the value of the Accounts assets. Further, as the
Account generally obtains appraisals on a quarterly basis, there may be
circumstances in the interim in which the true 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 in
times when the commercial and/or residential real estate markets experience an overall
and possibly dramatic decline in property values in a relatively short period
of time between appraisals.

Risks
of Borrowing: The Account acquires some of its
properties subject to existing financing or by borrowing new funds at the time of
purchase, and may from time to time place new leverage on, or increase the
leverage already placed on, existing properties the Account owns. The Account
may borrow, in the aggregate, either directly or through its joint venture
investments, an amount up to 30% of the Accounts Total Net Assets, and the
Account may borrow up to 70% of the then-current value of a particular
property. Among the risks of borrowing money and investing in a property
subject to a mortgage are:

|  |                                                                                                                                                                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Regardless
  of the quality of the Accounts property for which financing is sought,
  general economic conditions, or the market conditions then in effect in the
  real estate finance industry may hinder the Accounts ability to obtain
  financing for its property
  investments on favorable terms or at all. Such unfavorable terms might

7

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|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  | include high interest rates, increased fees and costs and restrictive
  covenants applicable to the Accounts operation of the property.                                                                                                                                                                                                                                                                                                                                                                                                                                    
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The Account
  may be unable to make its loan payments, which could result in a default on
  its loan. The lender then could foreclose on the underlying property and the
  Account would lose the value of its investment in the foreclosed property.                                                                                                                                                                                                                                                                                                                       
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | If the
  Account obtains a mortgage loan that involves a balloon payment, there is a
  risk that the Account may not be able to make the lump sum principal payment
  due under the loan at the end of the loan term, or otherwise obtain adequate
  refinancing on terms commercially acceptable to the Account or at all. The
  Account then may be forced to sell the property or other properties under
  unfavorable market conditions or default on its mortgage, resulting in the
  lender exercising its remedies, which may include repossession of the
  property.
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | If the
  Account takes out variable-rate loans, the Accounts returns may be volatile
  when interest rates are volatile. Further, to the extent that the Account
  takes out fixed-rate loans and interest rates subsequently decline, this may
  cause the Account to pay interest at above-market rates for a significant
  period of time.                                                                                                                                                                                                                              
|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | The market
  valuation of mortgage loans payable could have an adverse impact on the
  Accounts performance.                                                                                                                                                                                                                                                                                                                                                                                                                                                               

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

Investment Risk Associated with Participant Transactions.
The amount we have available to invest in new properties and other real estate related assets will depend, in large part, on the level of
participant premiums coming into the Account, as well as the level of net participant transfers into or out of the Account.  If the amount
of such premiums and/or net participant transfers into the Account were to experience a significant decline for a period of time, we may not
have enough available funds to pursue, or consummate, every new investment opportunity presented to us that is otherwise attractive to the Account.
This, in turn, could harm the Accounts returns.

Regulatory
Risks: Government regulation at the federal, state and
local levels, including, without limitation, zoning laws, rent control or rent
stabilization laws, laws regulating housing on the Accounts multifamily
residential properties, the Americans with Disabilities Act, property taxes and
fiscal, accounting, environmental or other government policies, could operate
or change in a way that adversely affects the Account and its properties. For example,
these regulations could raise the cost of owning, improving or maintaining
properties, present barriers to otherwise desirable investment opportunities or
make it harder to sell, rent, finance, or refinance properties either on
economically desirable terms, or at all, due to the increased costs associated
with regulatory compliance.

Environmental
Risks: The Account may be liable for damage to the
environment or injury to individuals caused by hazardous substances used or
found on its properties. Under various environmental regulations, the Account
may also be liable, as a current or previous property owner

8

---



or mortgagee, for the cost of removing or cleaning up hazardous
    substances found on a property, even if it didnt know of and wasnt
    responsible for the hazardous substances. If any hazardous substances are
    present or the Account doesnt properly clean up any hazardous substances,
    or if the Account fails to comply with regulations requiring it to actively
    monitor the business activities on its premises, the Account may have difficulty
    selling or renting a property or be liable for monetary penalties. Further,
    environmental laws may impose restrictions on the manner in which a property
    may be used, the tenants which may be allowed, or the manner in which businesses
may be operated, which may require the Account to expend funds, and such laws
may also cause the most ideal use of the property to differ from that
originally contemplated and as a result could impair the Accounts returns.
The cost of any required cleanup relating to a single real estate investment
(including remediating contaminated property) and the Accounts potential
liability for environmental damage, including paying personal injury claims and
performing under indemnification obligations to third parties, could exceed the
value of the Accounts investment in a property, the propertys value,
or in an extreme case, a significant portion of the Accounts assets.

Uninsurable
Losses:Certain catastrophic losses (e.g., from earthquakes, wars, terrorist
acts, nuclear accidents, floods or environmental or industrial hazards or
accidents) may be uninsurable or so expensive to insure against that it is
economically disadvantageous to buy insurance for them. If a disaster that we
havent insured against occurs, or if the insurance contains a high deductible,
the Account could lose both its original investment and any future profits from
the property affected. In addition, some leases may permit a tenant to
terminate its obligations in certain situations, regardless of whether those
events are fully covered by insurance. In that case, the Account would not
receive rental income from the property while that tenants space is vacant.

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

|  |                                                                                                                                                                                                                                                                                                                               
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In
 developing real estate, there may be delays or unexpected increases in the
 cost of property development and construction due to strikes, bad weather,
 material shortages, increases in material and labor costs or other events.                                                                                        
|  |                                                                                                                                                                                                                                                                                                                               
| | Because
 external factors may have changed from when the project was originally
 conceived (e.g., slower growth
 in local economy, higher interest rates, or overbuilding in the area), the
 property may not operate at the income and expense levels first projected or
 may not be developed in the way originally planned.

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

|  |                                                                                                                                                                                                                      
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The
 co-venturer may have interests or goals inconsistent with those of the
 Account.                                                                                                                                
|  |                                                                                                                                                                                                                      
| | If a co-venturer
 doesnt follow the Accounts instructions or adhere to the Accounts
 policies, the jointly-owned properties, and consequently the Account, might
 be exposed to greater liabilities than expected.
|  |                                                                                                                                                                                                                      
| | The Account
 may have limited rights pursuant to the terms of the joint venture, including
 the right to operate, manage or dispose of a property.                                                                   
|  |                                                                                                                                                                                                                      

9

---



|  |                                                                                                                                                                                                                                                                                                                
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | A co-venturer can make it harder for the Account
        to transfer its property interest, particularly if the co-venturer has
        the right to decide whether and when to sell the property.                                                                                                             
|  |                                                                                                                                                                                                                                                                                                                
| | The
 co-venturer may be unable to fulfill its obligations (such as to fund its pro
 rata share of expenditures or guarantee obligations of the venture) during
 the term of such agreement or may become insolvent or bankrupt, either of
 which could expose the Account to greater liabilities than expected.

Risks
with Purchase-Leaseback Transactions:The major risk
of purchase leaseback transactions is that the third party lessee will be
unable to make required payments to the Account. If the leaseback interest is
subordinate to other interests in the real property, such as a first mortgage
or other lien, the risk to the Account increases because the lessee may have to
pay the senior lienholder to prevent foreclosure before it pays the Account. If
the lessee defaults or the leaseback is terminated prematurely, the Account
might not recover its investment unless the property is sold or leased on
favorable terms.

RISKS
OF MAKING MORTGAGE LOAN INVESTMENTS

General
Risks of Mortgage Loans:The Account will be subject
to the risks inherent in making mortgage loans, including:

|  |                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                          
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |                                                                                                                                                                                                                                                       | The borrower
 may default on the loan, requiring that the Account foreclose on the
 underlying property to protect the value of its mortgage loan. Since its
 mortgage loans are usually non-recourse, the Account must rely solely on the
 value of a property for its security.                                                                                        
|  |                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                       | The larger
 the mortgage loan compared to the value of the property securing it, the
 greater the loans risk. Upon default, the Account may not be able to sell
 the property for its estimated or appraised value. Also, certain liens on the
 property, such as mechanics or tax liens, may have priority over the
 Accounts security interest.                     
|  |                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                       | A
 deterioration in the financial condition of tenants, which could be caused by
 general or local economic conditions or other factors beyond the control of
 the Account, or the bankruptcy or insolvency of a major tenant, may adversely
 affect the income of a property, which could increase the likelihood that the
 borrower will default under its obligations.
|  |                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                       | The borrower
 may be unable to make a lump sum principal payment due under a mortgage loan
 at the end of the loan term, unless it can refinance the mortgage loan with
 another lender.                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                          
|  |                                                                                                                                                                                                                                                       | If interest
 rates are volatile during the loan period, the Accounts variable-rate
 mortgage loans could have volatile yields. Further, to the extent the Account
 makes mortgage loans with fixed interest rates, it may receive lower yields
 than that which is then available in the market if interest rates rise
 generally.                                      
|  |                                                                                                                                                                                                                                                        |                                                                                                                                                                                                                                                                                                                                                                          
| | Prepayment Risks:The Accounts mortgage
 loan investments will usually be subject to the risk that the borrower repays
 a loan early. Also, we may be unable to reinvest the proceeds at as high an
 interest rate as the original mortgage loan rate.

10

---



|  |                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Interest Limitations:The interest rate we
 charge on mortgage loans may inadvertently violate state usury laws that
 limit rates, if, for example, state law changes during the loan term. If this
 happens, we could incur penalties or may be unable to enforce payment of the
 loan.
|  |                                                                                                                                                                                                                                                                                        
| | Risks of Participations:Participating
 mortgages are subject to the following additional risks:                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                        
|  |                                                                                                                                                                                                                                                                                        | The
 participation feature, in tying the Accounts returns to the performance of
 the underlying asset, might generate insufficient returns to make up for the
 higher interest rate the loan would have obtained without the participation
 feature.           
|  |                                                                                                                                                                                                                                                                                         |                                                                                                                                                                                                                                                                 
|  |                                                                                                                                                                                                                                                                                        | In very
 limited circumstances, a court may characterize the Accounts participation
 interest as a partnership or joint venture with the borrower and the Account
 could lose the priority of its security interest or become liable for the
 borrowers debts.

RISKS OF INVESTING IN REAL ESTATE INVESTMENT
TRUST (REIT) SECURITIES

Investments
in REIT securities are subject to many of the same general risks associated
with direct real property ownership. In particular, equity REITs may be
affected by changes in the value of the underlying property owned by the trust,
while mortgage REITs may be affected by the quality of any credit extended. In
addition to these risks, because REIT investments are securities, they may be
exposed to market risk and potentially significant price volatility due to
changing conditions in the financial markets and, in particular, changes in
overall interest rates, regardless of the value of the underlying real estate
such REIT may own.

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

RISKS OF MORTGAGE-BACKED SECURITIES

Mortgage-backed
securities are subject to many of the same general risks inherent in real
estate investing, making mortgage loans and investing in debt securities. In
particular, these types of investments may be subject to prepayment risk or
extension risk (i.e., the risk
that borrowers will repay the loans earlier or later than anticipated). If the
underlying mortgage assets experience faster than anticipated prepayments of
principal, the Account could fail to recoup some or all of its initial
investment in these securities, since the original price paid by the Account
was based in part on assumptions regarding the receipt of interest payments. If
the underlying mortgage assets are repaid later than anticipated, the Account
could lose the opportunity to reinvest the anticipated cash flows at a time
when interest rates might be rising. The rate of prepayments depends on a
variety of geographic, social and other functions, including prevailing market
interest rates and general economic factors.

Importantly,
the market value of these securities is also highly sensitive to changes in
interest rates, liquidity of the secondary market and economic conditions
impacting financial institutions and the credit markets generally. Note that
the potential for appreciation, which could
otherwise be expected to result from a decline in interest rates, may be
limited by any

11

---



increased prepayments. Further, volatility and disruption in
    the mortgage market and credit markets generally (such as has recently been
    the case) may cause there to be a very limited secondary market for these
securities and they may be harder to sell than other securities. Further, the
underlying mortgage loans may experience defaults with greater frequency than
originally projected when such mortgages were originally underwritten, which
would impact the values of these securities, and could hamper our ability to
sell such securities.

CONFLICTS OF INTEREST WITHIN TIAA

TIAA
and its affiliates (including Teachers Advisors, Inc., its wholly owned
subsidiary) have interests in other real estate programs and accounts and also
engage in other business activities and as such, they will have conflicts of
interest in allocating their time between the Accounts business and these
other activities. Also, the Account may be buying properties at the same time
as TIAA affiliates that may have similar investment objectives to those of the
Account. There is also a risk that TIAA will choose a property that provides
lower returns to us than a property purchased by TIAA and its affiliates.
Further, the Account will likely acquire properties in geographic areas where
TIAA and its affiliates own properties. In addition, the Account may desire to
sell a property at the same time another TIAA affiliate is selling a property
in an overlapping market. Conflicts could also arise because some properties
owned by TIAA and its affiliates may compete with the Accounts properties
for tenants. Among other things, if one of the TIAA entities attracts a tenant
that we are competing for, we could suffer a loss of revenue due to delays in
locating another suitable tenant. TIAA has adopted allocation policies and
procedures applicable to the purchasing conflicts scenario, but the resolution
of such conflicts may be economically disadvantageous to the Account. As a
result of TIAAs and its affiliates obligations to other current and potential
TIAA-sponsored investment vehicles with similar objectives to those of the
Account, we cannot assure you that the Account will be able to take advantage
of every attractive investment opportunity that otherwise is in accordance with
the Accounts investment objectives.

RISKS OF LIQUID INVESTMENTS

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

| |   |                                                                                                                                                                                                                                                                                                 
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Financial Risk The risk, for debt
 securities, that the issuer will not be able to pay principal and interest
 when due and, for 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 Risk The risk that the Accounts
 investments will experience price volatility due to changing conditions in
 the financial markets and, particularly for debt securities, changes in
 overall interest rates.                                                                          
| |   |                                                                                                                                                                                                                                                                                                 
| |  | Interest Rate Volatility The risk that
 interest rate volatility may affect the Accounts current income from an
 investment.                                                                                                                                                                  

Further,
    to the extent that a significant portion of the Accounts net assets
    at any particular time are comprised of cash, cash equivalents and marketable
securities, the

12

---



Accounts returns may suffer as compared to the return that
could have been generated by more profitable investments.

RISKS OF FOREIGN INVESTMENTS

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

| |   |                                                                                                                                                                                                                                                                                   
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | The value of
 foreign investments or rental income can increase or decrease due to changes
 in currency rates, currency exchange control regulations, possible
 expropriation or confiscatory taxation, political, social, and economic
 developments, and foreign regulations.   
| |   |                                                                                                                                                                                                                                                                                   
| |  | Foreign real
 estate markets may have different liquidity and volatility attributes than
 U.S. markets.                                                                                                                                                                           
| |   |                                                                                                                                                                                                                                                                                   
| |  | It may be
 more difficult to obtain and collect a judgment on foreign investments than
 on domestic investments, and the costs associated with contesting claims
 relating to foreign investments may exceed those costs associated with a
 similar claim on domestic investments.
| |   |                                                                                                                                                                                                                                                                                   
| |  | The Account
 may, but is not required to, seek to hedge its exposure to changes in
 currency rates, which could involve extra costs. Further, any hedging
 activities might not be successful.                                                                                    

NO OPPORTUNITY FOR PRIOR REVIEW OF PURCHASE

Investors
do not have the opportunity to evaluate the economic or financial merit of the
purchase of a property or other investment before the Account completes the
purchase, so investors will need to rely solely on TIAAs judgment and ability
to select investments consistent with the Accounts investment objective and
policies. Further, the Account may change its investment objective and pursue
specific investments without the consent of the Accounts investors.

RISKS OF REGISTRATION UNDER THE INVESTMENT
COMPANY ACT OF 1940

The
Account has not registered, and management intends to continue to operate the
Account so that it will not have to register, as an investment company under
the Investment Company Act of 1940, as amended (the Investment Company Act).
Generally, a company is an investment company and required to register under
the Investment Company Act if, among other things, it holds itself out as being
engaged primarily, or proposes to engage primarily, in the business of
investing, reinvesting or trading in securities, or it is engaged or proposes
to engage in the business of investing, reinvesting, owning, holding or trading
in securities and owns or proposes to acquire investment securities having a
value exceeding 40% of the value of such companys total assets (exclusive of
government securities and cash items) on an unconsolidated basis.

13

---



If
the Account were obligated to register as an investment company, the Account
would have to comply with a variety of substantive requirements under the
Investment Company Act that impose, among other things, limitations on capital
structure, restrictions on certain investments, compliance with reporting,
record keeping, voting and proxy disclosure requirements and other rules and
regulations that could significantly increase its operating expenses and reduce
its operating flexibility. To maintain compliance with the exemptions from the
Investment Company Act, the Account may be unable to sell assets it would
otherwise want to sell and may be unable to purchase securities it would
otherwise want to purchase, which might materially adversely impact the
Accounts performance.

|         |                           
|-------- | --------------------------
|ITEM 1B. | UNRESOLVED STAFF COMMENTS.

None

|        |            
|------- | -----------
|ITEM 2. | PROPERTIES.

THE PROPERTIESIN GENERAL

In
the table below you will find general information about each of the Accounts
property investments as of December 31, 2007. The Accounts property
investments include both properties that are wholly-owned by the Account and
properties owned by the Accounts joint venture investments. Certain property
investments are comprised of a portfolio of properties.

OFFICE PROPERTY INVESTMENTS

|                                               |  |                   |  |               |     |                  |  |                                |  |               |   |                                                   |       |                 |   |             |       
|---------------------------------------------- |  | ----------------- |  | ------------- | --- | ---------------- |  | ------------------------------ |  | ------------- | - | ------------------------------------------------- | ----- | --------------- | - | ----------- | ------
|Property                                       |  | Location          |  | Year
  Built  |     | Year
  Purchased |  | Rentable
  Area
  (Sq. ft.)(1) |  | PercentLeased |   | Annual Avg.
  Base Rent
  Per Leased
  Sq. Ft.(2) |       | MarketValue (3) |  
|                                               |  |                   |  |               |     |                  |  |                                |  |               |   |                                                   |       |                 |  
|                                               |  |                   |  |               |     |                  |  |                                |  |               |   |                                                   |       |                 |   |             |       
|1001 Pennsylvania Ave                          |  | Washington, DC    |  | 1987          |     | 2004             |  | 756,603                        |  | 100           | % | $                                                 | 37.15 |                 | $ | 640,149,632 | (4)   
|Fourth & Madison(5)                            |  | Seattle, WA       |  | 2002          |     | 2004             |  | 845,533                        |  | 98            | % |                                                   | 27.53 |                 |   | 487,000,000 | (4)   
|50 Fremont Street                              |  | San Francisco, CA |  | 1983          |     | 2004             |  | 817,412                        |  | 97            | % |                                                   | 30.25 |                 |   | 478,000,000 | (4)   
|1 & 7 Westferry Circus                         |  | London, UK        |  | 1992, 1993    |     | 2005             |  | 386,206                        |  | 81            | % |                                                   | 64.08 |                 |   | 436,127,130 | (4)(6)
|Four Oaks Place                                |  | Houston, TX       |  | 1983          |     | 2004             |  | 1,754,334                      |  | 96            | % |                                                   | 18.73 |                 |   | 419,270,107 |       
|The Newbry                                     |  | Boston, MA        |  | 1940-1961     | (7) | 2006             |  | 607,424                        |  | 100           | % |                                                   | 26.47 |                 |   | 389,880,008 |       
|780 Third Avenue                               |  | New York, NY      |  | 1984          |     | 1999             |  | 487,566                        |  | 95            | % |                                                   | 50.01 |                 |   | 375,000,000 |       
|Yahoo! Center(8)                               |  | Santa Monica, CA  |  | 1984          |     | 2004             |  | 1,087,952                      |  | 92            | % |                                                   | 32.66 |                 |   | 369,402,407 |       
|99 High Street                                 |  | Boston, MA        |  | 1971          |     | 2005             |  | 731,204                        |  | 96            | % |                                                   | 29.99 |                 |   | 344,688,328 | (4)   
|Lincoln Centre                                 |  | Dallas, TX        |  | 1984          |     | 2005             |  | 1,638,132                      |  | 87            | % |                                                   | 16.95 |                 |   | 305,000,000 | (4)   
|1900 K Street                                  |  | Washington, DC    |  | 1996          |     | 2004             |  | 333,098                        |  | 100           | % |                                                   | 44.27 |                 |   | 285,000,000 |       
|701 Brickell                                   |  | Miami, FL         |  | 1986          | (9) | 2002             |  | 677,667                        |  | 94            | % |                                                   | 29.60 |                 |   | 275,941,582 |       
|275 Battery(10)                                |  | San Francisco, CA |  | 1988          |     | 2005             |  | 472,261                        |  | 90            | % |                                                   | 34.73 |                 |   | 271,917,498 |       
|Mellon Financial Center at One BostonPlace(11) |  | Boston, MA        |  | 1970          | (9) | 2002             |  | 804,444                        |  | 95            | % |                                                   | 38.74 |                 |   | 246,440,493 |       
|Wilshire Rodeo Plaza                           |  | Beverly Hills, CA |  | 1935, 1984    |     | 2006             |  | 261,932                        |  | 98            | % |                                                   | 46.81 |                 |   | 230,439,415 | (4)   
|1401 H Street NW                               |  | Washington, D.C.  |  | 1992          |     | 2006             |  | 350,635                        |  | 100           | % |                                                   | 41.20 |                 |   | 224,576,156 | (4)   
|Ten & Twenty Westport Road                     |  | Wilton, CT        |  | 1974(9), 2001 |     | 2001             |  | 538,840                        |  | 100           | % |                                                   | 30.07 |                 |   | 183,006,040 |       

14

---



OFFICE PROPERTY INVESTMENTS (continued)

|                                       |  |                      |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |   |             |    
|-------------------------------------- |  | -------------------- |  | ------------ | --- | ---------------- |  | ------------------------------ | - | ------------- | - | ------------------------------------------------- | ----- | -------------- | - | ----------- | ---
|Property                               |  | Location             |  | Year
  Built |     | Year
  Purchased |  | Rentable
  Area
  (Sq. ft.)(1) |   | PercentLeased |   | Annual Avg.
  Base Rent
  Per Leased
  Sq. Ft.(2) |       | MarketValue(3) |  
|                                       |  |                      |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |  
|                                       |  |                      |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |  
|980 9th Street and 1010 8th Street(12) |  | Sacramento, CA       |  | 1992         |     | 2005             |  | 447,865                        |   | 95            | % | $                                                 | 23.66 |                | $ | 178,000,000 |    
|Millennium Corporate Park              |  | Redmond, VA          |  | 1999, 2000   |     | 2006             |  | 536,884                        |   | 100           | % |                                                   | 13.80 |                |   | 158,000,000 |    
|Urban Centre                           |  | Tampa, FL            |  | 1984, 1987   |     | 2005             |  | 547,979                        |   | 91            | % |                                                   | 21.16 |                |   | 135,577,463 |    
|Pacific Plaza                          |  | San Diego, CA        |  | 2000, 2002   |     | 2007             |  | 215,758                        |   | 87            | % |                                                   | 26.48 |                |   | 127,130,076 | (4)
|Inverness Center                       |  | Birmingham, AL       |  | 1980-1985    |     | 2005             |  | 903,857                        |   | 100           | % |                                                   | 12.27 |                |   | 125,521,529 |    
|88 Kearny Street                       |  | San Francisco, CA    |  | 1986         |     | 1999             |  | 228,358                        |   | 94            | % |                                                   | 41.48 |                |   | 123,822,200 |    
|Morris Corporate Center III            |  | Parsippany, NJ       |  | 1990         |     | 2000             |  | 526,052                        |   | 78            | % |                                                   | 20.06 |                |   | 119,600,001 |    
|Treat Towers(13)                       |  | Walnut Creek, CA     |  | 1999         |     | 2003             |  | 367,313                        |   | 85            | % |                                                   | 23.39 |                |   | 118,997,021 |    
|Prominence in Buckhead(13)             |  | Atlanta, GA          |  | 1999         |     | 2003             |  | 423,916                        |   | 95            | % |                                                   | 27.68 |                |   | 115,427,071 |    
|The Ellipse at Ballston                |  | Arlington, VA        |  | 1989         |     | 2006             |  | 194,914                        |   | 100           | % |                                                   | 32.81 |                |   | 92,504,000  |    
|Oak Brook Regency Towers               |  | Oakbrook, IL         |  | 1977         | (9) | 2002             |  | 402,318                        |   | 78            | % |                                                   | 13.09 |                |   | 86,891,650  |    
|Camelback Center                       |  | Phoenix, AZ          |  | 2001         |     | 2007             |  | 231,345                        |   | 94            | % |                                                   | 24.38 |                |   | 80,000,000  |    
|West Lake North Business Park          |  | Westlake Village, CA |  | 2000         |     | 2004             |  | 198,558                        |   | 93            | % |                                                   | 27.58 |                |   | 68,621,818  |    
|Centerside I                           |  | San Diego, CA        |  | 1982         |     | 2004             |  | 202,913                        |   | 67            | % |                                                   | 19.06 |                |   | 67,500,000  |    
|The North 40 Office Complex            |  | Boca Raton, FL       |  | 1983, 1984   |     | 2006             |  | 350,000                        |   | 93            | % |                                                   | 10.44 |                |   | 67,003,544  |    
|Parkview Plaza                         |  | Oakbrook, IL         |  | 1990         |     | 1997             |  | 264,461                        |   | 95            | % |                                                   | 15.98 |                |   | 66,066,513  |    
|3 Hutton Centre                        |  | Santa Ana, CA        |  | 1985         | (9) | 2003             |  | 197,819                        |   | 96            | % |                                                   | 20.04 |                |   | 64,200,000  |    
|8270 Greensboro Drive                  |  | McLean, VA           |  | 2000         |     | 2005             |  | 158,110                        |   | 100           | % |                                                   | 35.93 |                |   | 63,500,000  |    
|The Pointe on Tampa Bay                |  | Tampa, FL            |  | 1982         | (9) | 2002             |  | 250,357                        |   | 97            | % |                                                   | 23.93 |                |   | 60,971,897  |    
|One Virginia Square                    |  | Arlington, VA        |  | 1999         |     | 2004             |  | 116,077                        |   | 100           | % |                                                   | 17.18 |                |   | 59,538,690  |    
|Capitol Place                          |  | Sacramento, CA       |  | 1988         | (9) | 2003             |  | 167,920                        |   | 96            | % |                                                   | 26.72 |                |   | 53,539,218  |    
|Wellpoint                              |  | Westlake Village, CA |  | 1986, 1998   |     | 2006             |  | 216,751                        |   | 100           | % |                                                   | 12.93 |                |   | 51,000,000  |    
|Park Place on Turtle Creek             |  | Dallas, TX           |  | 1986         |     | 2006             |  | 177,169                        |   | 93            | % |                                                   | 22.43 |                |   | 48,282,785  |    
|4200 West Cypress Street               |  | Tampa, FL            |  | 1989         |     | 2003             |  | 219,815                        |   | 100           | % |                                                   | 22.36 |                |   | 48,043,650  |    
|Preston Sherry Plaza                   |  | Dallas, TX           |  | 1986         |     | 2007             |  | 147,008                        |   | 95            | % |                                                   | 24.03 |                |   | 45,500,000  |    
|Tysons Executive Plaza II(14)          |  | McLean, VA           |  | 1988         |     | 2000             |  | 259,614                        |   | 81            | % |                                                   | 23.50 |                |   | 44,178,210  |    
|Creeksides at Centerpoint              |  | Kent, WA             |  | 1985         |     | 2006             |  | 218,712                        |   | 84            | % |                                                   | 12.30 |                |   | 42,000,000  |    
|Needham Corporate Center               |  | Needham, MA          |  | 1987         |     | 2001             |  | 138,259                        |   | 87            | % |                                                   | 20.00 |                |   | 33,275,228  |    
|Columbus Portfolio                     |  | Various, OH          |  | 1997-1998    |     | 1999,
  2001     |  | 259,686                        |   | 92            | % |                                                   | 9.90  |                |   | 26,314,686  |    
|                                       |  |                      |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |   |             |    
|SubtotalOffice
  Property Investments |  |                      |  |              |     |                  |  | 94                             | % |               |   |                                                   | $     | 8,332,846,046  |  
|                                       |  |                      |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |   |             |    
|INDUSTRIAL
  PROPERTY INVESTMENTS      |  |                      |  |              |     |                  |  |                                |   |              
|                                       |  |                      |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |   |             |    
|Ontario IndustrialPortfolio(15)        |  | Various, CA          |  | 1997-1998    |     | 1998,
  2000,    |  | 3,981,894                      |   | 100           | % |                                                   | 3.08  |                |   | 355,398,714 | (4)
|                                       |  |                      |  |              |     | 2004             |  |                                |   |               |   |                                                   |       |                |   |             |    
|Dallas IndustrialPortfolio(16)(17)     |  | Dallas and           |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |   |             |    
|                                       |  | Coppell, TX          |  | 1997-2001    |     | 2000-2002        |  | 3,684,941                      |   | 96            | % |                                                   | 2.98  |                |   | 154,055,892 |    
|Rancho Cucamonga                       |  | Rancho               |  |              |     |                  |  |                                |   |               |   |                                                   |       |                |   |             |    
|Industrial Portfolio(18)               |  | Cucamonga, CA        |  | 2000-2002    |     | 2000,
  2001,    |  | 1,490,235                      |   | 100           | % |                                                   | 3.31  |                |   | 133,000,000 |    
|                                       |  |                      |  |              |     | 2002, 2004       |  |                                |   |               |   |                                                   |       |                |   |             |    
|Seneca Industrial Park                 |  | Pembroke Park, FL    |  | 1999-2001    |     | 2007             |  | 882,182                        |   | 96            | % |                                                   | 5.62  |                |   | 122,334,422 |    

15

---



INDUSTRIAL PROPERTY INVESTMENTS (continued)

|                                           |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|------------------------------------------ |  | ----------------- |  | ------------ |  | ---------------- |  | ------------------------------ | - | ------------- | - | ------------------------------------------------- | ---- | --------------- | - | ----------- | 
|Property                                   |  | Location          |  | Year
  Built |  | Year
  Purchased |  | Rentable
  Area
  (Sq. ft.)(1) |   | PercentLeased |   | Annual Avg.
  Base Rent
  Per Leased
  Sq. Ft.(2) |      | MarketValue (3) |  
|                                           |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |  
|                                           |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Southern California RA                     |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Industrial Portfolio                       |  | Los Angeles, CA   |  | 1982         |  | 2004             |  | 920,078                        |   | 98            | % | $                                                 | 6.44 |                 | $ | 110,718,042 | 
|Chicago Industrial                         |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Portfolio(17)                              |  | Chicago and       |  | 1997-2000    |  | 1998;
  2000     |  | 1,427,699                      |   | 100           | % |                                                   | 3.94 |                 |   | 86,420,886  | 
|                                           |  | Joliet, IL        |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Rainier Corporate Park                     |  | Fife, WA          |  | 1991-1997    |  | 2003             |  | 1,104,646                      |   | 100           | % |                                                   | 3.52 |                 |   | 81,160,792  | 
|Chicago CALEast Industrial                 |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Portfolio(17)                              |  | Chicago, IL       |  | 1974-2005    |  | 2003             |  | 1,280,784                      |   | 100           | % |                                                   | 3.62 |                 |   | 77,642,826  | 
|Shawnee Ridge                              |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Industrial Portfolio                       |  | Atlanta, GA       |  | 2000-2005    |  | 2005             |  | 1,422,922                      |   | 100           | % |                                                   | 3.19 |                 |   | 76,742,231  | 
|IDI National Portfolio(19)                 |  | Various, U.S.     |  | 1999-2004    |  | 2004             |  | 3,655,671                      |   | 100           | % |                                                   | 3.50 |                 |   | 76,536,044  | 
|Regal Logistics Campus                     |  | Seattle, WA       |  | 1999-2004    |  | 2005             |  | 968,535                        |   | 100           | % |                                                   | 4.15 |                 |   | 71,000,000  | 
|Northern California RA                     |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Industrial Portfolio(17)                   |  | Oakland, CA       |  | 1981         |  | 2004             |  | 657,602                        |   | 98            | % |                                                   | 4.11 |                 |   | 69,601,997  | 
|Atlanta Industrial
  Portfolio(17)         |  | Lawrenceville, GA |  | 1996-1999    |  | 2000             |  | 1,295,440                      |   | 95            | % |                                                   | 2.64 |                 |   | 58,300,000  | 
|South River Road Industrial                |  | Cranbury, NJ      |  | 1999         |  | 2001             |  | 858,957                        |   | 53            | % |                                                   | 2.57 |                 |   | 53,400,000  | 
|GE Appliance East Coast                    |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Distribution Facility                      |  | Perryville, MD    |  | 2003         |  | 2005             |  | 1,004,000                      |   | 100           | % |                                                   | 2.82 |                 |   | 48,000,000  | 
|Pinnacle Industrial/DFW                    |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Trade Center                               |  | Grapevine, TX     |  | 2003, 2004,  |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|                                           |  |                   |  | 2006         |  | 2006             |  | 899,200                        |   | 100           | % |                                                   | 3.47 |                 |   | 46,700,000  | 
|New Jersey CALEast                         |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Industrial Portfolio                       |  | Cranbury, NJ      |  | 1982-1989    |  | 2003             |  | 807,773                        |   | 50            | % |                                                   | 2.23 |                 |   | 42,225,000  | 
|East North Central RA                      |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Industrial Portfolio                       |  | Chicago, IL       |  | 1978         |  | 2004             |  | 541,266                        |   | 98            | % |                                                   | 4.25 |                 |   | 38,016,397  | 
|Broadlands Business Park                   |  | Elkton, MD        |  | 2006         |  | 2006             |  | 756,600                        |   | 100           | % |                                                   | 2.85 |                 |   | 35,500,000  | 
|Centre Pointe and Valley                   |  | Los Angeles       |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|View                                       |  | County, CA        |  | 1965-1989    |  | 2004             |  | 307,685                        |   | 58            | % |                                                   | 4.62 |                 |   | 34,142,741  | 
|Northeast RA Industrial                    |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Portfolio                                  |  | Boston, MA        |  | 2000         |  | 2004             |  | 384,000                        |   | 88            | % |                                                   | 5.71 |                 |   | 33,300,000  | 
|Summit Distribution Center                 |  | Memphis, TN       |  | 2002         |  | 2003             |  | 708,532                        |   | 100           | % |                                                   | 2.52 |                 |   | 27,500,000  | 
|Airways Distribution Center                |  | Memphis, TN       |  | 2005         |  | 2006             |  | 556,600                        |   | 100           | % |                                                   | 3.20 |                 |   | 24,300,000  | 
|Konica Photo Imaging                       |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Headquarters                               |  | Mahwah, NJ        |  | 1999         |  | 1999             |  | 168,000                        |   | 100           | % |                                                   | 2.87 |                 |   | 23,500,000  | 
|Northwest RA Industrial                    |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|Portfolio                                  |  | Seattle, WA       |  | 1996         |  | 2004             |  | 312,321                        |   | 100           | % |                                                   | 3.21 |                 |   | 23,401,540  | 
|UPS Distribution Facility                  |  | Fernley, NV       |  | 1998         |  | 1998             |  | 256,000                        |   | 100           | % |                                                   | 3.39 |                 |   | 15,900,000  | 
|FEDEX Distribution Facility                |  | Crofton, MD       |  | 1998         |  | 1998             |  | 110,842                        |   | 100           | % |                                                   | 2.99 |                 |   | 9,900,000   | 
|                                           |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 
|SubtotalIndustrial
  Property Investments |  |                   |  |              |  |                  |  | 96                             | % |               |   |                                                   | $    | 1,928,697,524   |  
|                                           |  |                   |  |              |  |                  |  |                                |   |               |   |                                                   |      |                 |   |             | 

16

---



RETAIL PROPERTY INVESTMENTS

|                                       |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|-------------------------------------- |  | ------------------ |  | ------------ | --- | ---------------- | -- | ------------------------------ | ---- | ------------- | - | ------------------------------------------------- | ------------- | --------------- | - | ------------- | ---
|Property                               |  | Location           |  | Year
  Built |     | Year
  Purchased |    | Rentable
  Area
  (Sq. ft.)(1) |      | PercentLeased |   | Annual Avg.
  Base Rent
  Per Leased
  Sq. Ft.(2) |               | MarketValue (3) |  
|                                       |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |  
|                                       |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|DDR Joint Venture(20)                  |  | Various,
  U.S.    |  | Various      |     | 2007             |    | 16,183,158                     |      | 95            | % | $                                                 | 11.46         |                 | $ | 1,028,297,460 |    
|The Florida Mall(21)                   |  | Orlando,
  FL      |  | 1986         | (9) | 2002             |    | 1,061,308                      | (22) | 99            | % |                                                   | 41.99         |                 |   | 296,486,153   |    
|Printemps de lHomme                   |  | Paris,
  France    |  | 1930         |     | 2007             |    | 142,363                        |      | 100           | % |                                                   | 84.73         |                 |   | 279,077,542   | (6)
|Florida Retail Portfolio(23)           |  | Various,
  FL      |  | 1974-2005    |     | 2006             |    | 1,259,554                      |      | 95            | % |                                                   | 15.63         |                 |   | 260,879,060   |    
|Miami International Mall(21)           |  | Miami,
  FL        |  | 1982         | (9) | 2002             |    | 296,746                        | (22) | 98            | % |                                                   | 36.41         |                 |   | 109,944,638   |    
|Mazza Gallerie                         |  | Washington,
  DC   |  | 1975         |     | 2004             |    | 293,935                        |      | 99            | % |                                                   | 19.84         |                 |   | 97,000,019    |    
|Westwood Marketplace                   |  | Los
  Angeles, CA  |  | 1950         | (9) | 2002             |    | 202,201                        |      | 100           | % |                                                   | 29.93         |                 |   | 96,562,192    |    
|Marketfair                             |  | West
  Windsor, NJ |  | 1987         |     | 2006             |    | 244,469                        |      | 99            | % |                                                   | 23.04         |                 |   | 95,500,000    |    
|West Town Mall(21)                     |  | Knoxville,
  TN    |  | 1972         | (9) | 2002             |    | 759,447                        | (22) | 97            | % |                                                   | 21.10         |                 |   | 75,826,066    |    
|Publix at Weston Commons               |  | Weston,
  FL       |  | 2005         |     | 2006             |    | 126,922                        |      | 96            | % |                                                   | 23.98         |                 |   | 55,200,000    | (4)
|Plainsboro Plaza                       |  | Plainsboro,
  NJ   |  | 1987         |     | 2005             |    | 206,503                        |      | 87            | % |                                                   | 10.67         |                 |   | 51,000,000    |    
|South Frisco Village                   |  | Frisco,
  TX       |  | 2002         |     | 2006             |    | 227,175                        |      | 99            | % |                                                   | 13.85         |                 |   | 48,500,000    | (4)
|The Market at Southpark                |  | Littleton,
  CO    |  | 1988         |     | 2004             |    | 190,104                        |      | 98            | % |                                                   | 10.16         |                 |   | 35,800,000    |    
|Suncrest Village                       |  | Orlando,
  FL      |  | 1987         |     | 2005             |    | 93,358                         |      | 98            | % |                                                   | 10.89         |                 |   | 19,500,000    |    
|Champlin Marketplace                   |  | Champlin,
  MN     |  | 1998-1999,   |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|                                       |  |                    |  | 2005         |     | 2007             |    | 88,577                         |      | 100           | % |                                                   | 13.47         |                 |   | 18,375,000    |    
|Plantation Grove                       |  | Ocoee,
  FL        |  | 1995         |     | 1995             |    | 73,655                         |      | 99            | % |                                                   | 11.82         |                 |   | 15,400,000    |    
|                                       |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|SubtotalRetail
  Property Investments |  |                    |  |              |     |                  | 97 | %                              |      |               |   | $                                                 | 2,583,348,130 |                
|                                       |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|RESIDENTIAL
  PROPERTY INVESTMENTS(24) |  |                    |  |              |     |                  |    |                                |     
|Houston Apartment                      |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|Portfolio(25)                          |  | Houston,
  TX      |  | 1984-2004    |     | 2006             |    | NA                             |      | 93            | % |                                                   | NA            |                 |   | 296,241,497   |    
|Palomino Park Apartments               |  | Denver,
  CO       |  | 1996-2001    |     | 2005             |    | NA                             |      | 92            | % |                                                   | NA            |                 |   | 194,001,036   |    
|Kierland Apartment                     |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|Portfolio(26)                          |  | Scottsdale,
  AZ   |  | 1996-2000    |     | 2006             |    | NA                             |      | 97            | % |                                                   | NA            |                 |   | 170,084,494   |    
|Phoenix Apartment                      |  | Greater
  Phoenix  |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|Portfolio(27)                          |  | Area,
  AZ         |  | 1995-1998    |     | 2006             |    | NA                             |      | 96            | % |                                                   | NA            |                 |   | 156,109,517   |    
|The Legacy at Westwood                 |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|Apartments                             |  | Los
  Angeles, CA  |  | 2001         |     | 2002             |    | NA                             |      | 79            | % |                                                   | NA            |                 |   | 126,579,694   |    
|The Colorado                           |  | New
  York, NY     |  | 1987         |     | 1999             |    | NA                             |      | 98            | % |                                                   | NA            |                 |   | 113,033,240   |    
|Larkspur Courts                        |  | Larkspur,
  CA     |  | 1991         |     | 1999             |    | NA                             |      | 94            | % |                                                   | NA            |                 |   | 97,000,000    |    
|Ashford Meadows                        |  |                    |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|Apartments                             |  | Herndon,
  VA      |  | 1998         |     | 2000             |    | NA                             |      | 96            | % |                                                   | NA            |                 |   | 94,059,776    |    
|1050 Lenox Park                        |  | Atlanta,
  GA      |  | 2001         |     | 2005             |    | NA                             |      | 97            | % |                                                   | NA            |                 |   | 85,500,000    |    
|Regents Court Apartments               |  | San
  Diego, CA    |  | 2001         |     | 2002             |    | NA                             |      | 99            | % |                                                   | NA            |                 |   | 69,000,000    |    
|South Florida Apartment                |  | Boca
  Raton and   |  |              |     |                  |    |                                |      |               |   |                                                   |               |                 |   |               |    
|Portfolio                              |  | Plantation,
  FL   |  | 1986         |     | 2001             |    | NA                             |      | 92            | % |                                                   | NA            |                 |   | 68,248,605    |    
|The Caruth                             |  | Dallas,
  TX       |  | 1999         |     | 2005             |    | NA                             |      | 88            | % |                                                   | NA            |                 |   | 65,427,458    |    
|Glenridge Walk                         |  | Atlanta,
  GA      |  | 1996,
  2001 |     | 2005             |    | NA                             |      | 94            | % |                                                   | NA            |                 |   | 52,900,000    |    
|The Reserve at Sugarloaf               |  | Duluth,
  GA       |  | 2000         |     | 2005             |    | NA                             |      | 92            | % |                                                   | NA            |                 |   | 52,000,000    | (4)
|The Lodge at Willow Creek              |  | Denver,
  CO       |  | 1997         |     | 1997             |    | NA                             |      | 97            | % |                                                   | NA            |                 |   | 43,500,000    |    
|The Maroneal                           |  | Houston,
  TX      |  | 1998         |     | 2005             |    | NA                             |      | 97            | % |                                                   | NA            |                 |   | 40,033,822    |    

17

---



RESIDENTIAL PROPERTY INVESTMENTS (continued)

|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |   |            | 
|------------------------------------------- |  | ---------------------- |  | ------------ |  | ---------------- | -- | ------------------------------ |  | ------------- | - | ------------------------------------------------- | -------------- | -------------- | - | ---------- | 
|Property                                    |  | Location               |  | Year
  Built |  | Year
  Purchased |    | Rentable
  Area
  (Sq. ft.)(1) |  | PercentLeased |   | Annual Avg.
  Base Rent
  Per Leased
  Sq. Ft.(2) |                | MarketValue(3) |  
|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |  
|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |   |            | 
|Westcreek Apartments                        |  | Westlake
  Village, CA |  | 1988         |  | 1997             |    | NA                             |  | 87            | % |                                                   | NA             |                | $ | 39,189,673 | 
|Lincoln Woods Apartments                    |  | Lafayette
  Hill, PA   |  | 1991         |  | 1997             |    | NA                             |  | 95            | % |                                                   | NA             |                |   | 37,917,165 | 
|The Fairways of Carolina                    |  | Margate,
  FL          |  | 1993         |  | 2001             |    | NA                             |  | 96            | % |                                                   | NA             |                |   | 27,207,661 | 
|Royal St. George                            |  | W.
  Palm Beach, FL    |  | 1995         |  | 1996             |    | NA                             |  | 96            | % |                                                   | NA             |                |   | 27,000,000 | 
|Quiet Water at Coquina
  Lakes              |  | Deerfield
  Beach, FL  |  | 1995         |  | 2001             |    | NA                             |  | 97            | % |                                                   | NA             |                |   | 26,204,860 | 
|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |   |            | 
|SubtotalResidential
  Property Investments |  |                        |  |              |  |                  | 94 | %                              |  |               |   | $                                                 | 1,881,238,498  |               
|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |   |            | 
|OTHER
  COMMERCIAL PROPERTY INVESTMENTS     |  |                        |  |              |  |                  |    |                                |  |              
|Storage Portfolio I(28)                     |  | Various,
  U.S.        |  | 1972-1990    |  | 2003             |    | 2,301,187                      |  | 84            | % | $                                                 | 9.83           |                | $ | 81,943,321 | 
|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |   |            | 
|SubtotalCommercial
  Property Investments  |  |                        |  |              |  |                  |    |                                |  |               |   | $                                                 | 12,926,835,021 |               
|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |   |            | 
|TotalAll
  Property Investments            |  |                        |  |              |  |                  |    |                                |  |               |   | $                                                 | 14,808,073,519 |               
|                                            |  |                        |  |              |  |                  |    |                                |  |               |   |                                                   |                |                |   |            | 

|     |                                                                                                                                                                                                                                                                                                                                                                              
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1)  | The square footage is an
  approximate measure and is subject to periodic remeasurement.                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(2)  | Based on total contractual
  rent for leases existing as of December 31, 2007. For those properties
  purchased in fourth quarter of 2007 the rent is based on the existing leases
  as of the date of purchase. The contractual rent can be either on a gross or
  net basis, depending on the terms of the leases.                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(3)  | Market value reflects the
  value determined in accordance with the procedures described in the Accounts
  prospectus and as stated in the Statement of Investments. The account joint
  venture interest in 161 North Clark Street was sold on August 24, 2007. A residual
  value of $3.15 million remains in the statement of investments but not on the
  property list.
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(4)  | Market value shown
  represents the Accounts interest gross of debt.                                                                                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(5)  | Formerly known as IDX
  Tower.                                                                                                                                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(6)  | 1 & 7 Westferry Circus
  is located in the United Kingdom, and the market value reflects the Accounts
  interest gross of debt. Printemps de lHomme is located in France. The market
  value of each property is converted from local currency to U.S. Dollars at
  the exchange rate as of December 31, 2007.                                                             
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(7)  | This property was
  substantially renovated in 1961, 2004 and 2006.                                                                                                                                                                                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(8)  | Formerly known as
  Colorado Center, this property is held in a 50%/50% joint venture with
  Equity Office Properties Trust. Market value shown reflects the value of the Accounts interest in
  the joint venture, net of debt.                                                                                                                                          
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(9)  | Undergone extensive
  renovations since original construction.                                                                                                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(10) | Formerly known as
  Embarcadero Plaza.                                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(11) | The Account purchased a
  50.25% interest in a private REIT, which owns this property. A 49.70%
  interest is owned by Societe Immobiler Trans-Quebec, and .05% is owned by 100
  individuals. Market value shown reflects the value of the Accounts interest
  in the joint venture.                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(12) | Formerly known as U.S.
  Bank Plaza.                                                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(13) | This investment property
  is held in a 75%/25% joint venture with Equity Office Properties Trust.
  Market value shown reflects the value of the Accounts interest in the joint
  venture.                                                                                                                                                                                 
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(14) | This investment property
  is held in a 50%/50% joint venture with Tennessee Consolidated Retirement
  System. Market value shown reflects the value of the Accounts interest in
  the joint venture.                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(15) | The Ontario Industrial
  Portfolio contains six investment properties, including one portfolio which
  consists of 1.1 million square feet located in Mira Loma, California. As of
  January 30, 2007, 1900 South Burgundy Place was added to the Ontario
  Industrial Portfolio.                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(16) | The Dallas Industrial
  Portfolio contains ten warehouse distribution properties located in Dallas
  and Coppell, Texas.                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(17) | A portion of this
  portfolio was sold on June 27, 2007.                                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(18) | Formerly known as Cabot
  Industrial Portfolio. As of January 31, 2007 the Weber Distribution property
  was consolidated into the existing Rancho Cucamonga Industrial Portfolio.                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                              
|(19) | Property held in a 60%/40%
  joint venture with Industrial Development International. Market value shown
  reflects the value of the Accounts interest in the joint venture, net of
  debt.                                                                                                                                                                                 

18

---



|     |                                                                                                                                                                                                                                                                                                                                                               
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(20) | This property investment
  consists of 65 properties located in 13 states and is held in a 85%/15% joint
  venture with Developers Diversified Realty Corporation. Market Value shown
  reflects the value of the Accounts interest in the joint venture, net of
  debt.                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                               
|(21) | These property investments
  are held in 50%/50% joint ventures with the Simon Property Group. Market
  values shown reflect the value of the Accounts interest in the joint
  ventures, net of debt.                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                               
|(22) | Reflects the square
  footage owned by the joint venture.                                                                                                                                                                                                                                                                                                     
|     |                                                                                                                                                                                                                                                                                                                                                               
|(23) | This investment property
  is held in a 80%/20% joint venture with Weingarten Realty Investors. Market
  value shown reflects the value of the Accounts interest in the joint venture
  net of debt. This portfolio contains seven neighborhood and/or community
  shopping centers located in the Ft. Lauderdale, Miami, Orlando and Tampa,
  Florida areas.
|     |                                                                                                                                                                                                                                                                                                                                                               
|(24) | For the average unit size
  and annual average rent per unit for each residential property, see
  Residential Properties below.                                                                                                                                                                                                                             
|     |                                                                                                                                                                                                                                                                                                                                                               
|(25) | The Houston Apartment
  Portfolio contains 11 properties that are a mix of two and three-story luxury
  garden style apartments and are located in Houston, Texas.                                                                                                                                                                                            
|     |                                                                                                                                                                                                                                                                                                                                                               
|(26) | The Kierland Apartment
  Portfolio contains three properties that are a mix of two and three-story
  luxury garden style apartments and are located in Scottsdale, Arizona.                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                               
|(27) | The Phoenix Apartment
  Portfolio contains four properties that are a mix of two and three-story
  luxury garden style apartments and are located in the greater Phoenix area in
  Arizona.                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                               
|(28) | Property held in 75%/25%
  joint venture with Storage USA. Market value shown reflects the value of the
  Accounts interest in the joint venture, net of debt.                                                                                                                                                                                               

19

---



Commercial (Non-Residential) Properties

At
December 31, 2007, the Account held 90 commercial (non-residential) property
investments in its portfolio, including a portfolio of storage facilities
located throughout the United States. Twelve of these property investments were
held through joint ventures, and 19 were subject to mortgages (including seven
joint venture property investments). Although the terms vary under each lease,
certain expenses, such as real estate taxes and other operating expenses, are
paid or reimbursed in whole or in part by the tenants.

Management
believes that the Accounts portfolio is diversified by both property type and
geographic location. The portfolio consists of: 46 office properties containing
approximately 21 million square feet located in 14 states, the District of
Columbia and the United Kingdom; 27 industrial properties containing
approximately 30 million square feet located in 11 states, including a 60%
interest in a portfolio of industrial properties located throughout the United
States; and 16 retail properties containing approximately 21.4 million square
feet located in eight states, the District of Columbia, the United Kingdom, and
Paris, France. One of the retail property investments is an 85% interest in a
portfolio containing 65 individual retail shopping centers located throughout
the East and Southeast states. In addition, the Account has a 75% interest in a
portfolio of storage facilities located throughout the United States containing
approximately 2.3 million square feet.

As
of December 31, 2007, the average overall occupancy rate of the Accounts
commercial real estate portfolio was 95%. On a weighted average basis, the
Accounts office properties were 94% leased, industrial properties were 96%
leased, retail properties were 97% leased, and the storage portfolio was 84%
leased.

Major Tenants: The following tables list
the Accounts major commercial tenants based on the total space they occupied
as of December 31, 2007, in the Accounts properties.

|                                            |  |                        |  |                                                                       |  |                                                                                  |  |  |     |  
|------------------------------------------- |  | ---------------------- |  | --------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  |  | --- | -
|MAJOR
 OFFICE TENANTS                       |  | Occupied
 Square
 Feet |  | Percentage of
 Total Rentable
 Area of
 Accounts
 Office
 Properties |  | Percentage of
 Total Rentable
 Area of
 Accounts
 Non-
 Residential
 Properties | 
|                                            |  |                        |  |                                                                       |  |                                                                                  |  |  |     |  
|Deloitte & Touche                           |  |                        |  | 517,855                                                               |  |                                                                                  |  |  | 2.5 | %
|BHP Petroleum                               |  |                        |  | 463,734                                                               |  |                                                                                  |  |  | 2.2 | %
|Mellon (Boston Co)                          |  |                        |  | 457,248                                                               |  |                                                                                  |  |  | 2.2 | %
|Southern Company Services,
 Inc             |  |                        |  | 456,235                                                               |  |                                                                                  |  |  | 2.2 | %
|Yahoo!                                      |  |                        |  | 448,147                                                               |  |                                                                                  |  |  | 2.1 | %
|Microsoft                                   |  |                        |  | 361,527                                                               |  |                                                                                  |  |  | 1.7 | %
|Crowell & Moring                            |  |                        |  | 320,539                                                               |  |                                                                                  |  |  | 1.5 | %
|ATMOS Energy                                |  |                        |  | 293,835                                                               |  |                                                                                  |  |  | 1.4 | %
|Fourth & Madison                            |  |                        |  | 284,630                                                               |  |                                                                                  |  |  | 1.3 | %
|Kirkpatrick & Lockhart
 Preston Gates Ellis |  |                        |  | 248,982                                                               |  |                                                                                  |  |  | 1.2 | %
|                                           

20

---



|                          |  |                        |  |                                                                           |  |                                                                                  |  |  |     |  
|------------------------- |  | ---------------------- |  | ------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- |  |  | --- | -
|MAJOR
 INDUSTRIAL TENANTS |  | Occupied
 Square
 Feet |  | Percentage of
 Total Rentable
 Area of
 Accounts
 Industrial
 Properties |  | Percentage of
 Total Rentable
 Area of
 Accounts
 Non-
 Residential
 Properties | 
|                         
|Meiko America             |  |                        |  | 1,115,000                                                                 |  |                                                                                  |  |  | 3.7 | %
|Walmart                   |  |                        |  | 1,099,112                                                                 |  |                                                                                  |  |  | 3.6 | %
|General Electric          |  |                        |  | 1,004,000                                                                 |  |                                                                                  |  |  | 3.3 | %
|Priority Fulfillment      |  |                        |  | 993,120                                                                   |  |                                                                                  |  |  | 3.3 | %
|Regal West                |  |                        |  | 968,535                                                                   |  |                                                                                  |  |  | 3.2 | %
|Covidien (FKA Tyco)       |  |                        |  | 800,000                                                                   |  |                                                                                  |  |  | 2.6 | %
|Michelin (TNT)            |  |                        |  | 756,600                                                                   |  |                                                                                  |  |  | 2.5 | %
|Hewlett-Packard           |  |                        |  | 708,532                                                                   |  |                                                                                  |  |  | 2.3 | %
|Del Monte                 |  |                        |  | 689,660                                                                   |  |                                                                                  |  |  | 2.3 | %
|RR Donnelley              |  |                        |  | 659,157                                                                   |  |                                                                                  |  |  | 2.2 | %
|                         

|                      |  |                        |         |                                                                      |  |                                                                                  |     |   |  | 
|--------------------- |  | ---------------------- | ------- | -------------------------------------------------------------------- |  | -------------------------------------------------------------------------------- | --- | - |  | 
|MAJOR
 RETAIL TENANTS |  | Occupied
 Square
 Feet |         | Percentage of
 Total Rentable
 Area of
 Accounts
 Retail Properties |  | Percentage of
 Total Rentable
 Area of
 Accounts
 Non-
 Residential
 Properties |    
|                     
|Walmart               |  |                        | 944,437 |                                                                      |  |                                                                                  | 4.4 | % |  | 
|Kohls                |  |                        | 609,529 |                                                                      |  |                                                                                  | 2.8 | % |  | 
|Goodys               |  |                        | 589,392 |                                                                      |  |                                                                                  | 2.7 | % |  | 
|Publix Super Markets  |  |                        | 565,187 |                                                                      |  |                                                                                  | 2.6 | % |  | 
|Ross                  |  |                        | 564,927 |                                                                      |  |                                                                                  | 2.6 | % |  | 
|Dicks Sporting Goods |  |                        | 522,486 |                                                                      |  |                                                                                  | 2.4 | % |  | 
|PetSmart              |  |                        | 496,595 |                                                                      |  |                                                                                  | 2.3 | % |  | 
|Michaels             |  |                        | 492,636 |                                                                      |  |                                                                                  | 2.3 | % |  | 
|Bed, Bath & Beyond    |  |                        | 455,510 |                                                                      |  |                                                                                  | 2.1 | % |  | 
|Linens N Things      |  |                        | 426,523 |                                                                      |  |                                                                                  | 2.0 | % |  | 
|                     

21

---



The
following tables list the rentable area subject to expiring leases during the
next five years, and an aggregate figure for expirations in 2013 and
thereafter, in the Accounts commercial (non residential) properties.

|                                            |  |                                                             |            |                                                                                                             |  |  |      |   | 
|------------------------------------------- |  | ----------------------------------------------------------- | ---------- | ----------------------------------------------------------------------------------------------------------- |  |  | ---- | - | 
|OFFICE
  PROPERTIESYear of Lease Expiration |  | Rentable Area
  Subject
  to Expiring 
  Leases
  (sq. ft.) |            | Percentage of Total
  Rentable Area of
  Accounts Office
  Properties
  Represented
  by Expiring
  Leases | 
|                                            |  |                                                             |            |                                                                                                             | 
|2008                                        |  |                                                             | 2,025,032  |                                                                                                             |  |  | 9.6  | % | 
|2009                                        |  |                                                             | 1,841,797  |                                                                                                             |  |  | 8.7  | % | 
|2010                                        |  |                                                             | 2,254,954  |                                                                                                             |  |  | 10.7 | % | 
|2011                                        |  |                                                             | 2,673,274  |                                                                                                             |  |  | 12.7 | % | 
|2012                                        |  |                                                             | 1,731,962  |                                                                                                             |  |  | 8.2  | % | 
|2013 and thereafter                         |  |                                                             | 8,606,526  |                                                                                                             |  |  | 40.9 | % | 
|                                            |  |                                                             |            |                                                                                                             |  |  |      |   | 
|Total                                       |  |                                                             | 19,133,545 |                                                                                                             |  |  | 90.8 | % | 
|                                            |  |                                                             |            |                                                                                                             |  |  |      |   | 

|                                                |  |                                                            |            |                                                                                                                   |  |  |      |   | 
|----------------------------------------------- |  | ---------------------------------------------------------- | ---------- | ----------------------------------------------------------------------------------------------------------------- |  |  | ---- | - | 
|INDUSTRIAL
  PROPERTIESYear of Lease Expiration |  | Rentable Area
  Subject
  to Expiring
  Leases
  (sq. ft.) |            | Percentage of Total
  Rentable Area of
  Accounts
  Industrial
  Properties
  Represented
  by Expiring
  Leases | 
|                                                |  |                                                            |            |                                                                                                                   |  |  |     
|2008                                            |  |                                                            | 4,373,313  |                                                                                                                   |  |  | 14.4 | % | 
|2009                                            |  |                                                            | 4,120,869  |                                                                                                                   |  |  | 13.5 | % | 
|2010                                            |  |                                                            | 4,570,510  |                                                                                                                   |  |  | 15.0 | % | 
|2011                                            |  |                                                            | 4,336,083  |                                                                                                                   |  |  | 14.2 | % | 
|2012                                            |  |                                                            | 1,542,068  |                                                                                                                   |  |  | 5.1  | % | 
|2013 and thereafter                             |  |                                                            | 9,800,725  |                                                                                                                   |  |  | 32.2 | % | 
|                                                |  |                                                            |            |                                                                                                                   |  |  |      |   | 
|Total                                           |  |                                                            | 28,743,568 |                                                                                                                   |  |  | 94.4 | % | 
|                                                |  |                                                            |            |                                                                                                                   |  |  |      |   | 

|                                            |  |                                                            |            |                                                                                                             |  |  |      |   | 
|------------------------------------------- |  | ---------------------------------------------------------- | ---------- | ----------------------------------------------------------------------------------------------------------- |  |  | ---- | - | 
|RETAIL
  PROPERTIESYear of Lease Expiration |  | Rentable Area
  Subject
  to Expiring
  Leases
  (sq. ft.) |            | Percentage of Total
  Rentable Area of
  Accounts Retail
  Properties
  Represented
  by Expiring
  Leases | 
|                                            |  |                                                            |            |                                                                                                             |  |  |     
|2008                                        |  |                                                            | 1,325,407  |                                                                                                             |  |  | 6.2  | % | 
|2009                                        |  |                                                            | 1,244,001  |                                                                                                             |  |  | 5.8  | % | 
|2010                                        |  |                                                            | 1,789,246  |                                                                                                             |  |  | 8.3  | % | 
|2011                                        |  |                                                            | 2,224,269  |                                                                                                             |  |  | 10.4 | % | 
|2012                                        |  |                                                            | 2,289,812  |                                                                                                             |  |  | 10.7 | % | 
|2013 and thereafter                         |  |                                                            | 11,315,396 |                                                                                                             |  |  | 52.7 | % | 
|                                            |  |                                                            |            |                                                                                                             |  |  |      |   | 
|Total                                       |  |                                                            | 20,188,131 |                                                                                                             |  |  | 94.1 | % | 
|                                            |  |                                                            |            |                                                                                                             |  |  |      |   | 

22

---



Residential Properties

The
Accounts residential property portfolio currently consists of 21 property
investments comprised of first class or luxury multi-family, garden, mid-rise,
and high-rise apartment buildings. The portfolio contains approximately 10,560
units located in nine states and has a 94% average occupancy rate. One of the
residential properties in the portfolio is subject to a mortgage. The complexes
generally contain one- to three-bedroom apartment units with a range of
amenities, such as patios or balconies, washers and dryers, and central air
conditioning. Many of these apartment communities have on-site fitness
facilities, including some with swimming pools. Rents on each of the properties
tend to be comparable with competitive communities and are not subject to rent
regulation. The Account is responsible for the expenses of operating its
residential properties.

The
table below contains detailed information regarding the apartment complexes in
the Accounts portfolio as of December 31, 2007.

|                                    |  |                                 |  |                   |       |                                     |  |                                   |       |  |  |  |        | 
|----------------------------------- |  | ------------------------------- |  | ----------------- | ----- | ----------------------------------- |  | --------------------------------- | ----- |  |  |  | ------ | 
|Property                            |  | Location                        |  | Number
  of Units |       | Average
  Unit Size
  (Square Feet) |  | Avg. Rent
  Per Unit/
  Per Month |      
|                                    |  |                                 |  |                   |       |                                     |  |                                   |       |  |  | 
|Houston Apartment
  Portfolio       |  | Houston, TX                     |  |                   | 2,295 |                                     |  |                                   | 1,351 |  |  |  | $1,341 | 
|Palomino Park                       |  | Highlands Ranch, CO             |  |                   | 1,184 |                                     |  |                                   | 1,095 |  |  |  | $1,153 | 
|Kierland Apartment
  Portfolio      |  | Scottsdale, AZ                  |  |                   | 1,000 |                                     |  |                                   | 1,047 |  |  |  | $1,260 | 
|Phoenix Apartment
  Portfolio       |  | Greater Phoenix Area, AZ        |  |                   | 1,176 |                                     |  |                                   | 1,094 |  |  |  | $1,122 | 
|Legacy at Westwood                  |  | Los Angeles, CA                 |  |                   | 187   |                                     |  |                                   | 1,181 |  |  |  | $4,212 | 
|The Colorado                        |  | New York, NY                    |  |                   | 256   |                                     |  |                                   | 617   |  |  |  | $3,173 | 
|Larkspur Courts                     |  | Larkspur, CA                    |  |                   | 248   |                                     |  |                                   | 1,001 |  |  |  | $2,382 | 
|Ashford Meadows                     |  | Herndon, VA                     |  |                   | 440   |                                     |  |                                   | 1,057 |  |  |  | $1,493 | 
|1050 Lenox Park                     |  | Atlanta, GA                     |  |                   | 407   |                                     |  |                                   | 1,023 |  |  |  | $1,386 | 
|Regents Court                       |  | San Diego, CA                   |  |                   | 251   |                                     |  |                                   | 884   |  |  |  | $2,208 | 
|South Florida Apartment
  Portfolio |  | Boca Raton and Plantation,
  FL |  |                   | 550   |                                     |  |                                   | 906   |  |  |  | $1,109 | 
|Caruth at Lincoln Park              |  | Dallas, TX                      |  |                   | 338   |                                     |  |                                   | 1,168 |  |  |  | $1,723 | 
|Glenridge Walk                      |  | Atlanta, GA                     |  |                   | 296   |                                     |  |                                   | 1,142 |  |  |  | $1,409 | 
|The Reserve at Sugarloaf            |  | Duluth, GA                      |  |                   | 333   |                                     |  |                                   | 1,222 |  |  |  | $1,175 | 
|The Lodge at Willow Creek           |  | Denver, CO                      |  |                   | 316   |                                     |  |                                   | 996   |  |  |  | $1,082 | 
|The Maroneal                        |  | Houston, TX                     |  |                   | 309   |                                     |  |                                   | 926   |  |  |  | $1,224 | 
|Westcreek Apartments                |  | Westlake Village, CA            |  |                   | 126   |                                     |  |                                   | 951   |  |  |  | $2,019 | 
|Lincoln Woods Apartments            |  | Lafayette Hill, PA              |  |                   | 216   |                                     |  |                                   | 774   |  |  |  | $1,264 | 
|Fairways at Carolina                |  | Margate, FL                     |  |                   | 208   |                                     |  |                                   | 1,026 |  |  |  | $1,181 | 
|The Royal St. George
  Apartments   |  | West Palm Beach, FL             |  |                   | 224   |                                     |  |                                   | 870   |  |  |  | $1,094 | 
|Quiet Waters Apartments             |  | Deerfield Beach, FL             |  |                   | 200   |                                     |  |                                   | 1,048 |  |  |  | $1,241 | 

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

|        |                                                                      
|------- | ---------------------------------------------------------------------
|ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.Not
  applicable.

23

---



PART II

|        |                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------
|ITEM 5. | MARKET FOR THE REGISTRANTS SECURITIES, RELATED STOCKHOLDER MATTERS,
 AND ISSUER PURCHASES OF EQUITY SECURITIES.

(a)
Market Information. There is no established public trading market for
participating interests in the TIAA Real Estate Account. Accumulation units in
the Account are sold to eligible participants at the Accounts current
accumulation unit value, which is based on the value of the Accounts then
current net assets. For the period from January 1, 2007 to December 31, 2007,
the high and low accumulation unit values for the Account were $311.4142 and
$273.5860, respectively. For the period January 1, 2006 to December 31, 2006,
the high and low accumulation unit values for the Account were $273.6530 and
$239.9535, respectively.

Approximate
Number of Holders. The number of contract owners at December 31, 2007 was
1,050,000.

Dividends.
Not applicable.

(b)
Use of Proceeds: Not applicable.

(c)
Purchases of Equity Securities by Issuer: Not applicable.

24

---



|        |                         
|------- | ------------------------
|ITEM 6. | SELECTED FINANCIAL DATA.

The
following selected financial data should be considered in conjunction with the
Accounts financial statements and notes provided in this report.

|                                                                            |  |                           |               |      |   |               |  |      |               |      |   |               |  |   |               | 
|--------------------------------------------------------------------------- |  | ------------------------- | ------------- | ---- | - | ------------- |  | ---- | ------------- | ---- | - | ------------- |  | - | ------------- | 
|                                                                            |  | Years
 Ended December 31, |              
|                                                                            |  |                           |              
|                                                                            |  | 2007                      |               | 2006 |   | 2005          |  | 2004 |               | 2003 |  
|                                                                            |  |                           |               |      |   |               |  |      |               |      |  
|Investment
 income:                                                         |  |                           |               |      |   |               |  |      |               |      |   |               |  |   |               | 
|Real estate
 income, net                                                    |  | $                         | 529,412,759   |      | $ | 444,782,843   |  | $    | 340,089,550   |      | $ | 239,429,500   |  | $ | 224,938,080   | 
|Income from real
 estate joint ventures and limited partnerships            |  |                           | 93,724,569    |      |   | 60,788,998    |  |      | 71,826,443    |      |   | 71,390,397    |  |   | 31,989,569    | 
|Dividends and
 interest                                                     |  |                           | 141,913,253   |      |   | 135,407,210   |  |      | 70,999,212    |      |   | 27,508,560    |  |   | 19,461,931    | 
|                                                                            |  |                           |               |      |   |               |  |      |               |      |   |               |  |   |               | 
|Total investment
 income                                                    |  |                           | 765,050,581   |      |   | 640,979,051   |  |      | 482,915,205   |      |   | 338,328,457   |  |   | 276,389,580   | 
|Expenses                                                                    |  |                           | 140,294,447   |      |   | 83,448,664    |  |      | 56,100,197    |      |   | 36,728,425    |  |   | 31,654,065    | 
|                                                                            |  |                           |               |      |   |               |  |      |               |      |   |               |  |   |               | 
|Investment
 income, net                                                     |  |                           | 624,756,134   |      |   | 557,530,387   |  |      | 426,815,008   |      |   | 301,600,032   |  |   | 244,735,515   | 
|Net realized and
 unrealized gain on investments and mortgage loans payable |  |                           | 1,438,434,738 |      |   | 1,056,670,295 |  |      | 765,970,272   |      |   | 414,580,303   |  |   | 58,837,371    | 
|                                                                            |  |                           |               |      |   |               |  |      |               |      |   |               |  |   |               | 
|Net increase in
 net assets resulting from operations                       |  |                           | 2,063,190,872 |      |   | 1,614,200,682 |  |      | 1,192,785,280 |      |   | 716,180,335   |  |   | 303,572,886   | 
|Participant
 transactions                                                   |  |                           | 1,464,653,415 |      |   | 1,969,780,728 |  |      | 2,110,375,836 |      |   | 1,735,947,490 |  |   | 813,860,715   | 
|                                                                            |  |                           |               |      |   |               |  |      |               |      |   |               |  |   |               | 
|Net increase in
 net assets                                                 |  | $                         | 3,527,844,287 |      | $ | 3,583,981,410 |  | $    | 3,303,161,116 |      | $ | 2,452,127,825 |  | $ | 1,117,433,601 | 
|                                                                            |  |                           |               |      |   |               |  |      |               |      |   |               |  |   |               | 

|                                          |  |                           |                |      |   |                |  |      |                |      |   |               |  |   |               | 
|----------------------------------------- |  | ------------------------- | -------------- | ---- | - | -------------- |  | ---- | -------------- | ---- | - | ------------- |  | - | ------------- | 
|                                          |  | Years
 Ended December 31, |               
|                                          |  |                           |               
|                                          |  | 2007                      |                | 2006 |   | 2005           |  | 2004 |                | 2003 |  
|                                          |  |                           |                |      |   |                |  |      |                |      |  
|Total assets                              |  | $                         | 19,232,767,244 |      | $ | 15,759,961,333 |  | $    | 11,685,426,413 |      | $ | 7,843,979,924 |  | $ | 4,867,089,727 | 
|Total liabilities                         |  |                           | 1,572,230,445  |      |   | 1,627,268,821  |  |      | 1,136,715,311  |      |   | 598,429,938   |  |   | 73,667,566    | 
|                                          |  |                           |                |      |   |                |  |      |                |      |   |               |  |   |               | 
|Total net assets                          |  | $                         | 17,660,536,799 |      | $ | 14,132,692,512 |  | $    | 10,548,711,102 |      | $ | 7,245,549,986 |  | $ | 4,793,422,161 | 
|                                          |  |                           |                |      |   |                |  |      |                |      |   |               |  |   |               | 
|Number of
 accumulation units outstanding |  |                           | 55,105,718     |      |   | 50,146,354     |  |      | 42,623,491     |      |   | 33,337,597    |  |   | 24,724,183    | 
|                                          |  |                           |                |      |   |                |  |      |                |      |   |               |  |   |               | 
|Net asset value,
 per accumulation unit   |  | $                         | 311.41         |      | $ | 273.65         |  | $    | 239.95         |      | $ | 210.44        |  | $ | 186.94        | 
|                                          |  |                           |                |      |   |                |  |      |                |      |   |               |  |   |               | 
|Mortgage loans
 payable                   |  | $                         | 1,392,092,982  |      | $ | 1,437,149,148  |  | $    | 973,502,186    |      | $ | 499,479,256   |  | $ |              | 
|                                          |  |                           |                |      |   |                |  |      |                |      |   |               |  |   |               | 

25

---



Quarterly Selected Financial Information

The
following selected unaudited financial data for each full quarter of 2007 and
2006 are derived from the financial statements of the Account for the years
ended December 31, 2007 and 2006. Certain amounts below have been reclassified
in accordance with the
reclassifications discussed in Note 1 of the Notes to Financial Statements.

|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  
|--------------------------------------------------------------------------- |  | -------------------------- | ----------- | ---------- | - | ------------ | - | ----------- | ----------- | ----------- | - | ----------- | - | - | ------------- | -
|                                                                            |  |                            | 2007        |            |   |              |  
|                                                                            |  |                            |             |            |   |             
|                                                                            |  | For the Three Months Ended |             | Year Ended |  
|                                                                            |  |                            |             |            |  
|                                                                            |  | March 31                   |             | June 30    |   | September 30 |   | December 31 |             | December 31 |  
|                                                                            |  |                            |             |            |   |              |   |             |             |             |  
|Investment income, net                                                      |  | $                          | 142,720,924 |            | $ | 158,634,655  |   | $           | 155,766,287 |             | $ | 167,634,268 |   | $ | 624,756,134   |  
|Net realized and unrealized gain on investments and mortgage loans
 payable |  |                            | 436,763,627 |            |   | 355,602,333  |   |             | 442,916,313 |             |   | 203,152,465 |   |   | 1,438,434,738 |  
|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  
|Net increase in net assets resulting from operations                        |  | $                          | 579,484,551 |            | $ | 514,236,988  |   | $           | 598,682,600 |             | $ | 370,786,733 |   | $ | 2,063,190,872 |  
|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  
|Total return                                                                |  |                            | 4.02        | %          |   | 3.31         | % |             | 3.66        | %           |   | 2.15        | % |   | 13.80         | %
|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  

|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  
|--------------------------------------------------------------------------- |  | -------------------------- | ----------- | ---------- | - | ------------ | - | ----------- | ----------- | ----------- | - | ----------- | - | - | ------------- | -
|                                                                            |  | 2006                       |             |            |   |             
|                                                                            |  |                            |             |            |   |             
|                                                                            |  | For the Three Months Ended |             | Year Ended |  
|                                                                            |  |                            |             |            |  
|                                                                            |  | March 31                   |             | June 30    |   | September 30 |   | December 31 |             | December 31 |  
|                                                                            |  |                            |             |            |   |              |   |             |             |             |  
|Investment income, net                                                      |  | $                          | 118,718,422 |            | $ | 135,473,310  |   | $           | 149,429,649 |             | $ | 153,909,006 |   | $ | 557,530,387   |  
|Net realized and unrealized gain on investments and mortgage loans
 payable |  |                            | 228,328,042 |            |   | 411,291,318  |   |             | 290,628,996 |             |   | 126,421,939 |   |   | 1,056,670,295 |  
|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  
|Net increase in net assets resulting from operations                        |  | $                          | 347,046,464 |            | $ | 546,764,628  |   | $           | 440,058,645 |             | $ | 280,330,945 |   | $ | 1,614,200,682 |  
|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  
|Total return                                                                |  |                            | 3.21        | %          |   | 4.69         | % |             | 3.43        | %           |   | 2.04        | % |   | 14.04         | %
|                                                                            |  |                            |             |            |   |              |   |             |             |             |   |             |   |   |               |  

26

---



|        |                                                                                              
|------- | ---------------------------------------------------------------------------------------------
|ITEM 7. | MANAGEMENTS DISCUSSION AND ANALYSIS OF ACCOUNTS FINANCIAL CONDITION
 AND OPERATING RESULTS.

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 entitled
Item 1A. Risk Factors, which begins on page 4. The past performance of the
Account is not indicative of future results.

Forward-Looking Statements

Some
statements in this Form 10-K 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, managements beliefs, assumptions made by management and the
transactions described in this Form 10-K. 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. Forward-looking statements involve risks and uncertainties, some of
which are referenced in the section of the Form 10-K entitled Item 1A. Risk
Factors and in this report below and also in the section entitled Item 7A.
Quantitative and Qualitative Disclosures About Market Risk, that could cause
actual results to differ materially from historical experience or managements
present expectations.

Caution
should be taken not to place undue reliance on managements forward-looking
statements, which represent managements views only as of the date 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.

2007 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. Performance of commercial real estate during 2007 was positive as U.S.
economic growth continued to support real estate market fundamentals. Investor
demand for commercial real estate remained strong through much of the year.
According to Real Capital Analytics, a primary source of commercial real estate
transaction data, transactional volume reached a record $430 billion in 2007, a
34% increase over the $322 billion recorded in 2006. Large transactions which
contributed to 2007s record breaking results included the privatization of
Archstone Smith and Equity Office Properties. While sales were strong for the
year as a whole, sales slowed dramatically in the fourth quarter as capital
markets uncertainties

27

---



escalated.
Sales activity in the quarter declined by roughly 33% compared with the fourth
quarter of 2006.

The shift in
capital market conditions that materialized in the summer and fall of 2007 was
the conclusion of a capital markets cycle phase characterized by plentiful
capital, inexpensive and abundant debt, and increasingly aggressive risk
pricing for all asset types. As deteriorating credit in sub-prime residential
mortgages became evident in 2007, the value of structured securities containing
those mortgages plunged and effectively closed down demand for new issues of
such securities. The loss of confidence in this sector of the market ignited,
in turn, a re-evaluation of risk pricing through-out the capital markets.
Credit spreads on corporate debt, conventional commercial mortgages and
commercial mortgage-backed securities (CMBS) have widened to levels not seen since
the last recession. CMBS new issuances have all but halted as a loss of
confidence spilled over from sub-prime residential mortgages. Various specialty
instruments have withered as well, also largely the result of this loss of
confidence. The risk repricing brought the long phase of commercial real estate
capitalization rate compression to a halt. By year end 2007, cap rates showed
slight widening across certain property types though based on very few
transactions. The slowing in transactions probably reflects both heightened
uncertainty as market participants wait out the capital markets volatility and
the constraining effect of less available and more expensive commercial
mortgage financing.

In the public
sector, REITs performed poorly during most of 2007, despite healthy real estate
market fundamentals. After a seven year run of above-average returns, REIT
returns as indicated by the Dow Jones Wilshire Real Estate Securities Index
were a negative 17.7% for the year as compared with a gain of 5.5% for the
S&P 500. Several REITs were taken private during the year at what turned
out to be peak prices; those that remained public saw their share prices
decline. Because of their liquidity, REIT returns have historically been more
volatile than commercial property returns, as stock market investors will often
move money between sectors based on swings in sentiment and other factors.
While the Account does invest in REITs, these holdings amount to less than 5%
of the total value of the Account as of December 31, 2007.

The U.S.
economy continued to expand in 2007; however, growth slowed measurably over the
course of the year due in large part to the slowdown in the housing market.
Home prices declined across the nation, and the number of residential mortgage
delinquencies increased, particularly among borrowers who bought homes with
adjustable rate mortgages. Housing construction dropped sharply over the course
of the year as inventories of unsold homes increased and mortgage lenders
tightened lending standards.

Historically,
there has not been a direct link between the performance of commercial real
estate and single-family housing due to the different market fundamentals that
drive each. In its January 2008 Beige Book, which reports on economic
conditions in the 12 Federal Reserve Districts, the Federal Reserve
characterized commercial real estate activity at year-end 2007 as generally
stable, with some markets reporting little to no change while others reported a
slight easing. By comparison, according to the Beige Book, residential real
estate conditions continued to be weak in all districts.

28

---



Nonetheless,
the performance of the single-family housing market has had an indirect impact
on commercial real estate markets. For example, bankruptcies of subprime
mortgage lenders have negatively affected office space demand in Orange County,
California, where several of the largest subprime lenders were headquartered.
The Account has minimal exposure to the Orange County market, with one
investment totaling $64 million, or 0.3% of total Account value. Similarly, job
losses in the financial services sector can affect retail market conditions
since financial services jobs are among the most highly paid. While retail
sales softened nationally in 2007, the impact has been minimal in the Accounts
primary retail markets to date.

During the
second half of 2007, as the national economy continued to weaken and the
housing market downturn deepened, the Federal Open Market Committee (FOMC)
cut the federal funds rate three times, first by 50 basis points (0.50%) in
September, and then by another 25 basis points (0.25%) in both October and
December. In early-2008, the Federal Reserve lowered the federal funds rate two
more times by a total of 125 basis points (1.25%). Cuts in interest rates are
designed to spur economic activity by increasing consumer spending and business
borrowing. The effects of cuts in the federal funds rate and other Federal
Reserve actions often take 6-9 months to become evident, and the Federal Reserve
will be watching for signs that its cuts have stimulated economic activity.
While credit markets remain constrained as of early 2008, the Federal Reserves
efforts to stimulate economic activity through cuts in the federal funds rate
give management reason to believe that the economic and capital markets
environment will provide fundamental support for U.S. commercial real estate
markets in 2008.

Investments as of December 31, 2007

As of December
31, 2007, the Account had total net assets in the amount of $17,660,536,799, a
3% increase from the end of the third quarter of 2007 and a 25% increase from
year-end 2006. The growth in net assets was due to the continued positive
inflow of premiums and net transfers into the Account, combined with a 12%
increase in net investment income and capital appreciation on the Accounts
investment portfolio during the year ended December 31, 2007, as compared to
2006.

As of December
31, 2007, the Account owned a total of 111 real estate property investments (99
of which were wholly-owned, 12 of which were held in joint ventures) and one
remaining equity interest in a joint venture, which sold its real estate
investments during the third quarter of 2007, representing 77.9% of the
Accounts total investment portfolio. The real estate portfolio included 46
office properties (5 of which were held in joint ventures and one located in
London, England), 27 industrial properties (including one held in a joint
venture), 21 apartment complexes, 16 retail properties (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 111 real estate property
investments, 20 are subject to debt (including seven joint venture property
investments). Total debt on the Accounts wholly-owned real estate portfolio as
of December 31, 2007 was $1,392,092,982 representing 7.9% of Total Net Assets.
The Accounts share of joint venture debt is netted out in determining the
joint venture values shown in the Statement of Investments, but, when that debt
is also considered, total debt on the Accounts portfolio as of December 31,
2007 was $3,383,875,582 representing 19.2% of Total Net Assets. The Account
currently has no fund-level debt.

29

---



During
2007, the Account purchased 7 property investments, one of which was a joint
venture interest in a portfolio containing 65 retail properties, for a total
net equity investment of $1.7 billion. These purchases were diversified by both
location (16 states and Paris, France) and by sector. The properties are listed
in the chart below:

|                                      |  |                |  |               |  |         |  |                        |               |                             |            |                    |   |                          |  |   |               | 
|------------------------------------- |  | -------------- |  | ------------- |  | ------- |  | ---------------------- | ------------- | --------------------------- | ---------- | ------------------ | - | ------------------------ |  | - | ------------- | 
|Property Investments Acquired in 2007 | 
|                                      | 
|                                     
|Property Name                         |  | Property
 Type |  | City          |  | State   |  | Net
 Acquisition
 Cost |               | Joint
 Venture/
 % Interest |            | Third
 Party
 Debt |   | Gross
 Acquisition
 Cost | 
|                                      |  |                |  |               |  |         |  |                        |               |                             |            |                    |   |                          | 
|                                      |  |                |  |               |  |         |  |                        |               |                             |            |                    |   |                          | 
|Camelback Center                      |  | Office         |  | Phoenix       |  | AZ      |  | $                      | 75,743,245    |                             | No         |                    | $ |                         |  | $ | 75,743,245    | 
|DDR Retail Portfolio                  |  | Retail         |  | various       |  | various |  |                        | 1,043,213,518 |                             | Yes
 - 85% |                    |   | 1,531,873,092            |  |   | 2,575,086,610 | 
|Printemps de lHomme                  |  | Retail         |  | Paris         |  | France  |  |                        | 259,842,066   |                             | No         |                    |   |                         |  |   | 259,842,066   | 
|Preston Sherry Plaza                  |  | Office         |  | Dallas        |  | TX      |  |                        | 45,211,077    |                             | No         |                    |   |                         |  |   | 45,211,077    | 
|Champlin Marketplace                  |  | Retail         |  | Champlin      |  | MN      |  |                        | 18,352,263    |                             | No         |                    |   |                         |  |   | 18,352,263    | 
|Pacific Plaza                         |  | Office         |  | San Diego     |  | CA      |  |                        | 118,221,017   |                             | No         |                    |   | 8,922,033                |  |   | 127,143,050   | 
|Seneca Industrial Park                |  | Industrial     |  | Pembroke Park |  | FL      |  |                        | 122,334,422   |                             | No         |                    |   |                         |  |   | 122,334,422   | 
|                                      |  |                |  |               |  |         |  |                        |               |                             |            |                    |   |                          |  |   |               | 
|Total                                 |  |                |  |               |  |         |  | $                      | 1,682,917,608 |                             |            |                    | $ | 1,540,795,125            |  | $ | 3,223,712,733 | 
|                                      |  |                |  |               |  |         |  |                        |               |                             |            |                    |   |                          |  |   |               | 

The
Account also sold 15 property investments and 5 properties from larger
portfolios for approximately $801.8 million. We believe that these properties
had either maximized in value, under-performed, or represented properties
needing significant capital infusions in the future, which could have had a
negative impact on the Accounts overall performance. The properties sold had a
cumulative realized gain of approximately $199.1 million. The properties are
listed below:

|                                                  |  |                |  |                |  |       |  |   |                                      | 
|------------------------------------------------- |  | -------------- |  | -------------- |  | ----- |  | - | ------------------------------------ | 
|Property Investments Sold in 2007                
|                                                 
|                                                 
|Property Name                                     |  | Property
 Type |  | City           |  | State |  |   | Net
 Sales Price
 (less selling exp) | 
|                                                  |  |                |  |                |  |       |  |   |                                      | 
|                                                  |  |                |  |                |  |       |  |   |                                      | 
|Greens at Metrowest                               |  | Apartment      |  | Orlando        |  | FL    |  | $ | 21,656,260                           | 
|Eastgate Distribution
 Center                     |  | Industrial     |  | San Diego      |  | CA    |  |   | 31,800,127                           | 
|Woodcreek III-Chicago
 Industrial (1)             |  | Industrial     |  | Bollingbrook   |  | IL    |  |   | 6,717,149                            | 
|IDI Kentucky                                      |  | Industrial     |  | Hebron         |  | KY    |  |   | 66,981,460                           | 
|Corporate Lakes-Atlanta
 Industrial (1)           |  | Industrial     |  | Atlanta        |  | GA    |  |   | 30,653,575                           | 
|Landmark at Salt Lake City                        |  | Industrial     |  | Salt Lake City |  | UT    |  |   | 16,176,540                           | 
|2101 Design Road-Dallas
 Industrial Portfolio (1) |  | Industrial     |  | Arlington      |  | TX    |  |   | 9,279,890                            | 
|1155 Harvester-Chicago
 CalEast Portfolio (1)     |  | Industrial     |  | West Chicago   |  | IL    |  |   | 8,727,620                            | 
|Memphis Portfolio                                 |  | Industrial     |  | Memphis        |  | TN    |  |   | 61,485,333                           | 
|Mideast RA Industrial
 Portfolio                  |  | Industrial     |  | New Castle     |  | DE    |  |   | 15,207,210                           | 
|Mountain RA Industrial
 Portfolio                 |  | Industrial     |  | Phoenix        |  | AZ    |  |   | 9,014,952                            | 
|Sabre Street-Northern CA
 RA Industrial (1)       |  | Industrial     |  | Hayward        |  | CA    |  |   | 6,547,463                            | 
|Batterymarch Park II                              |  | Office         |  | Quincy         |  | MA    |  |   | 17,291,200                           | 
|161 N. Clark Street (75%
 Account Interest)       |  | Office         |  | Chicago        |  | IL    |  |   | 239,493,750                          | 
|Butterfield Industrial
 Park                      |  | Industrial     |  | El Paso        |  | TX    |  |   | 5,035,162                            | 
|Legends at Chase Oaks                             |  | Apartment      |  | Plano          |  | TX    |  |   | 36,631,000                           | 
|Sawgrass Office Portfolio                         |  | Office         |  | Sunrise        |  | FL    |  |   | 85,656,950                           | 
|10 Waterview                                      |  | Office         |  | Parsippany     |  | NJ    |  |   | 36,633,763                           | 
|9 Hutton Centre                                   |  | Office         |  | Santa Ana      |  | CA    |  |   | 36,535,781                           | 
|One Monument Place                                |  | Office         |  | Fairfax        |  | VA    |  |   | 60,263,855                           | 
|                                                  |  |                |  |                |  |       |  |   |                                      | 
|Total                                             |  |                |  |                |  |       |  | $ | 801,789,040                          | 
|                                                  |  |                |  |                |  |       |  |   |                                      | 

(1) Partial sale of a single
building which was part of an existing portfolio

30

---



In
addition to the acquisition and sales activity, the Account entered into a
commitment to purchase a limited partnership interest in the amount of $50
million in a real estate fund providing mezzanine financing on commercial real
estate, and refinanced the debt on West Town Mall, reducing the interest rate
from 6.90% to 6.34%, and increasing the amount of its share in the loan from
$38 million to $105 million.

Management
believes that the Accounts real estate portfolio is diversified by location
and property type. The largest investment, DDR Joint Venture, consists of 65
properties in 13 states, represents 5.41% of Total Investments and 6.94% of its
total real estate investments. No single property investment represented more
than 3.37% of Total Investments or more than 4.32% of total real estate
investments, based on the values of such assets. The following charts reflect
the diversification of the Accounts real estate assets by region and property
type, list its ten largest holdings, and list its top five overall market
exposures by metropolitan statistical area. All information is based on the
values of the properties at December 31, 2007.

|                                |  |            |      |            |  |             |   |              |      |               |     |                |     |              |     |   |  |       |  
|------------------------------- |  | ---------- | ---- | ---------- |  | ----------- | - | ------------ | ---- | ------------- | --- | -------------- | --- | ------------ | --- | - |  | ----- | -
|Diversification by Market Value
|                               
|                               
|                                |  | East
 (27) |      | West
 (36) |  | South
 (36) |   | Midwest
 (7) |      | Various*
 (3) |     | Foreign**
 (2) |     | Total
 (111) |    
|                                |  |            |      |            |  |             |   |              |      |               |     |                |     |              |    
|Office (46)                     |  |            | 20.9 | %          |  | 20.1        | % |              | 11.1 | %             | 1.2 | %              | 0.0 | %            | 2.9 | % |  | 56.2  | %
|Apartment (21)                  |  |            | 1.7  | %          |  | 6.1         | % |              | 5.0  | %             | 0.0 | %              | 0.0 | %            | 0.0 | % |  | 12.8  | %
|Industrial (27)                 |  |            | 1.7  | %          |  | 6.0         | % |              | 3.4  | %             | 1.4 | %              | 0.5 | %            | 0.0 | % |  | 13.0  | %
|Retail (16)                     |  |            | 1.6  | %          |  | 0.9         | % |              | 6.0  | %             | 0.1 | %              | 6.9 | %            | 1.9 | % |  | 17.4  | %
|Other (1)***                    |  |            | 0.0  | %          |  | 0.0         | % |              | 0.0  | %             | 0.0 | %              | 0.6 | %            | 0.0 | % |  | 0.6   | %
|                                |  |            |      |            |  |             |   |              |      |               |     |                |     |              |     |   |  |       |  
|Total (111)                     |  |            | 25.9 | %          |  | 33.1        | % |              | 25.5 | %             | 2.7 | %              | 8.0 | %            | 4.8 | % |  | 100.0 | %

|                                                                                                                     |                                                                                                                                                                      
|-------------------------------------------------------------------------------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------
|( )                                                                                                                  | Number of property
 investments in parentheses.                                                                                                                      
|                                                                                                                     |                                                                                                                                                                      
|*                                                                                                                    | Represents a portfolio of
 storage facilities, a portfolio of industrial properties, and a portfolio of
 retail properties located in various regions across the U.S.
|                                                                                                                     |                                                                                                                                                                      
|**                                                                                                                   | Represents real estate
 investments in the United Kingdom and France.                                                                                                
|                                                                                                                     |                                                                                                                                                                      
|***                                                                                                                  | Represents a portfolio of
 storage facilities.                                                                                                                       
|                                                                                                                     |                                                                                                                                                                      
|Properties in the East
 region are located in: ME, NH, VT, MA, RI, CT, NY, NJ, PA, DE, MD, DC, WV,
 VA, NC, SC, KY
|                                                                                                                     |                                                                                                                                                                      
|Properties in the Midwest
 region are located in: WI, MI, OH, IN, IL, MN, IA, MO, KS, NE, ND, SD                  
|                                                                                                                     |                                                                                                                                                                      
|Properties in the South
 region are located in: TN, MS, AL, GA, FL, OK, AR, LA, TX                                
|                                                                                                                     |                                                                                                                                                                      
|Properties in the West
 region are located in: MT, ID, WY, CO, NM, AZ, UT, NV, WA, OR, CA, AK, HI                 

31

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|                                                 |  |               |  |                 |  |                |  |                       |   |                                        |     |                         |      |   |  |      |   | 
|------------------------------------------------ |  | ------------- |  | --------------- |  | -------------- |  | --------------------- | - | -------------------------------------- | --- | ----------------------- | ---- | - |  | ---- | - | 
|Top Ten Largest Real Estate Property Investments
|                                                
|                                                
|Property
 Name                                   |  | City          |  | State/
 Country |  | Property
 Type |  | Market
 Value ($M)(a) |   | % of Total
 Real Estate
 Portfolio (b) |     | % of Total
 Investments |     
|                                                 |  |               |  |                 |  |                |  |                       |   |                                        |     |                         |     
|DDR Joint Venture                                |  | Various       |  | USA             |  | Retail         |  |                       | $ | 1,028.3                                | (c) |                         | 6.94 | % |  | 5.41 | % | 
|1001 Pennsylvania Avenue                         |  | Washington    |  | DC              |  | Office         |  |                       | $ | 640.1                                  | (d) |                         | 4.32 | % |  | 3.37 | % | 
|Fourth and Madison                               |  | Seattle       |  | WA              |  | Office         |  |                       | $ | 487.0                                  | (e) |                         | 3.29 | % |  | 2.56 | % | 
|50 Fremont                                       |  | San Francisco |  | CA              |  | Office         |  |                       | $ | 478.0                                  | (f) |                         | 3.23 | % |  | 2.51 | % | 
|1 & 7 Westferry Circus                           |  | London        |  | UK              |  | Office         |  |                       | $ | 436.1                                  | (g) |                         | 2.94 | % |  | 2.29 | % | 
|Four Oaks Place                                  |  | Houston       |  | TX              |  | Office         |  |                       | $ | 419.3                                  |     |                         | 2.83 | % |  | 2.21 | % | 
|The Newbry                                       |  | Boston        |  | MA              |  | Office         |  |                       | $ | 389.9                                  |     |                         | 2.63 | % |  | 2.05 | % | 
|780 Third Avenue                                 |  | New York City |  | NY              |  | Office         |  |                       | $ | 375.0                                  |     |                         | 2.53 | % |  | 1.97 | % | 
|Yahoo! Center                                    |  | Santa Monica  |  | CA              |  | Office         |  |                       | $ | 369.4                                  |     |                         | 2.49 | % |  | 1.94 | % | 
|Ontario Industrial
 Portfolio                    |  | Ontario       |  | CA              |  | Industrial     |  |                       | $ | 355.4                                  | (h) |                         | 2.40 | % |  | 1.87 | % | 

|    |                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | Value as reported in the
 December 31, 2007 Statement of Investments. Investments owned 100% by TIAA
 are reported based on market value. Investments in joint ventures are
 reported based on the equity method of accounting.
|    |                                                                                                                                                                                                                                
|(b) | Total Real Estate Portfolio
 excludes the mortgage loan receivable.                                                                                                                                                            
|    |                                                                                                                                                                                                                                
|(c) | This property is held in a
 85%/15% joint venture with Developers Diversified Realty Corporation (DDR),
 and consists of 65 retail properties located in 13 states.                                                            
|    |                                                                                                                                                                                                                                
|(d) | This property is shown gross
 of debt. The value of the Accounts interest less leverage is $428.8M.                                                                                                                           
|    |                                                                                                                                                                                                                                
|(e) | This property is shown gross
 of debt. The value of the Accounts interest less leverage is $339.8M.                                                                                                                           
|    |                                                                                                                                                                                                                                
|(f) | This property is shown gross
 of debt. The value of the Accounts interest less leverage is $341.0M.                                                                                                                           
|    |                                                                                                                                                                                                                                
|(g) | This property is shown gross
 of debt. The value of the Accounts interest less leverage is $180.6M.                                                                                                                           
|    |                                                                                                                                                                                                                                
|(h) | This property is held in a
 50%/50% joint venture with Equity Office Properties Trust.                                                                                                                                         
|    |                                                                                                                                                                                                                                
|(i) | This property is shown gross
 of debt. The value of the Accounts interest less leverage is $346.0M.                                                                                                                           

32

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|                                             |  |           |   |                   |   |                      |  |      |   | 
|-------------------------------------------- |  | --------- | - | ----------------- | - | -------------------- |  | ---- | - | 
|Top Five Overall Market Exposure            
|                                            
|                                            
|Metropolitan
 Statistical Area (MSA)         |  | %
 Leased |   | # of
 Investments |   | % Total
 Investments | 
|                                             |  |           |   |                   |   |                      | 
|Washington-Arlington-Alexandria
 DC-VA-MD-WV |  | 99.2      | % |                   | 9 |                      |  | 8.42 | % | 
|Los Angeles-Long
 Beach-Glendale CA          |  | 92.5      | % |                   | 8 |                      |  | 5.72 | % | 
|Boston-Quincy MA                             |  | 96.7      | % |                   | 5 |                      |  | 5.51 | % | 
|San Francisco-San Mateo-Redwood
 City CA     |  | 94.4      | % |                   | 4 |                      |  | 5.11 | % | 
|Seattle-Bellevue-Everett WA                  |  | 97.9      | % |                   | 5 |                      |  | 4.11 | % | 

As
of December 31, 2007, the Account also held investments in real estate limited
partnerships, representing 1.74% of Total Investments, real estate equity securities,
representing 2.24% of Total Investments, a mortgage loan receivable
representing 0.38% of Total Investments, certificates of deposit representing
2.22% of Total Investments, commercial paper representing 9.23% of Total
Investments, government bonds, representing 5.82% of Total Investments,
variable notes representing 0.26% of Total Investments, and bankers acceptance
representing 0.20% of Total Investments.

Real Estate Market Update By Property Type

(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 year ended December 31, 2007 and may be subsequently
revised. Prior period data may have been adjusted to reflect updated
calculations. Investors should not rely exclusively on the data presented below
in forming a judgment regarding the current or prospective performance of the
commercial real estate market generally.)

In
2007 the United States economy grew steadily for the first seven months and
then at a pace which slowed measurably from August to the end of 2007.
Employment growth, which is a crucially important influence on the demand side
of commercial property markets, slowed with the economy. An estimated 1.7
million jobs were added during 2007, down significantly from 2.5 million in
2006. While the service sector expanded, job losses were concentrated in the
construction (primarily residential building) and manufacturing sectors. The
unemployment rate began to increase during the second half of the year, ending
at 5.0%, as compared to 4.4% at the end of 2006. Despite weaker economic
activity, commercial real estate fundamentals remained healthy, although varied
from market to market and by property sectors during the year. In general,
vacancy rates across most property types remained at or below equilibrium
levels and rents grew in most markets.

Payroll
employment grew in all of the Accounts primary metropolitan areas in 2007. The
Accounts top five markets based on the net equity value of the Accounts
property investments were Washington, D.C., Los Angeles, Boston, San Francisco,
and Seattle. Employment growth was strongest in Seattle, where the number of
jobs increased by 2.8% in 2007. Payroll growth was also positive in San
Francisco (2.2%), Boston (1.7%), and Washington, D.C (1.5%). Employment growth
in Los Angeles registered a more modest 1.0% gain during the year. In
comparison, payroll employment in the U.S. grew by 1.3%.

Office
market conditions, particularly in the primary markets, were stable over the
course of 2007. Torto Wheaton Research, an independent subsidiary of CB Richard
Ellis and a widely-used source of real estate market data, reported that U.S.
office vacancies averaged

33

---



12.5% as of
year-end 2007 as compared to 12.6% at year-end 2006. In comparison, at year-end
2007, the vacancy rate of the Accounts portfolio was 5.2%, which was well
below the national average. The office market remained stable despite job
losses in financial activities, a key office using sector. The downturn of the
housing market and collapse of several of the largest subprime mortgage lenders
contributed to the loss of around 21,000 jobs in the financial activities
sector in the latter half of 2007. Credit intermediation, a category which
includes subprime lenders, lost 75,000 jobs, most of which occurred during the
third and fourth quarters. However, job losses in financial services were more
than offset by larger gains in the professional and business services sector,
which generated 314,000 jobs over the course of the year.

Office
market fundamentals remained positive in the Accounts top office markets
during 2007. All of the Accounts top office markets enjoyed vacancy rates
below the national average. In Washington, D.C., where the largest proportion
of the Accounts office investments are concentrated, the year-end 2007 vacancy
rate was 10.0%, which is below the national average but marginally above the
markets vacancy rate of 9.1% at year-end 2006. By comparison, the average
vacancy rate for the Accounts Washington, D.C. properties was 0.6% at year-end
2007. Similarly, the table below shows that the average vacancy rate of the
Accounts property investments is well below that of their respective markets
in Boston, San Francisco, Los Angeles, and Seattle.

|       |  |                                              |  |                            |   |                          |  |                                     |      |                   |      |                        |      |   |  |       | 
|------ |  | -------------------------------------------- |  | -------------------------- | - | ------------------------ |  | ----------------------------------- | ---- | ----------------- | ---- | ---------------------- | ---- | - |  | ----- | 
|Sector |  | Metropolitan Statistical Area (MSA)          |  | Total
 Sector By
 MSA ($M) |   | % of
 Total
 Investments |  | Account
 Weighted
 Average
 Vacancy |      | MSA
 Vacancy
 (*) |      | National
 Average
 (*) |     
|       |  |                                              |  |                            |   |                          |  |                                     |      |                   |      |                        |     
|Office |  |                                              |  |                            |   |                          |  |                                     |      |                   | 5.7% |                        |      |   |  | 12.5% | 
|       |  |                                              |  |                            |   |                          |  |                                     |      |                   |      |                        |      |   |  |       | 
|1      |  | Washington-Arlington-Alexandria
 DC-VA-MD-WV |  |                            | $ | 1,409                    |  |                                     | 7.4% |                   | 0.6% |                        | 10.0 | % |  |       | 
|2      |  | Boston-Quincy MA                             |  |                            | $ | 1,014                    |  |                                     | 5.3% |                   | 3.0% |                        | 10.8 | % |  |       | 
|3      |  | San Francisco-San
 Mateo-Redwood City CA     |  |                            | $ | 874                      |  |                                     | 4.6% |                   | 5.6% |                        | 9.1  | % |  |       | 
|4      |  | Los Angeles-Long
 Beach-Glendale CA          |  |                            | $ | 719                      |  |                                     | 3.8% |                   | 5.4% |                        | 10.0 | % |  |       | 
|5      |  | Seattle-Bellevue-Everett WA                  |  |                            | $ | 687                      |  |                                     | 3.6% |                   | 3.6% |                        | 9.5  | % |  |       | 

* Source: Torto Wheaton
Research

Industrial
space demand is influenced by a number of factors including the national
business cycle, industrial production, international trade, as well as
employment growth in the manufacturing, wholesale trade and transportation and
warehousing industries. Gross Domestic Product (GDP), a basic indicator of the
national economic activity, grew an estimated 2.2% in 2007, as compared with
2.9% in 2006 and 3.1% in 2005. GDP growth was especially weak in the fourth
quarter of 2007 at 0.6% (a preliminary estimate), which many economists believe
will remain similarly weak in the first half of 2008. Nonetheless, industrial
market conditions were stable in 2007. According to Torto Wheaton Research,
industrial market vacancies in the U.S. averaged 9.4% as of year-end 2007,
unchanged from year-end 2006. In comparison, the average vacancy rate of the
Accounts portfolio of industrial properties was 4.3% as of year-end 2007,
below the national average. The average vacancy rates of the Accounts
properties in its top industrial markets are as follows:

34

---



|           |  |                                      |  |                            |   |                          |  |                                     |      |                   |      |                        |  |      |      |  |  | 
|---------- |  | ------------------------------------ |  | -------------------------- | - | ------------------------ |  | ----------------------------------- | ---- | ----------------- | ---- | ---------------------- |  | ---- | ---- |  |  | 
|Sector     |  | Metropolitan Statistical Area (MSA)  |  | Total
 Sector By
 MSA ($M) |   | % of
 Total
 Investments |  | Account
 Weighted
 Average
 Vacancy |      | MSA
 Vacancy
 (*) |      | National
 Average
 (*) | 
|           |  |                                      |  |                            |   |                          |  |                                     |      |                   |      |                        | 
|Industrial |  |                                      |  |                            |   |                          |  |                                     | 4.3  | %                 |      |                        |  |      | 9.4% | 
|           |  |                                      |  |                            |   |                          |  |                                     |      |                   |      |                        |  |      |      | 
|1          |  | Riverside-San
 Bernardino-Ontario CA |  |                            | $ | 488                      |  |                                     | 2.6% |                   | 0.0  | %                      |  | 9.1  | %    |  |  | 
|2          |  | Chicago-Naperville-Joliet
 IL        |  |                            | $ | 202                      |  |                                     | 1.1% |                   | 0.4  | %                      |  | 10.4 | %    |  |  | 
|3          |  | Dallas-Plano-Irving TX               |  |                            | $ | 201                      |  |                                     | 1.1% |                   | 3.7  | %                      |  | 10.6 | %    |  |  | 
|4          |  | Los Angeles-Long
 Beach-Glendale CA  |  |                            | $ | 145                      |  |                                     | 0.8% |                   | 11.4 | %                      |  | 4.6  | %    |  |  | 
|5          |  | Atlanta-Sandy
 Springs-Marietta GA   |  |                            | $ | 135                      |  |                                     | 0.7% |                   | 2.2  | %                      |  | 12.9 | %    |  |  | 

* Source: Torto Wheaton
Research

Riverside,
California, where the largest concentration of the Accounts industrial assets
is located, had a year-end 2007 vacancy rate of 9.1%, slightly below the 9.4%
national average. Riverside is the nations top industrial market due to its
proximity to the Ports of Los Angeles and Long Beach where approximately 40% of
the nations imports enter the U.S. The Accounts industrial properties in
Riverside are fully leased and occupied. Although vacancy rates in Chicago and
Dallas were above the national average, both markets saw vacancies decline over
the course of 2007. The Accounts industrial properties in Chicago and Dallas
had a vacancy rate of 0.4% and 3.7%, respectively, as of year-end 2007, which
are well below their respective market averages. Vacancy rates in Atlanta
averaged 12.9% as of year-end 2007, virtually unchanged from year-end 2006. In
comparison, the Accounts industrial properties in Atlanta had a vacancy rate
of 2.2% at year-end 2007. The only market in which the Accounts properties
have a higher vacancy rate than the market average is Los Angeles, where
vacancies in the Accounts industrial properties averaged 11.4% as of year-end
2007 versus the 4.6% market average. The higher vacancy rate in the Accounts
properties is due to two tenants moving to other buildings following expiration
of their leases.

The
rental apartment market remained relatively healthy in 2007, despite the
downturn in the housing market, which resulted in increasing competition from
unsold condominiums and single-family rentals being offered for rent. Preliminary
data from Torto Wheaton Research indicates that vacancy rates in U.S. apartment
markets averaged 4.7% as of year-end as compared with 4.8% at year-end 2006.
While national vacancies were largely unchanged, markets that experienced a
boom of single family and condominium construction in 2005-2006 generally
experienced an increase in vacancies. These markets include Phoenix and much
    of Florida (e.g., Orlando, Ft.
Lauderdale and Miami). The average vacancy rate for the Accounts apartment
holdings was 6.5% at the end of 2007. The average vacancy rates of properties
in the Accounts top apartment markets are shown below:

|          |  |                                     |  |                            |   |                          |  |                                     |      |                   |      |                        |  |      |  |      |  | 
|--------- |  | ----------------------------------- |  | -------------------------- | - | ------------------------ |  | ----------------------------------- | ---- | ----------------- | ---- | ---------------------- |  | ---- |  | ---- |  | 
|Sector    |  | Metropolitan Statistical Area (MSA) |  | Total
 Sector By
 MSA ($M) |   | % of
 Total
 Investments |  | Account
 Weighted
 Average
 Vacancy |      | MSA
 Vacancy
 (*) |      | National
 Average
 (*) | 
|          |  |                                     |  |                            |   |                          |  |                                     |      |                   |      |                        | 
|Apartment |  |                                     |  |                            |   |                          |  |                                     |      |                   | 6.5  | %                      |  |      |  | 4.7% | 
|          |  |                                     |  |                            |   |                          |  |                                     |      |                   |      |                        |  |      |  |      | 
|1         |  | Houston-Bay Town-Sugar Land
 TX     |  |                            | $ | 336                      |  |                                     | 1.8% |                   | 6.5  | %                      |  | 6.9% |  |      | 
|2         |  | Phoenix-Mesa-Scottsdale AZ          |  |                            | $ | 326                      |  |                                     | 1.7% |                   | 3.5  | %                      |  | 6.7% |  |      | 
|3         |  | Denver-Aurora CO                    |  |                            | $ | 238                      |  |                                     | 1.2% |                   | 7.1  | %                      |  | 4.6% |  |      | 
|4         |  | Atlanta-Sandy
 Springs-Marietta GA  |  |                            | $ | 190                      |  |                                     | 1.0% |                   | 5.2  | %                      |  | 6.0% |  |      | 
|5         |  | Los Angeles-Long
 Beach-Glendale CA |  |                            | $ | 127                      |  |                                     | 0.7% |                   | 21.0 | %                      |  | 2.6% |  |      | 

* Source: Torto Wheaton
Research

35

---



As
shown above, with the exception of the Accounts apartment properties in Denver
and Los Angeles, the average vacancy rates of its apartment properties were
generally similar to or modestly lower than their respective market averages.
In Los Angeles, the Accounts single property has experienced direct
competition from new rental projects. In Denver, one property has a 3% vacancy
while the second property has a vacancy of 8% due to direct competition from
lower priced properties.

Retail
markets weakened modestly during 2007 despite healthy consumer spending during
much of the year. Preliminary data from the U.S. Department of Commerce
indicated that retail and food service sales (excluding autos and auto parts)
increased 5.7% in the fourth quarter of 2007 as compared to the fourth quarter
of 2006. (Year-over-year comparisons are necessary to account for seasonal
sales patterns.) However, a number of major retailers reported that sales were
very soft during December, leading many economists to speculate that slower job
growth, elevated energy prices and declining home prices has caused consumers
to cut back on discretionary spending. According to Torto Wheaton Research,
vacancies in neighborhood and community centers averaged 9.8% at year-end 2007,
up from 8.7% at year-end 2006. In comparison, the average vacancy rate as of
December 31, 2007 for the Accounts entire retail portfolio as well as its
neighborhood and community centers was much lower at 2.5%, and lower than this
same time in 2006 at 3.0%.

Overall,
Management believes real estate markets are at or close to equilibrium. The
consistent declines in vacancy rates that occurred on a quarterly basis in
recent years appear to have ended. Similarly, rent growth has slowed or leveled
off in a number of markets. Management
believes that this reaction of the real estate market activity is consistent
with the slowing of the overall U.S. economic activity and job growth.
Fortunately, markets remained balanced, and the level of construction of new
commercial real estate has been moderate, and generally in-line with
anticipated demand. Torto Wheaton Research projects approximately 73 million
square feet of multi-tenant office space to be built in 2008, a total which is
below the average of 93 million square feet that were built during the
1999-2001 construction peak. Similarly, in the industrial market, Torto Wheaton
Research expects around 170 million square feet to be built in 2008, as
compared with an average of nearly 250 million square feet in 1999-2001.
Apartment construction is expected to total 215,000 units in 2008, which is
essentially similar to the 1999-2001 average, but below the 225,000 unit
average built in 2006-2007. However, Torto Wheatons forecast of apartment
construction may ultimately prove too high given the 9% decline in permits
issued for new multi-family buildings (an indicator of future construction) in
2007. Construction of new neighborhood and community centers is expected to
total just over 20 million square feet in 2008, down from 36 million square
feet in 2007, which is consistent with announcements by several major retailers
that plan to reduce their new store openings in 2008.

Outlook for 2008

While
commercial real estate fundamentals have remained positive to date despite the
capital markets turmoil of recent months, Management expects these fundamentals
to weaken to some degree in the months ahead as a result of a weak economic
growth environment. There is little disagreement among economic forecasters
with regard to the first half of 2008;

36

---



expectations
of sub-par growth are unanimous. Some forecasters are expecting mildly negative
GDP growth during the first half while others are expecting weakly positive
growth. While the difference might well determine whether this period is
actually deemed to be a recession, the impact on commercial real estate will
probably not differ much one way or the other. The larger question is whether
economic growth will rebound materially in the second half of the year. Here,
Management shares the view among more optimistic forecasters which calls for a
return to neartrend growth in the third and fourth quarters largely as a
result of the Federal Reserves interest rate cuts that began in September.
This view is shared by the Federal Open Market Committee which is the policy
setting arm of the Federal Reserve. As reported by Chairman Bernanke in his February
2008 Semiannual Monetary Policy Report to Congress, the FOMC members believe
that GDP growth in 2008 will amount to 1.3% to 2.0% with a rebound close to
or a little above its longer-term trend in 2009 and 2010. They also expect
inflation will be moderate from its 2007 pace.

With
slow growth or mild recession in the first half of 2008, growth in tenant
demand for office, industrial and retail space will likely slip, rent growth
will likely slow or flatten out, and vacancy rates may inch up. The degree of
commercial real estate market weakening will be mitigated by the generally balanced
conditions that currently prevail in many if not most metro area markets. In
addition, the credit market constraints now in play will likely constrain new
commercial real estate construction activity in 2009. Constrained additions to
supply along with the expected rebound in economic growth will set the stage
for a rapid repair of fundamentals in 2009.

Commercial
real estate pricing in the near term will be largely determined by a
combination of factors including the level and uncertainty associated with
Treasury rates and inflation, and the general pricing of risk across all asset
types. Assuming that the period of economic weakness is short-lived, Treasury
rates should achieve a cycle low in the first half of the year and then slowly
rebound as the economy recovers. Low Treasury rates would cushion the impact of
wider cap rate spreads which, for commercial real estate, are approaching their
long-term norms. Finally, pricing pressures have so far been concentrated on
properties that are in less attractive locations or have less attractive
investment characteristics; Management believes that such distinctions will
continue in light of the ongoing strong investor demand for the most attractive
properties. Nonetheless, in light of less available and more expensive
commercial mortgage debt, it is possible that the number of investors pursuing
commercial real estate will be smaller in 2008 than in prior years,
contributing to some easing of pricing across the quality spectrum.

Management
believes that its property investments are diversified by both sector and
geographic location, which will allow it to weather a continued slowdown of
economic and real estate market conditions. The Account will continue to
balance these fundamentals against pricing pressures when executing its core
investment strategy. However, market
conditions affecting real estate investments at any given time cannot be
predicted, and any downturn in one or a number of the markets in which the
Account invests could significantly and adversely impact the Accounts returns.

37

---



Results of Operations

Year Ended December 31, 2007 Compared to Year
Ended December 31, 2006

Performance

The
Accounts total return was 13.80% for the year ended December 31, 2007, 24
basis points lower than the 2006 annual return of 14.04%. The Accounts overall
performance on a year-to-year basis reflects the continued strong performance
of the Accounts real estate property investments, including investments owned
in joint ventures. This strong performance was offset by the substantial
decrease in performance of its marketable securities (described in Net Realized
and Unrealized Gains and Losses on Investments and Mortgage Loans Payable).

Commercial
real estate has continued to experience historically high pricing in 2007 as
capital has continued to flow into the asset class. While this increase in
property pricing has positively impacted the Accounts net realized and
unrealized gains on its real estate assets and joint venture holdings, the
underlying property values are subject to decline prospectively, if capital or
real estate market conditions experience adverse changes. Real estate as an
investment should be considered from a long-term perspective. The Accounts total
return (after expenses) over the past three, five and 10 years ended December
31, 2007 was 13.96%, 12.35% and 9.79%. The respective returns for the year
ended December 31, 2006 were 13.53%, 10.22% and 9.43%.

The
Accounts total net assets grew 25.0% from December 31, 2006 to December 31,
2007. The primary drivers of this growth were a significant increase in the
Accounts net realized and unrealized gains on its real estate investments
including joint ventures and funds, net positive participant transactions, and
an increase in the Accounts net investment income from its investment
portfolio over the last twelve months. Management believes that the continued
significant realized and unrealized gains on the real estate investments,
including joint ventures, is due to the positive real estate market
fundamentals, and the core property investment strategy upon which the Account
is based. Management also believes that the continued positive net participant
transfers into the Account are due to its strong long-term historic performance
and its historically low return volatility relative to other available
investment options.

Income
and Expenses

The
Accounts net investment income, after deduction of all expenses, was 12%
higher for the year ended December 31, 2007, as compared to 2006. This increase
was due to a 23% increase in net income from the Accounts real estate
properties, including joint venture holdings and limited partnerships,
augmented by a 5% increase in income from marketable securities, all of which
was partially offset by a 68% increase in Account level expenses for the year
ended 2007 as compared to 2006.

The
Accounts real estate holdings, including real estate joint ventures and
limited partnerships, generated approximately 81% and 79% of the Accounts
total investment income (before deducting Account level expenses) during 2007
and 2006, respectively. The 23% increase

38

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in the
Accounts total investment income was derived from its investment in real estate,
joint ventures and limited partnerships. The remaining portion of the Accounts
total investment income was generated by investments in marketable securities,
including real estate equity securities, commercial paper, government bonds,
and an investment in a commercial mortgage loan receivable.

Gross
real estate rental income increased approximately 18% during the year ended
December 31, 2007, as compared to the same period in 2006. This increase was
primarily due to income derived from properties acquired in 2006 and 2007,
which included properties with larger income streams due to their relative
size. Income from real estate joint ventures and limited partnerships was
$93,724,569 for the year ended December 31, 2007, as compared with $60,788,998
for the year ended December 31, 2006. This 54% increase was primarily due to an
increase in gross rental income from the properties owned in joint ventures,
which increased substantially with the acquisition of a joint venture interest
in 65 retail properties in the first quarter of 2007. Total investment income
on the Accounts investments in all marketable securities increased by 5%, from
$135,407,210 for the year ended December 31, 2006 to $141,913,253 for the
comparable period in 2007. This change was due to an increase in the Accounts
investment income from other marketable securities, which was partially offset
by a decrease in the Accounts investment income from REIT securities due to
their poor performance in 2007.

Total
real estate property level expenses and taxes for wholly-owned property
investments for the years ended December 31, 2007 and 2006 were $458,021,539
and $389,672,945, respectively. In 2007, operating expenses and real estate
taxes represented 54% and 28% of the total real estate property level expenses
and taxes, respectively, with the remaining 18% representing interest payments
on mortgages. In comparison, operating expenses, real estate taxes, and
interest expenses similarly represented 53%, 28% and 19% of total property
level expenses, respectively, in 2006. Overall, property level expenses
increased by only 18% from 2006 to 2007. The majority of this increase (83%)
was due to increases in operating expenses and real estate taxes associated
with the Accounts larger portfolio of wholly-owned property investments. The
increase in the interest expense paid on properties subject to a mortgage
accounted for 17% of the overall increase. As of year-end 2007, there were 13
wholly-owned properties subject to debt, as compared to 12 properties at
year-end 2006. Three of the thirteen properties with debt as of December 31,
2007 were added to the Accounts real estate portfolio in the second half of
2006; and one was added in fourth quarter 2007.

The
Account incurred overall Account level expenses for the year ended December 31,
2007 of $140,294,447, which was a 68% increase from expenses of $83,448,664 for
the year ended December 31, 2006. The overall change in expenses was primarily
due to the growth of the Accounts total net assets (which increased by
approximately 25% from December 31, 2006 to December 31, 2007), increased
actual expenses associated with managing the Account, due in part to
adjustments made to the allocation methodology, and increases in certain of the
Accounts expense deduction rates effective May 1, 2007. Investment advisory
charges grew to $49,239,366 for the year ended December 31, 2007 as compared to
$26,899,307 for the year ended December 31, 2006. This increase was primarily
the result of higher operational costs (including personnel and other
infrastructure costs) due to the Accounts increasing diversity of assets and
associated costs due to increased property asset management activities.
Further, a component of this increase (approximately $5.2 million) was the
result of reconciliation, during the twelve month period ended December 31,
2007 and in accordance with the Accounts procedures, of the difference between
actual and estimated expenses

39

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of the
Account. In addition, the direct investment advisory charges associated with
the Account increased with the continued growth of the Accounts total net
assets. Total administrative and distribution expenses increased to $63,593,008
for the year ended December 31, 2007 as compared to $45,712,473 for the year
ended December 31, 2006. Administrative and distribution expenses increased due
to adjustments made to the Accounts expense base, in accordance with the
Accounts procedures, for any difference between actual and estimated expenses.
This increase in expenses primarily resulted from larger allocated operational
expenses including costs associated with new technology investments. In
addition, the direct administrative and distribution charges associated with
the Account increased with the continued growth of the Accounts total net
assets. Finally, liquidity guarantee expenses increased to $19,409,759 for the
year ended December 31, 2007 as compared to $3,905,051 for the year ended
December 31, 2006, due to an increase in the liquidity guarantee expense
deduction rate, which increased from 0.035% of annual net assets to 0.160% of
annual net assets as of May 1, 2007.

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

The
Account had net realized and unrealized gains on investments and mortgage loans
payable of $1,438,434,738 for the year ended December 31, 2007, as compared
with net realized and unrealized gains on investments and mortgage loans
payable of $1,056,670,295 for the year ended December 31, 2006, a 36% year over
year increase. The overall increase was primarily driven by the increase in net
realized and unrealized gains on the Accounts real estate joint ventures and
limited partnerships to $462,098,173 for 2007 from $217,360,271 for the year
ended December 31, 2006. In addition, the Account had a strong increase in net
realized and unrealized gains on the real estate properties to $1,026,007,574
for the year ended December 31, 2007 from $735,507,509 for 2006. The increase
in net realized and unrealized gains on the Accounts property investments,
including those held in joint ventures, was due to the solid real estate market
fundamentals and continued liquidity in the commercial real estate markets. The
effect of these positive conditions was to increase the value of the Accounts
existing real estate assets, as reflected in the unrealized gains on the real
estate properties of $898,172,653 and the realized gains on the sales of real
estate properties of $127,834,921. During the year ended December 31, 2007, the
Account sold nineteen wholly-owned properties, which included two apartments,
five office buildings and a portfolio of several industrial properties for
total net proceeds of $562.3 million, and recognized a cumulative net gain of
$127.8 million. The Account also sold one joint venture, a 75% equity interest
in the 161 N. Clark Street joint venture for total net proceeds of $239.5
million, and recognized a net gain of $69.9 million. The Account posted a net
realized and unrealized loss on its marketable securities of $101,479,347 for
the year ended December 31, 2007, as compared to a net realized and unrealized
gain of $130,710,746 in the same period of 2006. The losses on the Accounts
marketable securities in the year ended December 31, 2007 were primarily due to
the Accounts investments in real estate equity securities (REITs). The U.S.
REIT market struggled through a volatile 2007 and ended the year down by more
than 17%, as compared to the strong 2006 performance where the market increased
by 35%. We believe that the volatility in the REIT market was a reaction to a
perceived fear of an overall slowdown in the real estate markets due to the
continued problems of the subprime market, and the subsequent credit crunch.

40

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Year Ended December 31, 2006 Compared to Year
Ended December 31, 2005

Performance

The
Accounts total return was 14.04% for the year ended December 31, 2006, two
basis points higher than the 2005 annual return of 14.02%. The Accounts overall
performance on a year-to-year basis reflected the continued strong performance
of the Accounts real estate property investments and an increase in interest
rates on its marketable securities.

As
of December 31, 2006 the Accounts total return (after expenses) over the prior
three, five and 10 years ended December 31, 2006 was 13.53%, 10.22% and 9.43%,
respectively.

The
Accounts total net assets grew 34% from December 31, 2005 to December 31,
2006. The primary drivers of this growth were significant net participant
transactions, the Accounts net investment income from its investment portfolio
and the Accounts realized and unrealized gains on its investments over the
prior year. Management believes that the net participant transfers into the
Account were due to its positive historical performance and its low return
volatility relative to other available investment options.

Income
and Expenses

The
Accounts net investment income, after deduction of all expenses, was 30.6%
higher for the year ended December 31, 2006, as compared to 2005. This increase
was related to the increase in total net assets, which included a 35.1%
increase in the Accounts real estate properties, joint venture holdings and
limited partnerships.

The
Accounts real estate holdings, including real estate joint ventures and
limited partnerships, generated approximately 79% and 85% of the Accounts
total investment income (before deducting Account level expenses) during 2006
and 2005, respectively. The remaining portion of the Accounts total investment
income was generated by investments in marketable securities, including real
estate equity securities, commercial paper, government bonds, and an investment
in a commercial mortgage loan receivable. The decline in the percentage of the
Accounts total investment income derived from its real estate holdings was
primarily due to an increase in the Accounts interest income from its
marketable securities and mortgage loan receivable.

Gross
real estate rental income increased approximately 35% in the year ended
December 31, 2006, as compared to 2005. This increase was primarily due to the
increased number and size of the Accounts wholly-owned property investments
(98 at December 31, 2005 compared to 109 at December 31, 2006). Income from
real estate joint ventures and limited partnerships was $60,788,998 for the
year ended December 31, 2006, as compared with $71,826,443 for the year ended
December 31, 2005. This 15% decrease was due to the timing of distributions
from the joint venture partners. Investment income on the Accounts investments
in marketable securities increased by 91%, from $70,999,212 in 2005 to
$135,407,210 in 2006. This increase was due to an increase in the number of
marketable securities investments and higher interest rates in 2006.

41

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Total
property level expenses for wholly-owned property investments for the years
ended December 31, 2006 and 2005 were $389,672,945 and $278,544,030,
respectively. In 2006, operating expenses and real estate taxes represented 53%
and 28% of the total property level expenses, respectively, with the remaining
19% representing interest payments on mortgages. In comparison, operating
expenses, real estate taxes, and interest expense represented 54%, 32% and 14%
of total property level expenses, respectively, in 2005. Overall, property
level expenses increased by 40% from 2005 to 2006. The majority of this
increase (71%) was due to increases in operating expenses and real estate taxes
associated with the Accounts larger portfolio of wholly-owned property
investments. The increase in the interest expense paid on properties subject to
a mortgage accounted for 29% of the overall increase. As of year-end 2006,
there were 12 wholly-owned properties subject to debt, as compared to seven
leveraged properties at year-end 2005.

The
Account also incurred expenses for the years ended December 31, 2006 and 2005
for investment advisory services ($26,899,307 and $19,603,225, respectively),
administrative and distribution services ($45,712,473 and $27,130,406,
respectively), and mortality, expense risk and liquidity guarantee charges
($10,836,884 and $9,366,566 respectively). The total 49% increase in these
expenses was a result of the larger net asset base in the Account, on which the
fees are calculated, and the increased costs associated with managing and
administering the Account.

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

The
Account had net realized and unrealized gains on investments and mortgage loans
payable of $1,056,670,295 for the year ended December 31, 2006, as compared
with net realized and unrealized gains on investments and mortgage loans
payable of $765,970,272 for the year ended December 31, 2005. The overall
increase was partially driven by the increase in net realized and unrealized
gains on the Accounts real estate properties to $735,507,509 for the year
ended December 31, 2006 from $610,734,011 for 2005. The Account also posted
substantial net realized and unrealized gains on its marketable securities of
$130,710,746 for the year ended 2006, as compared to $8,770,726 in 2005. In
addition, the Account had unrealized gains on its real estate joint ventures
and limited partnership holdings of $217,360,271 for the year ended December
31, 2006, as compared to unrealized gains of $175,619,683 for 2005. The
increase in net realized and unrealized gains on the Accounts property
investments, including those held in joint ventures, was due to the positive
effect of the strong inflow of capital into the real estate market from
investors, combined with improved real estate market fundamentals, which had
the effect of increasing the value of the Accounts existing real estate
assets. This trend was also evidenced by the net realized gains on the
properties sold in 2006. During the year ended December 31, 2006, the Account
sold nine properties for total net proceeds, after selling expenses, of $381.9
million, for a cumulative net gain of $76.1 million, based on the properties
capitalized costs. The unrealized gains on the Accounts marketable securities
in 2006 were primarily associated with the Accounts investments in real estate
equity securities.

Liquidity and Capital Resources

At
year-end 2007 and 2006, the Accounts liquid assets (i.e., cash and marketable securities) had a value of
$3,804,639,841 and $2,747,445,678, respectively. The increase in the

42

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Accounts
liquid assets was primarily due to an increase in its net investment income and
the continued net positive inflow from participant transfers and premiums into
the Account.

In
2007, the Account received $1,186,870,080 in premiums and $934,307,324 in net
participant transfers from TIAA, CREF Accounts and affiliated mutual funds,
while, for 2006, the Account received $1,085,057,614 in premiums and
$1,354,697,847 in net participant transfers. The Accounts net investment
income increased from $557,530,387 for the year ended December 31, 2006 to
$624,756,134 for the year ended December 31, 2007.

The
Accounts liquid assets continue to be available to purchase additional
suitable real estate properties and to meet the Accounts expense needs and
participant redemption requests (i.e.,
cash withdrawals, benefits, or transfers). In the unlikely event that the
Accounts liquid assets and its cash flow from operating activities and
participant transactions are not sufficient to meet participant transfer or
cash withdrawal requests, TIAAs general account will purchase accumulation
units (liquidity units) in accordance with TIAAs liquidity guarantee to the
Account.

The
Account, under certain conditions more fully described in the Accounts
prospectus (as supplemented from time to time), may borrow money and assume or
obtain a mortgage on a property (i.e.,
make leveraged real estate investments). Also, to meet any short-term cash
needs, the Account may obtain a line of credit whose terms may require that the
Account secure the loan with one or more of its properties. The Accounts total
borrowings may not exceed 30% of the Accounts Total Net Assets. In calculating
this limit, only the Accounts actual percentage interest in any borrowings is
included, and not that of 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.

Contractual Obligations

The
following table sets forth a summary regarding our known contractual
obligations, including required interest payments for those items that are
interest bearing, at December 31, 2007:

|                                             |  |                                              |             |      |   |            |  |      |            |      |   |            |  |       |             |  |   |               |  |   |              
|-------------------------------------------- |  | -------------------------------------------- | ----------- | ---- | - | ---------- |  | ---- | ---------- | ---- | - | ---------- |  | ----- | ----------- |  | - | ------------- |  | - | -------------
|                                             |  | Amounts Due During Years Ending December 31, |             |      |   |           
|                                             |  |                                              |             |      |   |           
|                                             |  | 2008                                         |             | 2009 |   | 2010       |  | 2011 |            | 2012 |   | Thereafter |  | Total
|                                             |  |                                              |             |      |   |            |  |      |            |      |   |            |  |      
|                                             |  |                                              |             |      |   |            |  |      |            |      |   |            |  |       |             |  |   |               |  |   |              
|Mortgage Loans Payable:                      |  |                                              |             |      |   |            |  |      |            |      |   |            |  |       |             |  |   |               |  |   |              
|Principal Payments                           |  | $                                            | 736,371     |      | $ | 788,911    |  | $    | 2,161,722  |      | $ | 10,241,993 |  | $     | 269,313,872 |  | $ | 1,144,614,574 |  | $ | 1,427,857,443
|Interest Payments(1)                         |  |                                              | 83,561,479  |      |   | 83,440,048 |  |      | 83,353,568 |      |   | 82,863,631 |  |       | 80,543,446  |  |   | 124,780,243   |  |   | 538,542,415  
|                                             |  |                                              |             |      |   |            |  |      |            |      |   |            |  |       |             |  |   |               |  |   |              
|Total Mortgage Loans Payable                 |  |                                              | 84,297,850  |      |   | 84,228,959 |  |      | 85,515,290 |      |   | 93,105,624 |  |       | 349,857,318 |  |   | 1,269,394,817 |  |   | 1,966,399,858
|Commitment to Purchase Leasehold Interest(2) |  |                                              | 42,728,299  |      |   |           |  |      |           |      |   |           |  |       |            |  |   |              |  |   | 42,728,299   
|Other Commitments(3)                         |  |                                              | 87,562,894  |      |   |           |  |      |           |      |   |           |  |       |            |  |   |              |  |   | 87,562,894   
|                                             |  |                                              |             |      |   |            |  |      |            |      |   |            |  |       |             |  |   |               |  |   |              
|Total Contractual Obligations                |  | $                                            | 214,589,043 |      | $ | 84,228,959 |  | $    | 85,515,290 |      | $ | 93,105,624 |  | $     | 349,857,318 |  | $ | 1,269,394,817 |  | $ | 2,096,691,051
|                                             |  |                                              |             |      |   |            |  |      |            |      |   |            |  |       |             |  |   |               |  |   |              

|    |                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | These amounts represent
  interest payments due on mortgage loans payable based on the stated rates
  and, where applicable, the foreign currency exchange rates at December 31,
  2007.
|    |                                                                                                                                                                                         
|(2) | The Account purchased this
  leasehold interest on February 12, 2008.                                                                                                                   
|    |                                                                                                                                                                                         
|(3) | This includes the Accounts
  commitment to purchase interest in six limited partnerships and to purchase
  shares in a private real estate equity investment trust.                    

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Effects of Inflation and Increasing Operating
Expenses

Inflation,
along with increased insurance, taxes, utilities and security costs, may
increase property operating expenses in the future. These increases in
operating expenses are generally billed to tenants either through contractual
lease provisions in office, industrial, and retail properties or through rent
increases in apartment complexes. The Account remains responsible for the expenses
for unleased space in a property as well as expenses which may not be
reimbursed under the terms of an existing lease.

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.

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

Valuation
of Real Estate Properties

Investments
in real estate properties are stated at fair value, as determined in accordance
with procedures approved by the Investment Committee of the TIAA Board of
Trustees and in accordance with the responsibilities of the Board as a whole;
accordingly, the Account does not record depreciation. Fair value for real
estate properties is defined as the most probable price for which a property
will sell in a competitive market under all conditions requisite to a fair
sale. Determination of fair value involves judgment because the actual market
value of real estate can be determined only by negotiation between the parties
in a sales transaction. Real estate properties owned by the Account are
initially valued at their respective purchase prices (including acquisition
costs). Subsequently, the properties are valued on a quarterly cycle with an
independent appraisal value completed for each real estate property at least
once a year. An independent fiduciary, Real Estate Research Corporation, has
been appointed by a special subcommittee of TIAAs Board of Trustees. The
independent fiduciary must approve all independent appraisers used by the
Account. TIAAs appraisal staff performs the other quarterly valuations for
each real estate property and updates the property value as appropriate. The
appraisals are performed in accordance with Uniform Standards of Professional
Appraisal Practices (USPAP), the real estate appraisal industry standards
created by The Appraisal Foundation. Real estate appraisals are estimates of
property values based on a professionals opinion. The independent fiduciary
can also require additional appraisals if a propertys value has changed
materially and such change is not reflected in the quarterly

44

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valuation
review, or otherwise to ensure that the Account is valued appropriately. The
independent fiduciary must also approve any valuation change 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 month. When a real estate
property is subject to a mortgage, the mortgage is valued independently of the
property and its fair value is reported separately. The independent fiduciary
reviews and approves mortgage valuation adjustments which exceed certain
prescribed limits 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 and Limited Partnerships

Real
estate joint ventures and limited partnerships are stated at the Accounts
equity in the net assets of the underlying entities and, for the joint
ventures, are adjusted to value their real estate holdings and mortgage notes
payable at fair value. 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, that occurs prior to the dissolution of the investee entity.

Valuation
of Marketable Securities

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

Debt
securities, other than money market instruments, are valued at the most recent
bid price or the equivalent quoted yield for such securities (or those of
comparable maturity, quality and type). Money market instruments, with
maturities of one year or less, are valued in the same manner as debt
securities or derived from a pricing matrix that has various types of money
market instruments along one axis and various maturities along the other.
Portfolio securities and limited partnership interests for which market
quotations are not readily available are valued at fair value as determined in
good faith under the direction of the Investment Committee of the TIAA Board of
Trustees and in accordance with the responsibilities of the Board as a whole.

Mortgage
Loans Receivable

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

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Mortgage
Loans Payable

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

Foreign
currency transactions and translation

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

Accumulation
and Annuity Fund

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

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

The
Account has limited ownership interests in various real estate funds (limited
partnerships and one limited liability corporation) and a private REIT
(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 and recorded quarterly when the Accounts accounting records are
compared to the financial statements of the limited partnerships.

Income
from joint ventures is recorded based on the Accounts proportional interest 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 and
includes accrual of discount and amortization of premium as applicable.
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.

New
Accounting Pronouncements

In
June 2006, the Financial Accounting Standards Board (FASB) issued FASB
Interpretation (FIN) 48, an interpretation of FASB Statement No. 109,
Accounting for Income Taxes. FIN 48 clarifies the accounting for uncertainty
in income taxes recognized in an enterprises financial statements and is
effective for fiscal years beginning after December 31, 2006. The adoption of
FIN 48 did not have a significant impact on the Accounts financial position
and results of operations.

In
September 2006, FASB issued Statement No. 157, Fair Value Measurements. This
Statement defines fair value, establishes a framework for measuring fair value
under generally accepted accounting principles in the United States, and
requires additional disclosures about fair value measurements. This Statement
does not require any new fair value measurements, but the application of this
Statement could change current practices in determining fair value. This
statement is effective January 1, 2008 for the Account. The Account has
assessed the impact of Statement No. 157 and determined that it will not
significantly change the Accounts financial position and results of operations
at the effective date.

47

---



In
February 2007, FASB issued Statement No. 159, The Fair Value Option for
Financial Assets and Financial Liabilities. This Statement permits entities to
choose to measure financial instruments and certain other items at fair value
and is expected to expand the use of fair value measurement when warranted. The
Account effectively adopted Statement 159 on January 1, 2008 and plans to
report all existing and future Mortgage Loans Payable at fair value using this
Statement. Historically, the Account recorded Mortgage Loans Payable at fair
value. The Account has assessed the impact of Statement 159 in comparison to
historical reporting and determined that it will not significantly change the
Accounts financial position and results of operations.

In
June 2007, the Accounting Standards Executive Committee (ACSEC) of the
American Institute of Certified Public Accountants (AICPA) issued Statement
of Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting
Guide Investment Companies and Accounting by Parent Companies and Equity Method
Investors for Investments in Investment Companies. The SOP clarifies which
entities are required to apply the provisions of the Investment Companies Audit
and Accounting Guide (Guide) and provides guidance on accounting by parent
companies and equity method investors for investments in investment companies.
The SOP is effective for fiscal years beginning on or after December 15, 2007.
In February 2008, FASB issued Staff Position (FSP) SOP 07-1-1 indefinitely
delaying the effective date of SOP 07-1 to allow FASB time to consider
significant issues related to the implementation of SOP 07-1. Management of the
Account will continue to monitor FASB developments and will evaluate the
financial reporting implications to the Account, as necessary.

In
December 2007, FASB issued Statement No. 141(R), Business Combinations, which
establishes principles and requirements for how the acquirer shall recognize
and measure in its financial statements the identifiable assets acquired,
liabilities assumed, any noncontrolling interest in the acquiree and goodwill
acquired in a business combination or a gain from a bargain purchase. This
Statement is effective for business combinations for which the acquisition date
is on or after the beginning of the first annual reporting period beginning on
or after December 15, 2008. The Account is currently assessing the impact that
Statement No. 141(R) will have on its financial position and results of
operations.

In
December 2007, FASB issued Statement No. 160, Noncontrolling Interests in
Consolidated Financial Statements  an Amendment of ARB No. 51, which
establishes and expands accounting and reporting standards for minority
interests, which will be recharacterized as noncontrolling interests, in a
subsidiary and the deconsolidation of a subsidiary. This Statement is effective
for fiscal years beginning on or after December 15, 2008. The Account is
currently assessing the potential impact that Statement No. 160 will have on
its financial position and results of operations.

48

---



|         |                                                            
|-------- | -----------------------------------------------------------
|ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

The
Accounts real estate holdings, including real estate joint ventures and
limited partnerships, which, as of December 31, 2007 represented 79.7% 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, 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 or buys 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.

As
of December 31, 2007, 20.3% of the Accounts total investments were in market
risk sensitive instruments, comprised of marketable securities and an
adjustable rate mortgage loan receivable. Marketable securities include real
estate equity securities, commercial mortgage-backed securities (CMBS), and
high-quality short-term debt instruments (i.e.,
commercial paper and government agency bonds). The Statement of Investments for
the Account sets forth the general financial terms of these instruments, along
with their fair values, as determined in accordance with procedures described
in Note 1 to the Accounts financial statements. Note that the Account does not
currently invest in derivative financial instruments.

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

|  |                                                                                                                                                                                                                                                                                                  
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Financial
 Risk  The risk, for debt securities, that the issuer will not be able to pay
 principal and interest when due and, for 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.

49

---



|  |                                                                                                                                                                                                                        
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Market Risk
  The risk that the Accounts investments will experience price volatility
 due to changing conditions in the financial markets and, particularly for
 debt securities, changes in overall interest rates.
|  |                                                                                                                                                                                                                        
| | Interest
 Rate Volatility  The risk that interest rate volatility may affect the
 Accounts current income from an investment.                                                                                        

In
addition, mortgage-backed securities are subject to prepayment risk or
extension risk (i.e., the risk
that borrowers will repay the loans 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 market value of these
securities is also highly sensitive to changes in interest rates. Note that the
potential for appreciation, which could otherwise be expected to result from a
decline in interest rates, may be limited by any increased prepayments. These
securities may be harder to sell than other securities.

In
addition to these risks, real estate equity securities and mortgage-backed
securities are subject to many of the same general risks inherent in real
estate investing, making mortgage loans and investing in debt securities. For
more information on the risks associated with all of the Accounts investments,
see the Accounts most recent prospectus.

50

---



|        |                                             
|------- | --------------------------------------------
|ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

|                             
|-----------------------------
|                             
|INDEX TO FINANCIAL STATEMENTS
|TIAA REAL ESTATE ACCOUNT     
|                             

|                                                         |     
|-------------------------------------------------------- | ----
|                                                         | Page
|                                                         |     
|Report of
 Management Responsibility                     | 52  
|Report of
 the Audit Committee                           | 53  
|                                                         |     
|Audited Financial
 Statements:                           |     
|Statements of Assets and
Liabilities                     | 54  
|Statements of
Operations                                 | 55  
|Statements of Changes in Net
Assets                      | 56  
|Statements of Cash
Flows                                 | 57  
|Notes to Financial
Statements                            | 58  
|Statements of
Investments                                | 67  
|Report of
 Independent Registered Public Accounting Firm | 86  

51

---



REPORT OF MANAGEMENT RESPONSIBILITY

To the Participants of the 
   TIAA Real Estate Account:

The accompanying financial
statements of the TIAA Real Estate Account (Account) of Teachers Insurance
and Annuity Association of America (TIAA) are the responsibility of TIAAs
management. They have been prepared in accordance with accounting principles
generally accepted in the United States of America and have been presented
fairly and objectively in accordance with such principles.

TIAA has established and
maintains an effective system of internal controls over financial reporting
designed to provide reasonable assurance that assets are properly safeguarded,
that transactions are properly executed in accordance with managements
authorization, and to carry out the ongoing responsibilities of management for
reliable financial statements. In addition, TIAAs internal audit personnel
provide regular reviews and assessments of the internal controls and operations
of the Account, and the Senior Vice President of Internal Audit regularly
reports to the Audit Committee of the TIAA Board of Trustees.

The independent registered
public accounting firm of PricewaterhouseCoopers LLP has audited the
accompanying financial statements for the years ended December 31, 2007, 2006
and 2005. To maintain auditor independence and avoid even the appearance of a
conflict of interest, it continues to be the Accounts policy (consistent
with TIAAs specific auditor independence policies, which are designed to
avoid such conflicts) that any management advisory or consulting services would
be obtained from a firm other than the independent accounting firm. The independent
auditors
report expresses an independent opinion on the fairness of presentation of the
Accounts financial statements.

The Audit Committee of the TIAA Board of
Trustees, comprised entirely of independent, non-management trustees, meets
regularly with management, representatives of the independent registered public
accounting firm and internal audit group personnel to review matters relating
to financial reporting, internal controls and auditing. In addition to the
annual independent audit of the Accounts financial statements, the New York
State Insurance Department and other state insurance departments regularly
examine the operations and financial statements of the Account as part of their
periodic corporate examinations.

|               |                              
|-------------- | -----------------------------
|March 20, 2008 | /s/
 Herbert M. Allison, Jr. 
|               |                              
|               | Herbert
 M. Allison, Jr.     
|               | Chairman,
 President and     
|               | Chief
 Executive Officer     
|               |                              
|               | /s/
 Georganne C. Proctor    
|               |                              
|               | Georganne
 C. Proctor        
|               | Executive
 Vice President and
|               | Chief
 Financial Officer     

52

---



REPORT OF THE AUDIT COMMITTEE

To the Participants of the
   TIAA Real Estate Account:

The TIAA Audit Committee
(Committee) oversees the financial reporting process of the TIAA Real Estate
Account (Account) on behalf of TIAAs Board of Trustees. The Committee
operates in accordance with a formal written charter (copies of which are
available upon request) which describes the Audit Committees responsibilities.
All members of the Committee are independent, as defined under the listing
standards of the New York Stock Exchange.

Management has the primary
responsibility for the Accounts financial statements, development and
maintenance of a strong system of internal controls and disclosure controls,
and compliance with applicable laws and regulations. In fulfilling its
oversight responsibilities, the Committee reviewed and approved the audit plans
of the internal audit group and the independent registered public accounting
firm in connection with their respective audits of the Account. The Committee
also meets regularly with the internal audit group and the independent
registered public accounting firm, both with and without management present, to
discuss the results of their examinations, their evaluation of internal
controls, and the overall quality of financial reporting. As required by its
charter, the Committee will evaluate rotation of the independent registered
public accounting firm whenever circumstances warrant, but in no event will the
evaluation be later than between their fifth and tenth years of service.

The Committee reviewed and
discussed the accompanying audited financial statements with management,
including a discussion of the quality and appropriateness of the accounting
principles and financial reporting practices followed, the reasonableness of
significant judgments, and the clarity and completeness of disclosures in the
financial statements. The Committee has also discussed the audited financial
statements with PricewaterhouseCoopers LLP, the independent registered public
accounting firm responsible for expressing an opinion on the conformity of these
audited financial statements with accounting principles generally accepted in
the United States of America.

The discussion with
PricewaterhouseCoopers LLP focused on their judgments concerning the quality
and appropriateness of the accounting principles and financial reporting
practices followed by the Account, the clarity and completeness of the
financial statements and related disclosures, and other significant matters,
such as any significant changes in accounting policies, internal controls, management
judgments and estimates, and the nature of any uncertainties or unusual
transactions. In addition, the Committee discussed with PricewaterhouseCoopers
LLP the auditors independence from management and the Account, and has
received a written disclosure regarding such independence, as required by the
Securities and Exchange Commission.

Based on the review and
discussions referred to above, the Committee has approved the release of the
accompanying audited financial statements for publication and filing with
appropriate regulatory authorities.

Rosalie J. Wolf, Audit
Committee Chair 
Glenn A. Britt, Audit Committee Member 
Donald K. Peterson, Audit Committee Member 
David L. Shedlarz, Audit Committee Member

March 20, 2008

53

---



TIAA REAL ESTATE ACCOUNTSTATEMENTS OF ASSETS AND LIABILITIES

|                                                                                                |  |                    |                |                    |   |                | 
|----------------------------------------------------------------------------------------------- |  | ------------------ | -------------- | ------------------ | - | -------------- | 
|                                                                                                |  | December 31,
 2007 |                | December 31,
 2006 |  
|                                                                                                |  |                    |                |                    |  
|ASSETS                                                                                          |  |                    |                |                    |   |                | 
|Investments, at value:                                                                          |  |                    |                |                    |   |                | 
|Real estate properties 
 (cost: $9,804,488,802 and $9,462,471,032)                              |  | $                  | 11,983,715,574 |                    | $ | 10,743,487,689 | 
|Real estate joint ventures and limited partnerships

 (cost: $2,260,919,575 and $1,413,322,924) |  |                    | 3,158,870,373  |                    |   | 1,948,028,002  | 
|Marketable securities:                                                                          |  |                    |                |                    |   |                | 
|Real estate-related 
 (cost: $439,154,248 and $569,326,795)                                     |  |                    | 426,630,212    |                    |   | 704,922,323    | 
|Other 
 (cost: $3,371,895,300 and $2,038,681,194)                                               |  |                    | 3,371,865,684  |                    |   | 2,038,938,210  | 
|Mortgage loans receivable 
 (cost: $75,000,000 and $75,000,000)                                 |  |                    | 72,519,684     |                    |   | 74,660,626     | 
|                                                                                                |  |                    |                |                    |   |                | 
|                                                                                               
|Total investments 
 (cost: $15,951,457,925 and $13,558,801,945)                                 |  |                    | 19,013,601,527 |                    |   | 15,510,036,850 | 
|                                                                                                |  |                    |                |                    |   |                | 
|Cash                                                                                            |  |                    | 6,143,945      |                    |   | 3,585,145      | 
|                                                                                                |  |                    |                |                    |   |                | 
|Due from investment advisor                                                                     |  |                    | 11,195,734     |                    |   | 8,461,793      | 
|                                                                                                |  |                    |                |                    |   |                | 
|Other                                                                                           |  |                    | 201,826,038    |                    |   | 237,877,545    | 
|                                                                                                |  |                    |                |                    |   |                | 
|                                                                                               
|TOTAL
 ASSETS                                                                                   |  |                    | 19,232,767,244 |                    |   | 15,759,961,333 | 
|                                                                                                |  |                    |                |                    |   |                | 
|                                                                                               
|LIABILITIES                                                                                     |  |                    |                |                    |   |                | 
|                                                                                                |  |                    |                |                    |   |                | 
|Mortgage loans payableNote 5 
 (principal outstanding: $1,427,857,443 and $1,415,032,586)      |  |                    | 1,392,092,982  |                    |   | 1,437,149,148  | 
|                                                                                                |  |                    |                |                    |   |                | 
|Payable for securities transactions                                                             |  |                    | 866,209        |                    |   | 1,219,323      | 
|                                                                                                |  |                    |                |                    |   |                | 
|Accrued real estate property level expenses                                                     |  |                    | 154,638,976    |                    |   | 169,657,402    | 
|                                                                                                |  |                    |                |                    |   |                | 
|Security deposits held                                                                          |  |                    | 24,632,278     |                    |   | 19,242,948     | 
|                                                                                                |  |                    |                |                    |   |                | 
|                                                                                               
|TOTAL
 LIABILITIES                                                                              |  |                    | 1,572,230,445  |                    |   | 1,627,268,821  | 
|                                                                                                |  |                    |                |                    |   |                | 
|                                                                                               
|NET ASSETS                                                                                      |  |                    |                |                    |   |                | 
|                                                                                                |  |                    |                |                    |   |                | 
|Accumulation Fund                                                                               |  |                    | 17,160,703,167 |                    |   | 13,722,700,176 | 
|                                                                                                |  |                    |                |                    |   |                | 
|Annuity Fund                                                                                    |  |                    | 499,833,632    |                    |   | 409,992,336    | 
|                                                                                                |  |                    |                |                    |   |                | 
|                                                                                               
|TOTAL NET
 ASSETS                                                                               |  | $                  | 17,660,536,799 |                    | $ | 14,132,692,512 | 
|                                                                                                |  |                    |                |                    |   |                | 
|                                                                                               
|NUMBER OF ACCUMULATION UNITS OUTSTANDINGNotes 6 and
7                                          |  |                    | 55,105,718     |                    |   | 50,146,354     | 
|                                                                                                |  |                    |                |                    |   |                | 
|NET ASSET VALUE, PER ACCUMULATION UNITNote 6                                                   |  | $                  | 311.41         |                    | $ | 273.65         | 
|                                                                                                |  |                    |                |                    |   |                | 

See notes to the financial statements.

54

---



TIAA REAL ESTATE ACCOUNTSTATEMENTS OF OPERATIONS

|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|----------------------------------------------------------------------------------- |  | ------------------------ | ------------- | ---- | - | ------------- | - | - | ------------- | -
|                                                                                    |  | Years Ended December 31, |              
|                                                                                    |  |                          |              
|                                                                                    |  | 2007                     |               | 2006 |   | 2005          |  
|                                                                                    |  |                          |               |      |   |               |  
|                                                                                   
|INVESTMENT INCOME                                                                   |  |                          |               |      |   |               |   |   |               |  
|Real estate income, net:                                                            |  |                          |               |      |   |               |   |   |               |  
|Rental income                                                                       |  | $                        | 987,434,298   |      | $ | 834,455,788   |   | $ | 618,633,580   |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|Real estate property level expenses and
  taxes:                                    |  |                          |               |      |   |               |   |   |               |  
|Operating expenses                                                                  |  |                          | 247,473,125   |      |   | 207,452,982   |   |   | 150,501,136   |  
|Real estate taxes                                                                   |  |                          | 126,925,585   |      |   | 110,059,852   |   |   | 88,014,264    |  
|Interest expense                                                                    |  |                          | 83,622,829    |      |   | 72,160,111    |   |   | 40,028,630    |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|Total real estate property level expenses and
taxes                                 |  |                          | 458,021,539   |      |   | 389,672,945   |   |   | 278,544,030   |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|Real estate
  income, net                                                           |  |                          | 529,412,759   |      |   | 444,782,843   |   |   | 340,089,550   |  
|Income from real estate joint ventures and
  limited partnerships                   |  |                          | 93,724,569    |      |   | 60,788,998    |   |   | 71,826,443    |  
|Interest                                                                            |  |                          | 129,473,616   |      |   | 118,621,441   |   |   | 54,114,448    |  
|Dividends                                                                           |  |                          | 12,439,637    |      |   | 16,785,769    |   |   | 16,884,764    |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|TOTAL INCOME                                                                        |  |                          | 765,050,581   |      |   | 640,979,051   |   |   | 482,915,205   |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|ExpensesNote 2:                                                                    |  |                          |               |      |   |               |   |   |               |  
|Investment advisory charges                                                         |  |                          | 49,239,366    |      |   | 26,899,307    |   |   | 19,603,225    |  
|Administrative and distribution charges                                             |  |                          | 63,593,008    |      |   | 45,712,473    |   |   | 27,130,406    |  
|Mortality and expense risk charges                                                  |  |                          | 8,052,314     |      |   | 6,931,833     |   |   | 6,196,549     |  
|Liquidity guarantee charges                                                         |  |                          | 19,409,759    |      |   | 3,905,051     |   |   | 3,170,017     |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|TOTAL EXPENSES                                                                      |  |                          | 140,294,447   |      |   | 83,448,664    |   |   | 56,100,197    |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|INVESTMENT INCOME, NET                                                              |  |                          | 624,756,134   |      |   | 557,530,387   |   |   | 426,815,008   |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|REALIZED AND UNREALIZED GAIN (LOSS) ON
  INVESTMENTS AND MORTGAGE LOANS PAYABLE     |  |                          |               |      |   |               |   |   |               |  
|Net realized gain (loss) on:                                                        |  |                          |               |      |   |               |   |   |               |  
|Real estate properties                                                              |  |                          | 127,834,921   |      |   | 76,137,064    |   |   | 76,164,380    |  
|Real estate joint ventures and limited
  partnerships                               |  |                          | 70,765,537    |      |   |              |   |   | 8,599,762     |  
|Marketable securities                                                               |  |                          | 47,179,736    |      |   | 10,257,108    |   |   | 36,871,417    |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|Total
  realized gain on investments                                                |  |                          | 245,780,194   |      |   | 86,394,172    |   |   | 121,635,559   |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|Net change in unrealized appreciation
  (depreciation) on:                          |  |                          |               |      |   |               |   |   |               |  
|Real estate properties                                                              |  |                          | 898,172,653   |      |   | 659,370,445   |   |   | 534,569,631   |  
|Real estate joint ventures and limited
  partnerships                               |  |                          | 391,332,636   |      |   | 217,360,271   |   |   | 167,019,921   |  
|Marketable securities                                                               |  |                          | (148,659,083  | )    |   | 120,453,638   |   |   | (28,100,691   | )
|Mortgage loan receivable                                                            |  |                          | (2,140,942    | )    |   | (339,374      | ) |   |              |  
|Mortgage loans payable                                                              |  |                          | 53,949,280    |      |   | (26,568,857   | ) |   | (29,154,148   | )
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|Net change
  in unrealized appreciation on
  investments and mortgage loans payable |  |                          | 1,192,654,544 |      |   | 970,276,123   |   |   | 644,334,713   |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|NET REALIZED AND UNREALIZED
  GAIN ON INVESTMENTS AND
  MORTGAGE LOANS PAYABLE      |  |                          | 1,438,434,738 |      |   | 1,056,670,295 |   |   | 765,970,272   |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  
|NET INCREASE IN NET ASSETS
  RESULTING FROM OPERATIONS                              |  | $                        | 2,063,190,872 |      | $ | 1,614,200,682 |   | $ | 1,192,785,280 |  
|                                                                                    |  |                          |               |      |   |               |   |   |               |  

See notes to the financial statements.

55

---



TIAA REAL ESTATE ACCOUNTSTATEMENTS OF CHANGES IN NET ASSETS

|                                                                                  |  |                          |                |      |   |                |   |   |                |  
|--------------------------------------------------------------------------------- |  | ------------------------ | -------------- | ---- | - | -------------- | - | - | -------------- | -
|                                                                                  |  | Years Ended December 31, |               
|                                                                                  |  |                          |               
|                                                                                  |  | 2007                     |                | 2006 |   | 2005           |  
|                                                                                  |  |                          |                |      |   |                |  
|FROM OPERATIONS                                                                   |  |                          |                |      |   |                |   |   |                |  
|Investment income, net                                                            |  | $                        | 624,756,134    |      | $ | 557,530,387    |   | $ | 426,815,008    |  
|Net realized gain on investments                                                  |  |                          | 245,780,194    |      |   | 86,394,172     |   |   | 121,635,559    |  
|Net change in unrealized appreciation on
  investments and mortgage loans payable |  |                          | 1,192,654,544  |      |   | 970,276,123    |   |   | 644,334,713    |  
|                                                                                  |  |                          |                |      |   |                |   |   |                |  
|NET INCREASE IN NET ASSETS 
  RESULTING FROM OPERATIONS                           |  |                          | 2,063,190,872  |      |   | 1,614,200,682  |   |   | 1,192,785,280  |  
|                                                                                  |  |                          |                |      |   |                |   |   |                |  
|FROM PARTICIPANT TRANSACTIONS                                                     |  |                          |                |      |   |                |   |   |                |  
|Premiums                                                                          |  |                          | 1,186,870,080  |      |   | 1,085,057,614  |   |   | 968,189,436    |  
|Net transfers from TIAA                                                           |  |                          | 153,136,947    |      |   | 215,893,898    |   |   | 172,305,147    |  
|Net transfers from CREF Accounts                                                  |  |                          | 832,782,037    |      |   | 1,154,122,836  |   |   | 1,238,160,587  |  
|Net transfers from (to) TIAA-CREF
  Institutional Mutual Funds                    |  |                          | (51,611,660    | )    |   | (15,318,887    | ) |   | 24,967,250     |  
|Annuity and other periodic payments                                               |  |                          | (95,776,359    | )    |   | (65,192,000    | ) |   | (44,487,142    | )
|Withdrawals and death benefits                                                    |  |                          | (560,747,630   | )    |   | (404,782,733   | ) |   | (248,759,442   | )
|                                                                                  |  |                          |                |      |   |                |   |   |                |  
|NET INCREASE IN NET ASSETS RESULTING
  FROM PARTICIPANT TRANSACTIONS              |  |                          | 1,464,653,415  |      |   | 1,969,780,728  |   |   | 2,110,375,836  |  
|                                                                                  |  |                          |                |      |   |                |   |   |                |  
|NET INCREASE IN NET ASSETS                                                        |  |                          | 3,527,844,287  |      |   | 3,583,981,410  |   |   | 3,303,161,116  |  
|                                                                                  |  |                          |                |      |   |                |   |   |                |  
|NET ASSETS                                                                        |  |                          |                |      |   |                |   |   |                |  
|Beginning of period                                                               |  |                          | 14,132,692,512 |      |   | 10,548,711,102 |   |   | 7,245,549,986  |  
|                                                                                  |  |                          |                |      |   |                |   |   |                |  
|End of period                                                                     |  | $                        | 17,660,536,799 |      | $ | 14,132,692,512 |   | $ | 10,548,711,102 |  
|                                                                                  |  |                          |                |      |   |                |   |   |                |  

See notes to the financial statements.

56

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF CASH FLOWS

|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|--------------------------------------------------------------------------------------------------------------------------- |  | ------------------------ | -------------- | ---- | - | -------------- | - | - | -------------- | -
|                                                                                                                            |  | Years Ended December 31, |               
|                                                                                                                            |  |                          |               
|                                                                                                                            |  | 2007                     |                | 2006 |   | 2005           |  
|                                                                                                                            |  |                          |                |      |   |                |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                                        |  |                          |                |      |   |                |   |   |                |  
|Net increase in net assets resulting from
  operations                                                                      |  | $                        | 2,063,190,872  |      | $ | 1,614,200,682  |   | $ | 1,192,785,280  |  
|Adjustments to reconcile net increase in
  net assets resulting from operations to net cash used in operating
  activities: |  |                          |                |      |   |                |   |   |                |  
|Purchase of real estate properties                                                                                          |  |                          | (639,704,090   | )    |   | (2,016,229,061 | ) |   | (1,864,646,776 | )
|Amortization of discount on debt                                                                                            |  |                          | 530,626        |      |   | 461,761        |   |   | 170,352        |  
|Capital improvements on real estate
  properties                                                                            |  |                          | (133,714,188   | )    |   | (117,041,456   | ) |   | (83,150,771    | )
|Proceeds from sale of real estate
  properties                                                                              |  |                          | 568,120,000    |      |   | 387,290,000    |   |   | 511,500,399    |  
|Net increase in other investments                                                                                           |  |                          | (1,904,858,906 | )    |   | (836,478,000   | ) |   | (1,313,958,742 | )
|Increase in mortgage loan receivable                                                                                        |  |                          |               |      |   | (74,660,626    | ) |   |               |  
|Decrease (increase) in other assets                                                                                         |  |                          | 33,317,566     |      |   | (47,865,701    | ) |   | (80,412,203    | )
|Decrease in amounts due to bank                                                                                             |  |                          |               |      |   |               |   |   | (231,476       | )
|Increase (decrease) in accrued real estate
  property level expenses and taxes                                              |  |                          | (15,018,427    | )    |   | 23,868,125     |   |   | 60,829,395     |  
|Increase in security deposits held                                                                                          |  |                          | 5,389,330      |      |   | 2,812,909      |   |   | 2,670,715      |  
|Increase (decrease) in other liabilities                                                                                    |  |                          | (353,114       | )    |   | 225,514        |   |   | (1,162,347     | )
|Net realized gain on investments                                                                                            |  |                          | (245,780,194   | )    |   | (86,394,172    | ) |   | (121,635,559   | )
|Net unrealized gain on investments and
  mortgage loans payable                                                             |  |                          | (1,192,654,544 | )    |   | (970,276,123   | ) |   | (644,334,713   | )
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|NET CASH USED IN
  OPERATING ACTIVITIES                                                                                     |  |                          | (1,461,535,069 | )    |   | (2,120,086,148 | ) |   | (2,341,576,446 | )
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|CASH FLOWS FROM FINANCING ACTIVITIES                                                                                        |  |                          |                |      |   |                |   |   |                |  
|Mortgage loan acquired                                                                                                      |  |                          |               |      |   | 153,000,000    |   |   | 232,585,341    |  
|Principal payments on mortgage loans
  payable                                                                              |  |                          | (559,546       | )    |   | (320,805       | ) |   | (173,361       | )
|Premiums                                                                                                                    |  |                          | 1,186,870,080  |      |   | 1,085,057,614  |   |   | 968,189,436    |  
|Net transfers from TIAA                                                                                                     |  |                          | 153,136,947    |      |   | 215,893,898    |   |   | 172,305,147    |  
|Net transfers from CREF Accounts                                                                                            |  |                          | 832,782,037    |      |   | 1,154,122,836  |   |   | 1,238,160,587  |  
|Net transfers from (to) TIAA-CREF
  Institutional Mutual Funds                                                              |  |                          | (51,611,660    | )    |   | (15,318,887    | ) |   | 24,967,250     |  
|Annuity and other periodic payments                                                                                         |  |                          | (95,776,359    | )    |   | (65,192,000    | ) |   | (44,487,142    | )
|Withdrawals and death benefits                                                                                              |  |                          | (560,747,630   | )    |   | (404,782,733   | ) |   | (248,759,442   | )
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|NET CASH PROVIDED BY
  FINANCING ACTIVITIES                                                                                 |  |                          | 1,464,093,869  |      |   | 2,122,459,923  |   |   | 2,342,787,816  |  
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|NET INCREASE IN CASH                                                                                                        |  |                          | 2,558,800      |      |   | 2,373,775      |   |   | 1,211,370      |  
|CASH                                                                                                                        |  |                          |                |      |   |                |   |   |                |  
|Beginning of period                                                                                                         |  |                          | 3,585,145      |      |   | 1,211,370      |   |   |               |  
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|End of period                                                                                                               |  | $                        | 6,143,945      |      | $ | 3,585,145      |   | $ | 1,211,370      |  
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|SUPPLEMENTAL DISCLOSURES:                                                                                                   |  |                          |                |      |   |                |   |   |                |  
|Cash paid for interest                                                                                                      |  | $                        | 83,063,017     |      | $ | 68,034,179     |   | $ | 38,267,618     |  
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  
|Debt assumed in acquisition of properties                                                                                   |  | $                        | 8,922,033      |      | $ | 288,950,559    |   | $ | 211,400,000    |  
|                                                                                                                            |  |                          |                |      |   |                |   |   |                |  

See notes to the financial statements.

57

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TIAA REAL
ESTATE ACCOUNT NOTES TO 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 on February 22, 1995,
under the insurance laws of the State of New York, for the purpose of funding
variable annuity contracts issued by TIAA. The investment objective of the
Account is a favorable long-term rate of return primarily through rental income
and capital appreciation from real estate investments owned by the Account. The
Account holds real estate properties directly and through wholly-owned
subsidiaries. The Account also holds interests in real estate joint ventures
and limited partnerships in which the Account does not hold a controlling
interest; as such, they 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 for operating
expenses, capital expenditures and benefit payments.

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. The following is a
summary of the significant accounting policies of the Account.

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

Reclassifications: During 2007, the Account determined
    that its pro rata share of 2006 undistributed earnings from joint venture
    investments totaling approximately $24 million was reported as income from
    real estate joint ventures and limited partnerships for the year ended December
    31, 2006 when the Account should have reported this amount as unrealized
    appreciation on real estate joint ventures and limited partnerships. Accordingly,
    the Statement of Operations for the year ended December 31, 2006 has been
    adjusted to reflect a reclassification of these undistributed earnings to
    unrealized appreciation on real estate joint ventures and limited partnerships
    equal to this amount. There is no impact to the Accounts total assets,
    total net assets or net asset value per accumulation unit for the periods
    presented as a result of this reclassification.

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

Valuation of Real Estate Properties: Investments in real estate properties are
stated at fair value, as determined in accordance with procedures approved by
the Investment Committee of the TIAA Board of Trustees and in accordance with
the responsibilities of the Board as a whole; accordingly, the Account does not
record depreciation. Fair value for real estate properties is defined as the
most probable price for which a property will sell in a competitive market
under all conditions requisite to a fair sale. Determination of fair value
involves judgment because the actual market value of real estate can be
determined only by negotiation between the parties in a sales transaction. Real
estate properties owned by the Account are initially valued at their respective
purchase prices (including acquisition costs). Subsequently, the properties are
valued on a quarterly cycle with an independent appraisal value completed for
each real estate property at least once a year. An independent fiduciary, Real
Estate Research Corporation, has been appointed by a special subcommittee of
TIAAs Board of Trustees. The independent fiduciary must approve all
independent appraisers used by the Account. TIAAs appraisal staff performs the
other quarterly valuations for each real estate property and updates the
property value as appropriate. The appraisals are performed in accordance with
Uniform Standards of Professional Appraisal Practices (USPAP), the real estate
appraisal industry standards created by The Appraisal Foundation. Real estate
appraisals are estimates of property values based on a professionals opinion.
The independent fiduciary can also require additional appraisals if a
propertys value has changed materially and such change is not

58

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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 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 month. When a real estate
property is subject to a mortgage, the mortgage is valued independently of the
property and its fair value is reported separately. The independent fiduciary
reviews and approves mortgage valuation adjustments which exceed certain
prescribed limits 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 and Limited
Partnerships: Real
estate joint ventures and certain limited partnerships are stated at the
Accounts equity in the net assets of the underlying entities, and for the
joint ventures, are adjusted to value their real estate holdings and mortgage
notes payable at fair value. 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, that occurs prior to the dissolution of the investee entity.

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

Debt securities, other than
money market instruments, are valued at the most recent bid price or the
equivalent quoted yield for such securities (or those of comparable maturity,
quality and type). Money market instruments, with maturities of one year or
less, are valued in the same manner as debt securities or derived from a
pricing matrix that has various types of money market instruments along one
axis and various maturities along the other. Portfolio securities and certain
limited partnership interests for which market quotations are not readily
available are valued at fair value as determined in good faith under the
direction of the Investment Committee of the TIAA Board of Trustees and in
accordance with the responsibilities of the Board as a whole.

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

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

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

Accumulation and Annuity Funds: The Accumulation Fund represents the net
assets attributable to participants in the accumulation phase of their
investment. The Annuity Fund represents the net assets attributable to the
participants currently receiving annuity payments. The net increase or decrease
in net assets from investment operations is apportioned between the accounts
based upon their relative daily net asset values. Once an Account participant
begins

59

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receiving lifetime annuity income
benefits, monthly payment levels cannot be reduced as a result of the Accounts
adverse mortality experience. In addition, the contracts are required to
stipulate the maximum expense charge that can be assessed, which is equal to
2.50% of average net assets per year. 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 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 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 real estate funds (limited partnerships and one
limited liability corporation) and a private real estate investment trust
(REIT) (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 and recorded when the financial statements of the limited
partnerships are received by the Account.

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 and includes accrual
of discount and amortization of premium as applicable. 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.

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 material federal income tax
attributable to the net investment activity of the Account.

Note 2Management Agreements and Arrangements

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

Through December 31, 2007,
administrative and distribution services for the Account are provided by
TIAA-CREF Individual & Institutional Services, LLC (Services) pursuant to
a Distribution and Administrative Services Agreement with the Account. Services,
a wholly-owned subsidiary of TIAA, is a registered broker-dealer and a member
of the Financial Industry Regulatory Authority.

60

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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 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 would fund any such transfer and withdrawal requests
by purchasing accumulation units in the Account. 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
the Condensed Financial Information disclosed in Note 6.

Effective January 1, 2008,
the Account entered into a Distribution Agreement for the Contracts Funded by
the TIAA Real Estate Account (the New Distribution Agreement), dated as of
January 1, 2008, by and among TIAA, for itself and on behalf of the Account,
and Services.

Pursuant to the New
Distribution Agreement, 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) providing assistance in designing,
installing and providing administrative services for contract owners or
institutions, will be performed by Services. The New Distribution Agreement is
terminable by either party upon 60 days written notice and terminates
automatically upon any assignment thereof.

Effective January 1, 2008,
the administrative functions previously performed for the Account by Services,
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, will be performed by TIAA.

Both distribution services
(pursuant to the New Distribution Agreement) and administrative services will
continue to be provided to the Account by Services and TIAA, as applicable, on
an at cost basis.

Note 3Leases

The Accounts real estate
properties are leased to tenants under operating lease agreements which expire
on various dates through 2058. Aggregate minimum annual rentals for the
properties owned, excluding short-term residential and storage facility leases,
are as follows:

|                               |  |   |               | 
|------------------------------ |  | - | ------------- | 
|Years
  Ending 
  December 31, |  |   |               | 
|                               |  |   |               | 
|2008                           |  | $ | 975,895,973   | 
|2009                           |  |   | 906,194,738   | 
|2010                           |  |   | 797,243,797   | 
|2011                           |  |   | 659,462,763   | 
|2012                           |  |   | 549,590,444   | 
|2013-2058                      |  |   | 1,934,542,421 | 
|                               |  |   |               | 
|                               | 
|Total                          |  | $ | 5,822,930,136 | 
|                               |  |   |               | 

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

61

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Note 4Investment 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 notes payable on the properties owned. At December 31,
2007, the Account held 12 joint venture investments with non-controlling
ownership interest percentages that ranged from 50% to 85%. The Accounts
allocated portion of the mortgage notes payable was $1,991,782,600 and
$472,167,225 at December 31, 2007 and December 31, 2006, respectively. The
Accounts equity in the joint ventures at December 31, 2007 and December 31,
2006 was $2,827,508,939 and $1,668,744,951, respectively. A condensed summary
of the financial position and results of operations of the joint ventures is
shown below.

|                                 |  |                   |               |                   |   |               | 
|-------------------------------- |  | ----------------- | ------------- | ----------------- | - | ------------- | 
|                                 |  | December 31, 2007 |               | December 31, 2006 |  
|                                 |  |                   |               |                   |  
|Assets                           |  |                   |               |                   |   |               | 
|Real estate properties, at value |  | $                 | 7,001,687,137 |                   | $ | 3,650,902,513 | 
|Other assets                     |  |                   | 99,798,401    |                   |   | 63,839,503    | 
|                                 |  |                   |               |                   |   |               | 
|Total assets                     |  | $                 | 7,101,485,538 |                   | $ | 3,714,742,016 | 
|                                 |  |                   |               |                   |   |               | 
|Liabilities
  and Equity         |  |                   |               |                   |   |               | 
|Mortgage loans payable, at value |  | $                 | 2,707,160,513 |                   | $ | 875,560,195   | 
|Other liabilities                |  |                   | 64,738,173    |                   |   | 47,949,271    | 
|                                 |  |                   |               |                   |   |               | 
|Total liabilities                |  |                   | 2,771,898,686 |                   |   | 923,509,466   | 
|Equity                           |  |                   | 4,329,586,852 |                   |   | 2,791,232,550 | 
|                                 |  |                   |               |                   |   |               | 
|Total liabilities and equity     |  | $                 | 7,101,485,538 |                   | $ | 3,714,742,016 | 
|                                 |  |                   |               |                   |   |               | 

|                                  |  |                                |             |                                |   |                                |  |   |             | 
|--------------------------------- |  | ------------------------------ | ----------- | ------------------------------ | - | ------------------------------ |  | - | ----------- | 
|                                  |  | Year Ended
  December 31, 2007 |             | Year Ended
  December 31, 2006 |   | Year Ended
  December 31, 2005 | 
|                                  |  |                                |             |                                |   |                                | 
|Operating
  Revenues and Expenses |  |                                |             |                                |   |                                |  |   |             | 
|Revenues                          |  | $                              | 534,468,876 |                                | $ | 299,078,956                    |  | $ | 270,519,206 | 
|Expenses                          |  |                                | 315,076,922 |                                |   | 157,806,671                    |  |   | 142,782,169 | 
|                                  |  |                                |             |                                |   |                                |  |   |             | 
|Excess of revenues over expenses  |  | $                              | 219,391,954 |                                | $ | 141,272,285                    |  | $ | 127,737,037 | 
|                                  |  |                                |             |                                |   |                                |  |   |             | 

The Account invests in
limited partnerships that own real estate properties and receives distributions
from the limited partnerships based on the Accounts non-controlling ownership
interest percentages. At December 31, 2007, the Account held five limited
partnership investments with non-controlling ownership interest percentages
that ranged from 5.27% to 18.45%. The Accounts investment in limited
partnerships was $331,361,434 and $279,283,051 at December 31, 2007 and
December 31, 2006, respectively.

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Note 5Mortgage Loans Payable

At December
31, 2007, the Account had outstanding mortgage loans payable on the following
properties:

|                                                |  |                                                    |  |                            |  |     |  |             |               |   |  |                   |                   | 
|----------------------------------------------- |  | -------------------------------------------------- |  | -------------------------- |  | --- |  | ----------- | ------------- | - |  | ----------------- | ----------------- | 
|Property                                        |  | Interest Rate
  Percentage and
  Payment Frequency |  | Amount
  December 31, 2007 |  | Due | 
|                                                |  |                                                    |  |                            |  |     | 
|50 Fremont                                      |  |                                                    |  | 6.40 paid
  monthly        |  |     |  | $           | 135,000,000   |   |  |                   | August 21, 2013   | 
|Ontario
  Industrial Portfolio (a,b)            |  |                                                    |  | 7.42 paid
  monthly        |  |     |  |             | 8,917,619     |   |  |                   | May 1, 2011       | 
|Fourth &
  Madison                              |  |                                                    |  | 6.40 paid
  monthly        |  |     |  |             | 145,000,000   |   |  |                   | August 21, 2013   | 
|1001
  Pennsylvania Ave                         |  |                                                    |  | 6.40 paid
  monthly        |  |     |  |             | 210,000,000   |   |  |                   | August 21, 2013   | 
|99 High
  Street                                |  |                                                    |  | 5.52 paid
  monthly        |  |     |  |             | 185,000,000   |   |  |                   | November 11, 2015 | 
|Reserve at
  Sugarloaf (a)                      |  |                                                    |  | 5.49 paid
  monthly        |  |     |  |             | 25,891,337    |   |  |                   | June 1, 2013      | 
|1 & 7
  Westferry Circus                        |  |                                                    |  | 5.40 paid
quarterly (c)    |  |     |  | 267,188,869 |               |   |  | November 15, 2012 |                  
|Lincoln
  Centre                                |  |                                                    |  | 5.51 paid
  monthly        |  |     |  |             | 153,000,000   |   |  |                   | February 1, 2016  | 
|Wilshire
  Rodeo Plaza (b)                      |  |                                                    |  | 5.28 paid
  monthly        |  |     |  |             | 112,700,000   |   |  |                   | April 11, 2014    | 
|1401 H
  Street (b)                             |  |                                                    |  | 5.97 paid
  monthly        |  |     |  |             | 115,000,000   |   |  |                   | December 7, 2014  | 
|South Frisco
  Village (b)                      |  |                                                    |  | 5.85 paid
  monthly        |  |     |  |             | 26,250,559    |   |  |                   | June 1, 2013      | 
|Pacific
  Plaza (a)                             |  |                                                    |  | 5.55 paid
  monthly        |  |     |  |             | 8,909,059     |   |  |                   | September 1, 2013 | 
|Publix at
  Weston Commons (b)                  |  |                                                    |  | 5.08 paid
  monthly        |  |     |  |             | 35,000,000    |   |  |                   | January 1, 2036   | 
|                                                |  |                                                    |  |                            |  |     |  |             |               |   |  |                   |                   | 
|Total principal outstanding                     |  |                                                    |  |                            |  |     |  |             | 1,427,857,443 |   |  |                   |                   | 
|Unamortized discount                            |  |                                                    |  |                            |  |     |  |             | (4,746,752    | ) |  |                   |                   | 
|                                                |  |                                                    |  |                            |  |     |  |             |               |   |  |                   |                   | 
|Amortized
    principal                         |  |                                                    |  |                            |  |     |  |             | 1,423,110,691 |   |  |                   |                   | 
|Fair value adjustment                           |  |                                                    |  |                            |  |     |  |             | 3,585,820     |   |  |                   |                   | 
|Cumulative
        foreign currency translation |  |                                                    |  |                            |  |     |  |             | (34,603,529   | ) |  |                   |                   | 
|                                                |  |                                                    |  |                            |  |     |  |             |               |   |  |                   |                   | 
|Total mortgage loans payable                    |  |                                                    |  |                            |  |     |  | $           | 1,392,092,982 |   |  |                   |                   | 
|                                                |  |                                                    |  |                            |  |     |  |             |               |   |  |                   |                   | 

|    |                                                                                                                                                                                                                                                                       
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | The mortgage is adjusted
  monthly for principal payments.                                                                                                                                                                                                            
|    |                                                                                                                                                                                                                                                                       
|(b) | The mortgage was acquired
  at a discount which is amortized monthly.                                                                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                       
|(c) | The mortgage is denominated
  in British pounds and the principal has been converted to U.S. dollars using
     the exchange rate as of December 31, 2007. The quarterly payments are interest
  only, with a balloon payment at maturity. The interest rate is fixed.

Principal on
mortgage loans payable is due as follows:

|                 |  |        |               | 
|---------------- |  | ------ | ------------- | 
|                 |  | Amount |              
|                 |  |        |              
|2008             |  | $      | 736,371       | 
|2009             |  |        | 788,911       | 
|2010             |  |        | 2,161,722     | 
|2011             |  |        | 10,241,993    | 
|2012             |  |        | 269,313,872   | 
|Thereafter       |  |        | 1,144,614,574 | 
|                 |  |        |               | 
|Total maturities |  | $      | 1,427,857,443 | 
|                 |  |        |               | 

63

---



Note 6Condensed Financial Information

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

|                                                                                   |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|---------------------------------------------------------------------------------- |  | ------------------------ | ---------- | ---- | - | ---------- | - | ---- | ---------- | ---- | - | --------- | - | - | --------- | -
|                                                                                   |  | Years Ended December 31, |           
|                                                                                   |  |                          |           
|                                                                                   |  | 2007                     |            | 2006 |   | 2005       |   | 2004 |            | 2003 |  
|                                                                                   |  |                          |            |      |   |            |   |      |            |      |  
|Per Accumulation Unit data:                                                        |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Rental income                                                                      |  | $                        | 17.975     |      | $ | 16.717     |   | $    | 15.604     |      | $ | 13.422    |   | $ | 15.584    |  
|Real estate property level expenses and
 taxes                                     |  |                          | 8.338      |      |   | 7.807      |   |      | 7.026      |      |   | 5.331     |   |   | 5.890     |  
|                                                                                   |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Real estate income, net                                                            |  |                          | 9.637      |      |   | 8.910      |   |      | 8.578      |      |   | 8.091     |   |   | 9.694     |  
|Other income                                                                       |  |                          | 4.289      |      |   | 3.931      |   |      | 3.602      |      |   | 3.341     |   |   | 2.218     |  
|                                                                                   |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Total income                                                                       |  |                          | 13.926     |      |   | 12.841     |   |      | 12.180     |      |   | 11.432    |   |   | 11.912    |  
|Expense charges (1)                                                                |  |                          | 2.554      |      |   | 1.671      |   |      | 1.415      |      |   | 1.241     |   |   | 1.365     |  
|                                                                                   |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Investment income, net                                                             |  |                          | 11.372     |      |   | 11.170     |   |      | 10.765     |      |   | 10.191    |   |   | 10.547    |  
|Net realized and unrealized gain (loss) on
 investments and mortgage loans payable |  |                          | 26.389     |      |   | 22.530     |   |      | 18.744     |      |   | 13.314    |   |   | 2.492     |  
|                                                                                   |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Net increase in Accumulation Unit Value                                            |  |                          | 37.761     |      |   | 33.700     |   |      | 29.509     |      |   | 23.505    |   |   | 13.039    |  
|Accumulation Unit Value:                                                           |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Beginning of year                                                                  |  |                          | 273.653    |      |   | 239.953    |   |      | 210.444    |      |   | 186.939   |   |   | 173.900   |  
|                                                                                   |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|End of year                                                                        |  | $                        | 311.414    |      | $ | 273.653    |   | $    | 239.953    |      | $ | 210.444   |   | $ | 186.939   |  
|                                                                                   |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Total return                                                                       |  |                          | 13.80      | %    |   | 14.04      | % |      | 14.02      | %    |   | 12.57     | % |   | 7.50      | %
|Ratios to Average Net Assets:                                                      |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Expenses (1)                                                                       |  |                          | 0.87       | %    |   | 0.67       | % |      | 0.63       | %    |   | 0.63      | % |   | 0.76      | %
|Investment income, net                                                             |  |                          | 3.88       | %    |   | 4.49       | % |      | 4.82       | %    |   | 5.17      | % |   | 5.87      | %
|Portfolio turnover rate:                                                           |  |                          |            |      |   |            |   |      |            |      |   |           |   |   |           |  
|Real estate properties                                                             |  |                          | 5.59       | %    |   | 3.62       | % |      | 6.72       | %    |   | 2.32      | % |   | 5.12      | %
|Marketable securities                                                              |  |                          | 13.03      | %    |   | 51.05      | % |      | 77.63      | %    |   | 143.47    | % |   | 71.83     | %
|Accumulation Units outstanding at end of
 year (in thousands)                      |  |                          | 55,105     |      |   | 50,146     |   |      | 42,623     |      |   | 33,338    |   |   | 24,724    |  
|Net assets end of year (in thousands)                                              |  | $                        | 17,660,537 |      | $ | 14,132,693 |   | $    | 10,548,711 |      | $ | 7,245,550 |   | $ | 4,793,422 |  

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Expense
 charges per Accumulation Unit and the Ratio of Expenses to Average Net Assets
 reflect 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 year ended December 31, 2007 would be $10.892 ($9.478, $8.441,
 $6.572, and $7.255 for the years ended December 31, 2006, 2005, 2004, and
 2003, respectively), and the Ratio of Expenses to Average Net Assets for the
 year ended December 31, 2007 would be 3.71% (3.81%, 3.78%, 3.33%, and 4.04%
 for the years ended December 31, 2006, 2005, 2004, and 2003, respectively).

64

---



Note 7Accumulation Units

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

|                                                                                                |  |                                  |            |  |  |            |  |  |            | 
|----------------------------------------------------------------------------------------------- |  | -------------------------------- | ---------- |  |  | ---------- |  |  | ---------- | 
|                                                                                                |  | For
the Years Ended December 31, |           
|                                                                                                |  |                                  |           
|                                                                                                |  |                                  | 2007       |  |  | 2006       |  |  | 2005       | 
|                                                                                                |  |                                  |            |  |  |            | 
|Credited for
  premiums                                                                         |  |                                  | 3,795,126  |  |  | 4,056,196  |  |  | 4,335,121  | 
|Net units
  credited for transfers, net disbursements and amounts applied to the Annuity
  Fund |  |                                  | 1,164,238  |  |  | 3,466,667  |  |  | 4,950,773  | 
|Outstanding:                                                                                    |  |                                  |            |  |  |            |  |  |            | 
|Beginning of
  year                                                                             |  |                                  | 50,146,354 |  |  | 42,623,491 |  |  | 33,337,597 | 
|                                                                                                |  |                                  |            |  |  |            |  |  |            | 
|End of year                                                                                     |  |                                  | 55,105,718 |  |  | 50,146,354 |  |  | 42,623,491 | 
|                                                                                                |  |                                  |            |  |  |            |  |  |            | 

Note 8Commitments and Subsequent Events

During the
normal course of business, the Account enters into discussions and agreements
to purchase or sell real estate properties. As of December 31, 2007, the
Account had an outstanding commitment to purchase a leasehold interest in
approximately 40,000 square feet of retail space located in an apartment
property owned by the Account in New York and has subsequently purchased for
approximately $42.7 million.

As of December
31, 2007, the Account entered into a commitment to purchase an interest in a
limited partnership in the amount of $50 million. Together with the Accounts
outstanding commitments to purchase interests in five other limited
partnerships and to purchase shares in a private real estate equity investment
trust, as of December 31, 2007, $87.6 million remains to be funded under these
commitments.

The Account is
party to various other 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.

Effective
March 3, 2008, the Account has entered into an agreement with State Street Bank
and Trust Company (State Street) to serve as the Accounts service provider
to perform certain custodial functions, as well as investment accounting,
recordkeeping, and valuation functions relating to portfolio transactions in
securities made through the Account, and to provide other data and information
as described in the agreement.

Note 9New Accounting Pronouncements

In June 2006,
the Financial Accounting Standards Board (FASB) issued FASB Interpretation
(FIN) 48, an interpretation of FASB Statement No. 109, Accounting for Income
Taxes. FIN 48 clarifies the accounting for uncertainty in income taxes
recognized in an enterprises financial statements and is effective for fiscal
years beginning after December 31, 2006. The adoption of FIN 48 did not have a
significant impact on the Accounts financial position and results of
operations.

In September
2006, FASB issued Statement No. 157, Fair Value Measurements. This Statement
defines fair value, establishes a framework for measuring fair value under
generally accepted accounting principles in the United States, and requires
additional disclosures about fair value measurements. This Statement does not
require any new fair value measurements, but the application of this Statement
could change current practices in determining fair value. This Statement is
effective January 1, 2008 for the Account. The Account has assessed the impact
of Statement No. 157 and determined that it will not significantly change the
Accounts financial position and results of operations at the effective date.

In February
2007, FASB issued Statement No. 159, The Fair Value Option for Financial
Assets and Financial Liabilities. This Statement permits entities to choose to
measure financial instruments and certain other items at fair

65

---



value and is
expected to expand the use of fair value measurement when warranted. The
Account effectively adopted Statement 159 on January 1, 2008 and plans to
report all existing and future Mortgage Loans Payable at fair value using this
Statement. Historically, the Account recorded Mortgage Loans Payable at fair
value. The Account has assessed the impact of Statement 159 in comparison to
historical reporting and determined that it will not significantly change the
Accounts financial position and results of operations.

In June 2007,
the Accounting Standards Executive Committee (ACSEC) of the American
Institute of Certified Public Accountants (AICPA) issued Statement of
Position (SOP) 07-1, Clarification of the Scope of the Audit and Accounting
Guide Investment Companies and Accounting by Parent Companies and Equity Method
Investors for Investments in Investment Companies. The SOP clarifies which
entities are required to apply the provisions of the Investment Companies Audit
and Accounting Guide (Guide) and provides guidance on accounting by parent
companies and equity method investors for investments in investment companies.
The SOP is effective for fiscal years beginning on or after December 15, 2007.
In February 2008, FASB issued Staff Position (FSP) SOP 07-1-1 indefinitely
delaying the effective date of SOP 07-1 to allow FASB time to consider
significant issues related to the implementation of SOP 07-1. Management of the
Account will continue to monitor FASB developments and will evaluate the
financial reporting implications to the Account, as necessary.

In December
2007, FASB issued Statement No. 141(R), Business Combinations, which
establishes principles and requirements for how the acquirer shall recognize
and measure in its financial statements the identifiable assets acquired,
liabilities assumed, any noncontrolling interest in the acquiree and goodwill
acquired in a business combination or a gain from a bargain purchase. This Statement
is effective for business combinations for which the acquisition date is on or
after the beginning of the first annual reporting period beginning on or after
December 15, 2008. The Account is currently assessing the impact that Statement
No. 141(R) will have on its financial position and results of operations.

In December
2007, FASB issued Statement No. 160, Noncontrolling Interests in Consolidated
Financial Statements  an Amendment of ARB No. 51, which establishes and
expands accounting and reporting standards for minority interests, which will
be recharacterized as noncontrolling interests, in a subsidiary and the
deconsolidation of a subsidiary. This Statement is effective for fiscal years
beginning on or after December 15, 2008. The Account is currently assessing the
potential impact that Statement No. 160 will have on its financial position and
results of operations.

66

---



TIAA REAL
ESTATE ACCOUNTSTATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                             |  |   |             |     |      |             |     | 
|------------------------------------------------------------ |  | - | ----------- | --- | ---- | ----------- | --- | 
|                                                             |  |   | Value       |    
|                                                             |  |   |             |    
|Location /
 Description                                      |  |   | 2007        |     | 2006 |            
|                                                             |  |   |             |     |      |            
|REAL ESTATE PROPERTIES63.04% and 69.27%                     |  |   |             |     |      |             |    
|Alabama:                                                     |  |   |             |     |      |             |    
|Inverness Center - Office building                           |  | $ | 125,521,529 |     | $    | 112,256,914 |    
|Arizona:                                                     |  |   |             |     |      |             |    
|Camelback Center - Office building                           |  |   | 80,000,000  |     |      |            |    
|Kierland Apartment Portfolio - Apartments                    |  |   | 170,084,494 |     |      | 206,100,000 |    
|Mountain RA Industrial Portfolio -
 Industrial building      |  |   |            |     |      | 6,605,429   |    
|Phoenix Apartment Portfolio - Apartments                     |  |   | 156,109,517 |     |      | 182,900,000 |    
|California:                                                  |  |   |             |     |      |             |    
|3 Hutton Centre Drive - Office building                      |  |   | 64,200,000  |     |      | 59,011,323  |    
|9 Hutton Centre - Office building                            |  |   |            |     |      | 29,000,000  |    
|50 Fremont - Office building                                 |  |   | 478,000,000 | (1) |      | 421,000,000 | (1)
|88 Kearny Street - Office building                           |  |   | 123,822,200 |     |      | 90,310,024  |    
|275 Battery - Office building                                |  |   | 271,917,498 |     |      | 231,000,000 |    
|980 9th Street and 1010 8th Street - Office
 building        |  |   | 178,000,000 |     |      | 168,000,000 |    
|Rancho Cucamonga Industrial Portfolio -
 Industrial building |  |   | 133,000,000 |     |      | 109,000,000 |    
|Capitol Place - Office building                              |  |   | 53,539,218  |     |      | 50,331,828  |    
|Centerside I - Office building                               |  |   | 67,500,000  |     |      | 67,000,000  |    
|Centre Pointe and Valley View - Industrial
 building         |  |   | 34,142,741  |     |      | 32,385,980  |    
|Eastgate Distribution Center - Industrial
 building          |  |   |            |     |      | 25,558,962  |    
|Larkspur Courts - Apartments                                 |  |   | 97,000,000  |     |      | 93,043,346  |    
|Northern CA RA Industrial Portfolio -
 Industrial building   |  |   | 69,601,997  |     |      | 71,317,741  |    
|Ontario Industrial Portfolio - Industrial
 building          |  |   | 355,398,714 | (1) |      | 298,045,226 | (1)
|Pacific Plaza - Office building                              |  |   | 127,130,076 | (1) |      |            |    
|Regents Court - Apartments                                   |  |   | 69,000,000  |     |      | 67,800,000  |    
|Southern CA RA Industrial Portfolio -
 Industrial building   |  |   | 110,718,042 |     |      | 97,558,473  |    
|The Legacy at Westwood - Apartments                          |  |   | 126,579,694 |     |      | 110,231,593 |    
|Wellpoint - Office building                                  |  |   | 51,000,000  |     |      | 49,000,000  |    
|Westcreek - Apartments                                       |  |   | 39,189,673  |     |      | 35,300,000  |    
|West Lake North Business Park - Office
 building             |  |   | 68,621,818  |     |      | 61,000,000  |    
|Westwood Marketplace - Shopping center                       |  |   | 96,562,192  |     |      | 91,467,954  |    
|Wilshire Rodeo Plaza - Office building                       |  |   | 230,439,415 | (1) |      | 204,084,734 | (1)
|Colorado:                                                    |  |   |             |     |      |             |    
|Palomino Park - Apartments                                   |  |   | 194,001,036 |     |      | 184,000,000 |    
|The Lodge at Willow Creek - Apartments                       |  |   | 43,500,000  |     |      | 39,501,399  |    
|The Market at Southpark - Shopping center                    |  |   | 35,800,000  |     |      | 35,800,000  |    
|Connecticut:                                                 |  |   |             |     |      |             |    
|Ten & Twenty Westport Road - Office
 building                |  |   | 183,006,040 |     |      | 175,000,000 |    
|Delaware:                                                    |  |   |             |     |      |             |    
|Mideast RA Industrial Portfolio -
 Industrial building       |  |   |            |     |      | 16,014,758  |    
|Florida:                                                     |  |   |             |     |      |             |    
|701 Brickell - Office building                               |  |   | 275,941,582 |     |      | 231,239,379 |    
|4200 West Cypress Street - Office building                   |  |   | 48,043,650  |     |      | 43,100,425  |    
|Plantation Grove - Shopping center                           |  |   | 15,400,000  |     |      | 15,010,406  |    
|Pointe on Tampa Bay - Office building                        |  |   | 60,971,897  |     |      | 50,573,824  |    
|Publix at Weston Commons - Shopping center                   |  |   | 55,200,000  | (1) |      | 54,411,436  | (1)

67

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                     |  |   |             |     |      |             |     | 
|-------------------------------------------------------------------- |  | - | ----------- | --- | ---- | ----------- | --- | 
|                                                                     |  |   | Value       |    
|                                                                     |  |   |             |    
|Location /
 Description                                              |  |   | 2007        |     | 2006 |            
|                                                                     |  |   |             |     |      |            
|Quiet Waters at Coquina Lakes - Apartments                           |  | $ | 26,204,860  |     | $    | 24,006,100  |    
|Royal St. George - Apartments                                        |  |   | 27,000,000  |     |      | 25,000,000  |    
|Sawgrass Office Portfolio - Office building                          |  |   |            |     |      | 72,000,000  |    
|Seneca Industrial Park - Industrial
 building                        |  |   | 122,334,422 |     |      |            |    
|South Florida Apartment Portfolio -
 Apartments                      |  |   | 68,248,605  |     |      | 65,099,785  |    
|Suncrest Village - Shopping center                                   |  |   | 19,500,000  |     |      | 17,009,378  |    
|The Fairways of Carolina - Apartments                                |  |   | 27,207,661  |     |      | 25,309,965  |    
|The Greens at Metrowest - Apartments                                 |  |   |            |     |      | 21,011,825  |    
|The North 40 Office Complex - Office
 building                       |  |   | 67,003,544  |     |      | 63,500,000  |    
|Urban Centre - Office building                                       |  |   | 135,577,463 |     |      | 121,000,000 |    
|France:                                                              |  |   |             |     |      |             |    
|Printemps De LHomme - Shopping center                               |  |   | 279,077,542 |     |      |            |    
|Georgia:                                                             |  |   |             |     |      |             |    
|1050 Lenox Park - Apartments                                         |  |   | 85,500,000  |     |      | 79,470,836  |    
|Atlanta Industrial Portfolio - Industrial
 building                  |  |   | 58,300,000  |     |      | 77,863,416  |    
|Glenridge Walk - Apartments                                          |  |   | 52,900,000  |     |      | 48,710,574  |    
|Reserve at Sugarloaf - Apartments                                    |  |   | 52,000,000  | (1) |      | 49,500,000  | (1)
|Shawnee Ridge Industrial Portfolio -
 Industrial building            |  |   | 76,742,231  |     |      | 76,117,193  |    
|Illinois:                                                            |  |   |             |     |      |             |    
|Chicago Caleast Industrial Portfolio -
 Industrial building          |  |   | 77,642,826  |     |      | 74,999,590  |    
|Chicago Industrial Portfolio - Industrial
 building                  |  |   | 86,420,886  |     |      | 89,104,640  |    
|East North Central RA Industrial Portfolio
 - Industrial building    |  |   | 38,016,397  |     |      | 37,503,284  |    
|Oak Brook Regency Towers - Office building                           |  |   | 86,891,650  |     |      | 83,200,000  |    
|Parkview Plaza - Office building                                     |  |   | 66,066,513  |     |      | 59,400,000  |    
|Kentucky:                                                            |  |   |             |     |      |             |    
|IDI Kentucky Portfolio - Industrial
 building                        |  |   |            |     |      | 66,552,034  |    
|Maryland:                                                            |  |   |             |     |      |             |    
|Broadlands Business Park - Industrial
 building                      |  |   | 35,500,000  |     |      | 35,002,731  |    
|FEDEX Distribution Facility - Industrial
 building                   |  |   | 9,900,000   |     |      | 8,500,000   |    
|GE Appliance East Coast Distribution
 Facility - Industrial building |  |   | 48,000,000  |     |      | 48,000,000  |    
|Massachusetts:                                                       |  |   |             |     |      |             |    
|99 High Street - Office building                                     |  |   | 344,688,328 | (1) |      | 291,806,564 | (1)
|Batterymarch Park II - Office building                               |  |   |            |     |      | 13,234,314  |    
|Needham Corporate Center - Office building                           |  |   | 33,275,228  |     |      | 22,712,550  |    
|Northeast RA Industrial Portfolio -
 Industrial building             |  |   | 33,300,000  |     |      | 30,900,000  |    
|The Newbry - Office building                                         |  |   | 389,880,008 |     |      | 370,745,525 |    
|Minnesota:                                                           |  |   |             |     |      |             |    
|Champlin Marketplace - Shopping center                               |  |   | 18,375,000  |     |      |            |    
|Nevada:                                                              |  |   |             |     |      |             |    
|UPS Distribution Facility - Industrial
 building                     |  |   | 15,900,000  |     |      | 15,000,000  |    
|New Jersey:                                                          |  |   |             |     |      |             |    
|10 Waterview Boulevard - Office building                             |  |   |            |     |      | 32,100,000  |    
|Konica Photo Imaging Headquarters -
 Industrial building             |  |   | 23,500,000  |     |      | 23,100,000  |    
|Marketfair - Shopping center                                         |  |   | 95,500,000  |     |      | 94,058,427  |    
|Morris Corporate Center III - Office
 building                       |  |   | 119,600,001 |     |      | 114,857,104 |    
|NJ Caleast Industrial Portfolio -
 Industrial building               |  |   | 42,225,000  |     |      | 41,920,988  |    

68

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                |  |   |             |     |      |             |     | 
|--------------------------------------------------------------- |  | - | ----------- | --- | ---- | ----------- | --- | 
|                                                                |  |   | Value       |    
|                                                                |  |   |             |    
|Location /
 Description                                         |  |   | 2007        |     | 2006 |            
|                                                                |  |   |             |     |      |            
|Plainsboro Plaza - Shopping center                              |  | $ | 51,000,000  |     | $    | 50,900,000  |    
|South River Road Industrial - Industrial building               |  |   | 53,400,000  |     |      | 60,600,000  |    
|New York:                                                       |  |   |             |     |      |             |    
|780 Third Avenue - Office building                              |  |   | 375,000,000 |     |      | 298,000,000 |    
|The Colorado - Apartments                                       |  |   | 113,033,240 |     |      | 100,000,000 |    
|Ohio:                                                           |  |   |             |     |      |             |    
|Columbus Portfolio - Office building                            |  |   | 26,314,686  |     |      | 24,600,000  |    
|Pennsylvania:                                                   |  |   |             |     |      |             |    
|Lincoln Woods - Apartments                                      |  |   | 37,917,165  |     |      | 37,781,555  |    
|Tennessee:                                                      |  |   |             |     |      |             |    
|Airways Distribution Center - Industrial
 building              |  |   | 24,300,000  |     |      | 24,857,278  |    
|Memphis Caleast Industrial Portfolio -
 Industrial building     |  |   |            |     |      | 52,500,000  |    
|Summit Distribution Center - Industrial
 building               |  |   | 27,500,000  |     |      | 26,300,000  |    
|Texas:                                                          |  |   |             |     |      |             |    
|Butterfield Industrial Park - Industrial
 building              |  |   |            |     |      | 5,100,000   | (2)
|Dallas Industrial Portfolio - Industrial
 building              |  |   | 154,055,892 |     |      | 153,210,519 |    
|Four Oaks Place - Office building                               |  |   | 419,270,107 |     |      | 306,200,984 |    
|Houston Apartment Portfolio - Apartments                        |  |   | 296,241,497 |     |      | 306,042,523 |    
|Lincoln Centre - Office building                                |  |   | 305,000,000 | (1) |      | 270,000,000 | (1)
|Park Place on Turtle Creek - Office
 building                   |  |   | 48,282,785  |     |      | 44,573,669  |    
|Pinnacle Industrial /DFW Trade Center -
 Industrial building    |  |   | 46,700,000  |     |      | 45,874,807  |    
|Preston Sherry Plaza - Office building                          |  |   | 45,500,000  |     |      |            |    
|South Frisco Village - Shopping center                          |  |   | 48,500,000  | (1) |      | 47,014,065  | (1)
|The Caruth - Apartments                                         |  |   | 65,427,458  |     |      | 60,007,237  |    
|The Legends at Chase Oaks - Apartments                          |  |   |            |     |      | 29,025,236  |    
|The Maroneal - Apartments                                       |  |   | 40,033,822  |     |      | 39,113,694  |    
|United Kingdom:                                                 |  |   |             |     |      |             |    
|1 & 7 Westferry Circus - Office
 building                       |  |   | 436,127,130 | (1) |      | 428,574,628 | (1)
|Utah:                                                           |  |   |             |     |      |             |    
|Landmark at Salt Lake City (Building #4) -
 Industrial building |  |   |            |     |      | 16,509,871  |    
|Virginia:                                                       |  |   |             |     |      |             |    
|8270 Greensboro Drive - Office building                         |  |   | 63,500,000  |     |      | 62,000,000  |    
|Ashford Meadows - Apartments                                    |  |   | 94,059,776  |     |      | 89,091,341  |    
|Monument Place - Office building                                |  |   |            |     |      | 58,600,000  |    
|One Virginia Square - Office building                           |  |   | 59,538,690  |     |      | 53,000,000  |    
|The Ellipse at Ballston - Office building                       |  |   | 92,504,000  |     |      | 85,439,350  |    
|Washington:                                                     |  |   |             |     |      |             |    
|Creeksides at Centerpoint - Office building                     |  |   | 42,000,000  |     |      | 40,508,139  |    
|Fourth & Madison - Office building                              |  |   | 487,000,000 | (1) |      | 398,990,017 | (1)
|Millennium Corporate Park - Office building                     |  |   | 158,000,000 |     |      | 139,107,181 |    
|Northwest RA Industrial Portfolio -
 Industrial building        |  |   | 23,401,540  |     |      | 20,684,499  |    
|Rainier Corporate Park - Industrial
 building                   |  |   | 81,160,792  |     |      | 69,362,219  |    
|Regal Logistics Campus - Industrial
 building                   |  |   | 71,000,000  |     |      | 66,000,000  |    

69

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                                           |  |   |                |       |      |                |       | 
|------------------------------------------------------------------------------------------ |  | - | -------------- | ----- | ---- | -------------- | ----- | 
|                                                                                           |  |   | Value          |      
|                                                                                           |  |   |                |      
|Location /
 Description                                                                    |  |   | 2007           |       | 2006 |               
|                                                                                           |  |   |                |       |      |               
|Washington DC:                                                                             |  |   |                |       |      |                |      
|1001 Pennsylvania Avenue - Office building                                                 |  | $ | 640,149,632    | (1)   | $    | 552,502,209    | (1)  
|1401 H Street, NW - Office building                                                        |  |   | 224,576,156    | (1)   |      | 207,806,286    | (1)  
|1900 K Street - Office building                                                            |  |   | 285,000,000    |       |      | 255,002,226    |      
|Mazza Gallerie - Shopping center                                                           |  |   | 97,000,018     |       |      | 86,350,179     |      
|                                                                                           |  |   |                |       |      |                |      
|                                                                                           |  |   |                |       |      |                |      
|TOTAL REAL ESTATE PROPERTIES
 (Cost $9,804,488,802 and $9,462,471,032)                     |  |   | 11,983,715,574 |       |      | 10,743,487,689 |      
|                                                                                           |  |   |                |       |      |                |      
|OTHER REAL ESTATE-RELATED
 INVESTMENTS16.61% and 12.56%                                   |  |   |                |       |      |                |      
|                                                                                           |  |   |                |       |      |                |      
|REAL ESTATE JOINT VENTURES14.87% and
 10.76%                                              |  |   |                |       |      |                |      
|CA - Colorado Center LP
 Yahoo! Center (50% Account Interest)                              |  |   | 369,402,407    | (3)   |      | 187,766,625    | (3)  
|CA -Treat Towers LP
 Treat Towers (75% Account Interest)                                   |  |   | 118,997,021    |       |      | 94,023,131     |      
|GA -Buckhead LLC
 Prominence in Buckhead (75% Account Interest)                            |  |   | 115,427,071    |       |      | 107,256,320    |      
|Florida Mall Associates, Ltd.
 The Florida Mall (50% Account Interest)                     |  |   | 296,486,153    | (3)   |      | 237,919,775    | (3)  
|IL -161 Clark Street LLC
161 North Clark Street (75% Account
 Interest)                    |  |   | 3,150,995      | (4)   |      | 189,183,793    |      
|MA -One Boston Place REIT
 One Boston Place (50.25% Account Interest)                      |  |   | 246,440,493    |       |      | 177,900,327    |      
|DDR TC LLC
 DDR Joint Venture -Various (85% Account Interest)                              |  |   | 1,028,297,460  | (3,5) |      |               |      
|Storage Portfolio I, LLC
 Storage Portfolio (75% Account Interest)                         |  |   | 81,943,321     | (3,5) |      | 74,864,074     | (3,5)
|Strategic Ind Portfolio I, LLC
 IDI Nationwide Industrial Portfolio (60% Account Interest) |  |   | 76,536,044     | (3,5) |      | 70,348,753     | (3,5)
|Teachers REA IV, LLC
 Tysons Executive Plaza II (50% Account Interest)                    |  |   | 44,178,210     |       |      | 40,570,382     |      
|TREA Florida Retail, LLC
 Florida Retail Portfolio (80% Account Interest)                  |  |   | 260,879,060    |       |      | 265,396,677    |      
|West Dade Associates
 Miami International Mall (50% Account Interest)                      |  |   | 109,944,638    | (3)   |      | 97,300,131     | (3)  
|West Town Mall, LLC
 West Town Mall (50% Account Interest)                                 |  |   | 75,826,066     | (3)   |      | 126,214,963    | (3)  
|                                                                                           |  |   |                |       |      |                |      
|TOTAL REAL ESTATE JOINT VENTURES(Cost $2,005,340,226 and
$1,168,027,179)                   |  |   | 2,827,508,939  |       |      | 1,668,744,951  |      
|                                                                                           |  |   |                |       |      |                |      
|                                                                                           |  |   |                |       |      |                |      
|LIMITED PARTNERSHIPS1.74% and 1.80%                                                       |  |   |                |       |      |                |      
|Cobalt Industrial REIT (10.998% Account
 Interest)                                         |  |   | 32,840,031     |       |      | 26,506,381     |      
|Colony Realty Partners LP (5.27% Account
 Interest)                                        |  |   | 32,505,008     |       |      | 26,382,659     |      
|Heitman Value Partners Fund (8.43% Account
 Interest)                                      |  |   | 24,488,535     |       |      | 24,578,388     |      
|Lion Gables Apartment Fund (18.45% Account
 Interest)                                      |  |   | 205,162,203    |       |      | 179,013,211    |      

70

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                                                     |  |   |               |  |      |               |  | 
|---------------------------------------------------------------------------------------------------- |  | - | ------------- |  | ---- | ------------- |  | 
|                                                                                                     |  |   | Value         | 
|                                                                                                     |  |   |               | 
|Location /
 Description                                                                              |  |   | 2007          |  | 2006 |              
|                                                                                                     |  |   |               |  |      |              
|MONY/Transwestern Mezzanine Fund RP (19.75%
 Account Interest)                                       |  | $ |              |  | $    | 454,319       | 
|MONY/Transwestern Mezz RP II (16.67%
 Account Interest)                                              |  |   | 36,365,657    |  |      | 22,348,093    | 
|                                                                                                     |  |   |               |  |      |               | 
|                                                                                                    
|TOTAL LIMITED PARTNERSHIPS
 (Cost $255,579,349 and $245,295,745)                                     |  |   | 331,361,434   |  |      | 279,283,051   | 
|                                                                                                     |  |   |               |  |      |               | 
|                                                                                                    
|TOTAL REAL ESTATE JOINT VENTURES AND
 LIMITED PARTNERSHIPS
 (Cost $2,260,919,575 and $1,413,322,924) |  |   | 3,158,870,373 |  |      | 1,948,028,002 | 
|                                                                                                     |  |   |               |  |      |               | 
|                                                                                                     |  |   |               |  |      |               | 
|MARKETABLE SECURITIES19.97% and 17.69%                                                              |  |   |               |  |      |               | 
|                                                                                                     |  |   |               |  |      |               | 
|REAL ESTATE-RELATED MARKETABLE SECURITIES2.24%
 and 4.54%                                           |  |   |               |  |      |               | 
|                                                                                                     |  |   |               |  |      |               | 
|REAL ESTATE EQUITY SECURITIES2.24% and
 3.99%                                                       |  |   |               |  |      |               | 

|        |  |         |  |                                                                        |  |      |            |      |  |            | 
|------- |  | ------- |  | ---------------------------------------------------------------------- |  | ---- | ---------- | ---- |  | ---------- | 
|Shares  |  |         |  | Value                                                                  | 
|        |  |         |  |                                                                        | 
|2007    |  | 2006    |  | Issuer                                                                 |  | 2007 |            | 2006 | 
|        |  |         |  |                                                                        |  |      |            |      | 
|51,200  |  | 53,300  |  | Acadia
 Realty Trust                                                   |  |      | 1,311,232  |      |  | 1,333,566  | 
|       |  | 68,700  |  | Affordable
 Residential Communities LP                                 |  |      |           |      |  | 800,355    | 
|       |  | 68,700  |  | Affordable Residential Communities LP share
 rights
 (expired 1/23/07) |  |      |           |      |  | 16,488     | 
|3,300   |  | 3,800   |  | Alexanders
 Inc.                                                      |  |      | 1,165,725  |      |  | 1,594,670  | 
|53,100  |  | 54,400  |  | Alexandria
 Real Estate Equities Inc.                                  |  |      | 5,398,677  |      |  | 5,461,760  | 
|164,585 |  | 166,985 |  | AMB Property
 Corp.                                                    |  |      | 9,473,513  |      |  | 9,786,991  | 
|45,100  |  | 42,500  |  | American
 Campus Communities Inc.                                      |  |      | 1,210,935  |      |  | 1,209,975  | 
|214,600 |  | 244,900 |  | American
 Financial Realty Trust                                       |  |      | 1,721,092  |      |  | 2,801,656  | 
|159,700 |  | 181,500 |  | Apartment
 Investment & Management Co.                                 |  |      | 5,546,381  |      |  | 10,167,630 | 
|       |  | 408,900 |  | Archstone-Smith
 Trust                                                 |  |      |           |      |  | 23,802,069 | 
|200,000 |  | 118,500 |  | Ashford
 Hospitality Trust Inc.                                        |  |      | 1,438,000  |      |  | 1,475,325  | 
|27,500  |  | 33,300  |  | Associated
 Estates Realty Corp.                                       |  |      | 259,600    |      |  | 457,542    | 
|132,200 |  | 138,900 |  | AvalonBay
 Communities Inc.                                            |  |      | 12,445,308 |      |  | 18,063,945 | 
|109,100 |  | 122,400 |  | BioMed
 Realty Trust Inc.                                              |  |      | 2,527,847  |      |  | 3,500,640  | 
|198,600 |  | 217,200 |  | Boston
 Properties Inc.                                                |  |      | 18,233,466 |      |  | 24,300,336 | 
|148,100 |  | 171,500 |  | Brandywine
 Realty Trust                                               |  |      | 2,655,433  |      |  | 5,702,375  | 
|86,500  |  | 94,200  |  | BRE
 Properties Inc.                                                   |  |      | 3,505,845  |      |  | 6,124,884  | 
|341,650 |  | 220,300 |  | Brookfield
 Properties Corp.                                           |  |      | 6,576,763  |      |  | 8,664,399  | 
|93,500  |  | 105,200 |  | Camden
 Property Trust                                                 |  |      | 4,502,025  |      |  | 7,769,020  | 
|110,900 |  | 121,500 |  | CBL & Associates
 Properties Inc.                                      |  |      | 2,651,619  |      |  | 5,267,025  | 
|74,900  |  | 74,900  |  | Cedar
 Shopping Centers Inc.                                           |  |      | 766,227    |      |  | 1,191,659  | 
|75,400  |  | 87,600  |  | Colonial
 Properties Trust                                             |  |      | 1,706,302  |      |  | 4,106,688  | 
|79,500  |  | 80,600  |  | Corporate
 Office Properties Trust                                     |  |      | 2,504,250  |      |  | 4,067,882  | 
|71,100  |  | 75,500  |  | Cousins
 Properties Inc.                                               |  |      | 1,571,310  |      |  | 2,662,885  | 
|       |  | 179,000 |  | Crescent
 Real Estate Equities Company                                 |  |      |           |      |  | 3,535,250  | 
|281,100 |  |        |  | DCT
 Industrial Trust Inc.                                             |  |      | 2,617,041  |      |  |           | 
|205,000 |  | 204,000 |  | Developers
 Diversified Realty Corp.                                   |  |      | 7,849,450  |      |  | 12,841,800 | 
|157,000 |  | 125,500 |  | DiamondRock
 Hospitality Co.                                           |  |      | 2,351,860  |      |  | 2,260,255  | 
|99,000  |  | 84,100  |  | Digital
 Realty Trust Inc.                                             |  |      | 3,798,630  |      |  | 2,878,743  | 
|164,400 |  | 123,500 |  | Douglas
 Emmett Inc.                                                   |  |      | 3,717,084  |      |  | 3,283,865  | 

71

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|        |  |         |  |                                            |  |      |            |      |   |            | 
|------- |  | ------- |  | ------------------------------------------ |  | ---- | ---------- | ---- | - | ---------- | 
|Shares  |  |         |  | Value                                      | 
|        |  |         |  |                                            | 
|2007    |  | 2006    |  | Issuer                                     |  | 2007 |            | 2006 |  
|        |  |         |  |                                            |  |      |            |      |  
|243,000 |  | 252,100 |  | Duke Realty
 Corp.                         |  | $    | 6,337,440  |      | $ | 10,310,890 | 
|51,700  |  |        |  | Dupont
 Fabros Technology                  |  |      | 1,013,320  |      |   |           | 
|39,400  |  | 42,900  |  | EastGroup
 Properties Inc.                 |  |      | 1,648,890  |      |   | 2,297,724  | 
|49,900  |  | 49,900  |  | Education
 Realty Trust Inc.               |  |      | 560,876    |      |   | 737,023    | 
|       |  | 103,400 |  | Equity Inns
 Inc.                          |  |      |           |      |   | 1,650,264  | 
|37,300  |  | 38,800  |  | Equity
 Lifestyle Properties Inc.          |  |      | 1,703,491  |      |   | 2,111,884  | 
|       |  | 654,500 |  | Equity
 Office Properties Trust            |  |      |           |      |   | 31,527,265 | 
|60,800  |  | 69,900  |  | Equity One
 Inc.                           |  |      | 1,400,224  |      |   | 1,863,534  | 
|452,300 |  | 544,300 |  | Equity
 Residential                        |  |      | 16,495,381 |      |   | 27,623,225 | 
|42,000  |  | 43,600  |  | Essex
 Property Trust Inc.                 |  |      | 4,094,580  |      |   | 5,635,300  | 
|108,700 |  | 120,200 |  | Extra Space
 Storage Inc.                  |  |      | 1,553,323  |      |   | 2,194,852  | 
|93,700  |  | 103,200 |  | Federal
 Realty Investment Trust           |  |      | 7,697,455  |      |   | 8,772,000  | 
|101,300 |  | 115,300 |  | FelCor
 Lodging Trust Inc.                 |  |      | 1,579,267  |      |   | 2,518,152  | 
|74,700  |  | 84,300  |  | First Industrial
 Realty Trust Inc.        |  |      | 2,584,620  |      |   | 3,952,827  | 
|41,600  |  | 41,600  |  | First
 Potomac Realty Trust                |  |      | 719,264    |      |   | 1,210,976  | 
|384,500 |  | 423,600 |  | General
 Growth Properties Inc.            |  |      | 15,833,710 |      |   | 22,124,628 | 
|62,700  |  | 69,600  |  | Glimcher
 Realty Trust                     |  |      | 895,983    |      |   | 1,859,016  | 
|64,200  |  | 73,800  |  | GMH
 Communities Trust                     |  |      | 354,384    |      |   | 749,070    | 
|360,900 |  |        |  | HCP Inc                                    |  |      | 12,552,102 |      |   |           | 
|141,700 |  |        |  | Health Care
 REIT Inc                      |  |      | 6,332,573  |      |   |           | 
|84,600  |  |        |  | Healthcare
 Realty Trust Inc               |  |      | 2,147,994  |      |   |           | 
|70,900  |  | 59,500  |  | Hersha
 Hospitality Trust                  |  |      | 673,550    |      |   | 674,730    | 
|       |  | 107,500 |  | Highland
 Hospitality Corp.                |  |      |           |      |   | 1,531,875  | 
|96,300  |  | 101,700 |  | Highwoods
 Properties Inc.                 |  |      | 2,829,294  |      |   | 4,145,292  | 
|55,500  |  | 64,000  |  | Home
 Properties Inc.                      |  |      | 2,489,175  |      |   | 3,793,280  | 
|155,800 |  | 147,900 |  | Hospitality
 Properties Trust              |  |      | 5,019,876  |      |   | 7,029,687  | 
|869,070 |  | 973,570 |  | Host Hotels
 & Resorts Inc.                |  |      | 14,808,953 |      |   | 23,901,143 | 
|375,400 |  | 396,700 |  | HRPT
 Properties Trust                     |  |      | 2,901,842  |      |   | 4,899,245  | 
|95,300  |  | 116,700 |  | Inland Real
 Estate Corp.                  |  |      | 1,349,448  |      |   | 2,184,624  | 
|       |  | 84,800  |  | Innkeepers
 USA Trust                      |  |      |           |      |   | 1,314,400  | 
|54,100  |  | 59,400  |  | Kilroy
 Realty Corp.                       |  |      | 2,973,336  |      |   | 4,633,200  | 
|365,921 |  | 409,521 |  | Kimco Realty
 Corp.                        |  |      | 13,319,524 |      |   | 18,407,969 | 
|47,600  |  | 55,300  |  | Kite Realty
 Group Trust                   |  |      | 726,852    |      |   | 1,029,686  | 
|66,600  |  | 75,000  |  | LaSalle
 Hotel Properties                  |  |      | 2,124,540  |      |   | 3,438,750  | 
|151,900 |  | 167,000 |  | Liberty
 Property Trust                    |  |      | 4,376,239  |      |   | 8,206,380  | 
|121,000 |  | 135,900 |  | Macerich
 Co./The                          |  |      | 8,598,260  |      |   | 11,764,863 | 
|111,900 |  | 118,700 |  | Mack-Cali
 Realty Corp.                    |  |      | 3,804,600  |      |   | 6,053,700  | 
|59,900  |  | 81,000  |  | Maguire
 Properties Inc.                   |  |      | 1,765,253  |      |   | 3,240,000  | 
|42,300  |  | 44,000  |  | Mid-America
 Apartment Communities         |  |      | 1,808,325  |      |   | 2,518,560  | 
|       |  | 100,200 |  | Mills
 Corp./The                           |  |      |           |      |   | 2,004,000  | 
|155,200 |  |        |  | Nationwide
 Health Properties Inc.         |  |      | 4,868,624  |      |   |           | 
|       |  | 198,000 |  | New Plan
 Excel Realty Trust               |  |      |           |      |   | 5,441,040  | 
|25,400  |  | 25,100  |  | Parkway
 Properties Inc./Md                |  |      | 939,292    |      |   | 1,280,351  | 
|65,900  |  | 69,500  |  | Pennsylvania
 Real Estate Investment Trust |  |      | 1,955,912  |      |   | 2,736,910  | 
|72,200  |  | 79,300  |  | Post
 Properties Inc.                      |  |      | 2,535,664  |      |   | 3,624,010  | 
|427,900 |  | 462,500 |  | Prologis                                   |  |      | 27,120,302 |      |   | 28,106,125 | 

72

---



TIAA REAL ESTATE ACCOUNT 
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                           |  |         |             |                                        |  |             |            |      |   |            | 
|-------------------------------------------------------------------------- |  | ------- | ----------- | -------------------------------------- |  | ----------- | ---------- | ---- | - | ---------- | 
|Shares                                                                     |  |         |             | Value                                  | 
|                                                                           |  |         |             |                                        | 
|2007                                                                       |  | 2006    |             | Issuer                                 |  | 2007        |            | 2006 |  
|                                                                           |  |         |             |                                        |  |             |            |      |  
|26,900                                                                     |  | 30,200  |             | PS Business
  Parks Inc.               |  | $           | 1,413,595  |      | $ | 2,135,442  | 
|214,614                                                                    |  | 241,114 |             | Public
  Storage Inc.                  |  |             | 15,754,814 |      |   | 23,508,615 | 
|31,500                                                                     |  | 28,500  |             | Ramco-Gershenson
  Properties          |  |             | 673,155    |      |   | 1,086,990  | 
|                                                                          |  | 157,000 |             | Reckson
  Associates Realty Corp.      |  |             |           |      |   | 7,159,200  | 
|115,100                                                                    |  | 129,300 |             | Regency
  Centers Corp.                |  |             | 7,422,799  |      |   | 10,107,381 | 
|19,300                                                                     |  | 20,600  |             | Saul Centers
  Inc.                    |  |             | 1,031,199  |      |   | 1,136,914  | 
|139,600                                                                    |  |        |             | Senior
  Housing Properties Trust      |  |             | 3,166,128  |      |   |           | 
|373,221                                                                    |  | 412,821 |             | Simon
  Property Group Inc.            |  |             | 32,417,976 |      |   | 41,814,639 | 
|98,507                                                                     |  | 86,300  |             | SL Green
  Realty Corp.                |  |             | 9,206,464  |      |   | 11,458,914 | 
|36,500                                                                     |  | 33,500  |             | Sovran Self
  Storage Inc.             |  |             | 1,463,650  |      |   | 1,918,880  | 
|124,300                                                                    |  | 134,700 |             | Strategic
  Hotels & Resorts Inc.      |  |             | 2,079,539  |      |   | 2,935,113  | 
|27,800                                                                     |  | 30,900  |             | Sun
  Communities Inc.                 |  |             | 585,746    |      |   | 999,924    | 
|98,200                                                                     |  | 109,400 |             | Sunstone
  Hotel Investors Inc.        |  |             | 1,796,078  |      |   | 2,924,262  | 
|52,300                                                                     |  | 58,300  |             | Tanger
  Factory Outlet Centers        |  |             | 1,972,233  |      |   | 2,278,364  | 
|88,800                                                                     |  | 98,400  |             | Taubman
  Centers Inc.                 |  |             | 4,368,072  |      |   | 5,004,624  | 
|224,000                                                                    |  |        |             | UDR, Inc.                              |  |             | 4,446,400  |      |   |           | 
|                                                                          |  | 250,400 |             | United
  Dominion Realty Trust Inc.    |  |             |           |      |   | 7,960,216  | 
|17,000                                                                     |  |        |             | Universal
  Health Realty Income Trust |  |             | 602,480    |      |   |           | 
|78,500                                                                     |  | 95,400  |             | U-Store-It
  Trust                     |  |             | 719,060    |      |   | 1,960,470  | 
|221,800                                                                    |  |        |             | Ventas Inc.                            |  |             | 10,036,450 |      |   |           | 
|237,100                                                                    |  | 245,800 |             | Vornado
  Realty Trust                 |  |             | 20,852,945 |      |   | 29,864,700 | 
|77,700                                                                     |  | 85,500  |             | Washington
  Real Estate Investment    |  |             | 2,440,556  |      |   | 3,420,000  | 
|133,000                                                                    |  | 148,500 |             | Weingarten
  Realty Investors          |  |             | 4,181,520  |      |   | 6,847,335  | 
|                                                                          |  | 44,700  |             | Winston
  Hotels Inc.                  |  |             |           |      |   | 592,275    | 
|                                                                           |  |         |             |                                        |  |             |            |      |   |            | 
|TOTAL REAL ESTATE EQUITY SECURITIES
  (Cost $439,154,248 and $484,071,757) |  |         | 426,630,212 |                                        |  | 619,342,386 |           
|                                                                           |  |         |             |                                        |  |             |            |      |   |            | 
|COMMERCIAL MORTGAGE-BACKED SECURITIES0.00% and 0.55%                      |  |         |             |                                        |  |             |           

|          |  |            |  |                                                 |  |      |   |      |  |            | 
|--------- |  | ---------- |  | ----------------------------------------------- |  | ---- | - | ---- |  | ---------- | 
|Principal |  |            |  | Value                                           | 
|          |  |            |  |                                                 | 
|2007      |  | 2006       |  | Issuer,
  Interest Rate and Maturity Date       |  | 2007 |   | 2006 | 
|          |  |            |  |                                                 |  |      |   |      | 
|         |  | 10,000,000 |  | Commercial Mortgage Pass
  5.450% 12/15/20      |  |      |  |      |  | 10,000,000 | 
|         |  | 3,389,773  |  | Credit Suisse Mortgage Company
  5.470% 4/15/21 |  |      |  |      |  | 3,390,255  | 
|         |  | 10,000,000 |  | GS Mortgage Securities Co
  5.682% 5/3/18       |  |      |  |      |  | 10,186,930 | 
|         |  | 8,780,566  |  | GS Mortgage Securities Co
  5.420% 6/6/20       |  |      |  |      |  | 8,782,059  | 
|         |  | 9,996,970  |  | JP Morgan Chase Commercial
  5.440% 11/15/18    |  |      |  |      |  | 9,996,970  | 
|         |  | 9,298,609  |  | Lehman Brothers Floating
  5.430% 9/15/21       |  |      |  |      |  | 9,298,971  | 
|         |  | 9,143,864  |  | Morgan Stanley Capital
  5.440% 7/15/19         |  |      |  |      |  | 9,144,605  | 

73

---



TIAA REAL ESTATE ACCOUNT 
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                                      |  |            |             |                                                 |  |             |            |      |   |            | 
|------------------------------------------------------------------------------------- |  | ---------- | ----------- | ----------------------------------------------- |  | ----------- | ---------- | ---- | - | ---------- | 
|Principal                                                                             |  |            |             | Value                                           | 
|                                                                                      |  |            |             |                                                 | 
|2007                                                                                  |  | 2006       |             | Issuer,
  Interest Rate and Maturity Date       |  | 2007        |            | 2006 |  
|                                                                                      |  |            |             |                                                 |  |             |            |      |  
|                                                                                     |  | 10,000,000 |             | Morgan Stanley Dean Witter
  5.712% 2/3/16      |  | $           |           |      | $ | 10,137,150 | 
|                                                                                     |  | 14,642,368 |             | Wachovia Bank Commercial
  5.440% 9/15/21       |  |             |           |      |   | 14,642,997 | 
|                                                                                      |  |            |             |                                                 |  |             |            |      |   |            | 
|TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES
  (Cost $0 and $85,255,038)               |  |            |            |                                                 |  | 85,579,937  |           
|                                                                                      |  |            |             |                                                 |  |             |            |      |   |            | 
|TOTAL REAL ESTATE-RELATED MARKETABLE
  SECURITIES(Cost $439,154,248 and $569,326,795) |  |            | 426,630,212 |                                                 |  | 704,922,323 |           
|                                                                                      |  |            |             |                                                 |  |             |            |      |   |            | 
|OTHER MARKETABLE SECURITIES17.73% and 13.15%                                         |  |            |             |                                                 |  |             |           
|                                                                                      |  |            |             |                                                 |  |             |           
|CERTIFICATES OF DEPOSIT2.22% and .86%                                                |  |            |             |                                                 |  |             |           
|                                                                                     |  | 10,000,000 |             | American Express Bank, FSB
  5.565% 1/8/07      |  |             |           |      |   | 10,000,235 | 
|                                                                                     |  | 1,500,000  |             | American Express Bank, FSB
  5.290% 1/12/07     |  |             |           |      |   | 1,499,996  | 
|                                                                                     |  | 24,000,000 |             | American Express Bank, FSB
  5.280% 1/18/07     |  |             |           |      |   | 23,999,578 | 
|25,000,000                                                                            |  |           |             | American Express Centurion Bank
  4.750% 2/4/08 |  |             | 25,001,875 |      |   |           | 
|20,000,000                                                                            |  |           |             | American Express Centurion Bank
  4.750% 2/5/08 |  |             | 20,001,556 |      |   |           | 
|                                                                                     |  | 25,000,000 |             | American Express Centurion Bank
  5.290% 1/3/07 |  |             |           |      |   | 24,999,988 | 
|                                                                                     |  | 19,165,000 |             | American Express Centurion Bank
  5.290% 1/8/07 |  |             |           |      |   | 19,164,962 | 
|                                                                                     |  | 20,000,000 |             | American Express Centurion Bank
  5.290% 1/9/07 |  |             |           |      |   | 19,999,954 | 
|10,000,000                                                                            |  |           |             | Bank of Montreal
  5.030% 2/14/08               |  |             | 10,004,439 |      |   |           | 
|45,000,000                                                                            |  |           |             | Bank of Montreal
  5.100% 3/7/08                |  |             | 45,031,437 |      |   |           | 
|25,000,000                                                                            |  |           |             | Bank of Nova Scotia
  5.060% 1/16/08            |  |             | 25,003,988 |      |   |           | 
|25,000,000                                                                            |  |           |             | Barclays Bank
  4.990% 2/27/08                  |  |             | 25,012,510 |      |   |           | 
|10,000,000                                                                            |  |           |             | Calyon
  4.820% 1/31/08                         |  |             | 10,001,100 |      |   |           | 
|50,000,000                                                                            |  |           |             | Calyon
  5.050% 3/12/08                         |  |             | 50,032,645 |      |   |           | 
|25,000,000                                                                            |  |           |             | Deutsche Bank
  4.950% 1/24/08                  |  |             | 25,004,197 |      |   |           | 
|                                                                                     |  | 3,000,000  |             | Deutsche Bank
  5.290% 1/9/07                   |  |             |           |      |   | 2,999,962  | 

74

---



TIAA REAL ESTATE ACCOUNT 
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                     |  |            |             |                                                     |  |             |            |      |   |            | 
|-------------------------------------------------------------------- |  | ---------- | ----------- | --------------------------------------------------- |  | ----------- | ---------- | ---- | - | ---------- | 
|Principal                                                            |  |            |             | Value                                               | 
|                                                                     |  |            |             |                                                     | 
|2007                                                                 |  | 2006       |             | Issuer,
  Interest Rate and Maturity Date           |  | 2007        |            | 2006 |  
|                                                                     |  |            |             |                                                     |  |             |            |      |  
|                                                                    |  | 30,000,000 |             | Deutsche Bank
  5.300% 1/22/07                      |  | $           |           |      | $ | 29,999,154 | 
|32,000,000                                                           |  |           |             | Dexia Banque SA
  4.990% 3/10/08                    |  |             | 32,016,554 |      |   |           | 
|20,000,000                                                           |  |           |             | Dexia Banque SA
  4.880% 3/25/08                    |  |             | 20,008,286 |      |   |           | 
|30,000,000                                                           |  |           |             | Rabobank Nederland
  5.020% 3/5/08                  |  |             | 30,016,305 |      |   |           | 
|30,000,000                                                           |  |           |             | Royal Bank of Canada
  5.060% 1/25/08               |  |             | 30,007,494 |      |   |           | 
|20,000,000                                                           |  |           |             | SunTrust Banks, Inc.
  4.845% 1/28/08               |  |             | 19,998,920 |      |   |           | 
|40,000,000                                                           |  |           |             | Toronto Dominion Bank
  5.300% 1/22/08              |  |             | 40,014,108 |      |   |           | 
|15,000,000                                                           |  |           |             | Toronto Dominion Bank
  5.040% 2/26/08              |  |             | 15,008,718 |      |   |           | 
|                                                                     |  |            |             |                                                     |  |             |            |      |   |            | 
|TOTAL CERTIFICATES OF DEPOSIT
  (Cost $422,007,080 and $132,665,429) |  |            | 422,164,132 |                                                     |  | 132,663,829 |           
|                                                                     |  |            |             |                                                     |  |             |           
|COMMERCIAL PAPER9.23% and 9.81%                                     |  |            |             |                                                     |  |             |           
|                                                                    
|                                                                     |  |            |             | Issuer,
  Yield(6)and Maturity Date                 |  |             |            |      |   |            | 
|                                                                     |  |            |             |                                                     |  |             |            |      |   |            | 
|10,000,000                                                           |  |           |             | Abbey National North America LLC
  4.670% 1/8/08    |  |             | 9,989,577  |      |   |           | 
|20,000,000                                                           |  |           |             | Abbey National North America LLC
  4.930% 1/9/08    |  |             | 19,976,550 |      |   |           | 
|                                                                    |  | 25,000,000 |             | Abbey National North America LLC
  5.260% 1/17/07   |  |             |           |      |   | 24,945,207 | 
|50,000,000                                                           |  |           |             | American Express Credit Corp.
  4.510% 1/14/08      |  |             | 49,908,220 |      |   |           | 
|32,490,000                                                           |  |           |             | American Honda Finance Corp.
  4.50-4.510% 1/29/08  |  |             | 32,369,946 |      |   |           | 
|2,137,000                                                            |  |           |             | American Honda Finance Corp.
  4.380% 1/4/08        |  |             | 2,135,879  |      |   |           | 
|15,438,000                                                           |  |           |             | American Honda Finance Corp.
  4.310% 2/11/08       |  |             | 15,355,978 |      |   |           | 
|7,050,000                                                            |  |            |             | American Honda Finance Corp.
  4.250% 2/28/08       |  |             | 6,996,781  |      |   |           | 
|                                                                    |  | 50,000,000 |             | American Honda Finance Corp.
  5.210-5.240% 1/22/07 |  |             |           |      |   | 49,853,055 | 
|                                                                    |  | 17,475,000 |             | American Honda Finance Corp.
  5.240% 2/9/07        |  |             |           |      |   | 17,377,605 | 
|                                                                    |  | 10,000,000 |             | Anheuser - Busch Co.
  5.250% 1/19/07               |  |             |           |      |   | 9,975,019  | 
|20,000,000                                                           |  |           |             | Bank of America Corp
  4.970% 1/15/08               |  |             | 19,960,666 |      |   |           | 

75

---



TIAA REAL ESTATE ACCOUNT 
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|           |  |                                   |  |                                                     |      |   |            |  |   |            | 
|---------- |  | --------------------------------- |  | --------------------------------------------------- | ---- | - | ---------- |  | - | ---------- | 
|Principal  |  |                                   |  | Value                                               |     
|           |  | Issuer, Yield(6)and Maturity Date |  |                                                     |     
|2007       |  | 2006                              |  |                                                     | 2007 |   | 2006       | 
|           |  |                                   |  |                                                     |      |   |            |  |  
|13,200,000 |  |                                  |  | Bank of America Corp
  4.780% 3/6/08                |      | $ | 13,087,663 |  | $ |           | 
|30,000,000 |  |                                  |  | Bank of America Corp
  4.800% 4/8/08                |      |   | 29,604,246 |  |   |           | 
|27,400,000 |  |                                  |  | Bank of Scotland
  4.710% 2/26/08                   |      |   | 27,200,523 |  |   |           | 
|34,525,000 |  |                                  |  | Bank of Scotland
  4.720% 2/29/08                   |      |   | 34,259,731 |  |   |           | 
|          |  | 25,000,000                        |  | Barclays U.S. Funding Corp.
  5.240% 1/26/07       |      |   |           |  |   | 24,912,383 | 
|          |  | 20,000,000                        |  | BMW US Capital Corp.
  5.210% 2/7/07                |      |   |           |  |   | 19,894,400 | 
|          |  | 23,050,000                        |  | BMW US Capital Corp.
  5.240% 2/9/07                |      |   |           |  |   | 22,921,533 | 
|20,000,000 |  |                                  |  | Canadian Imperial Holdings, Inc.
  4.703% 1/29/08   |      |   | 19,926,098 |  |   |           | 
|          |  | 25,000,000                        |  | Ciesco LP
  5.250% 1/9/07                           |      |   |           |  |   | 24,973,942 | 
|          |  | 14,000,000                        |  | Ciesco LP
  5.260% 1/25/07                          |      |   |           |  |   | 13,952,299 | 
|40,000,000 |  |                                  |  | Citigroup Funding Inc.
  4.850% 1/23/08             |      |   | 39,880,984 |  |   |           | 
|25,000,000 |  |                                  |  | Citigroup Funding Inc.
  4.650% 2/12/08             |      |   | 24,864,937 |  |   |           | 
|25,000,000 |  |                                  |  | Citigroup Funding Inc.
  4.650% 2/7/08              |      |   | 24,880,483 |  |   |           | 
|          |  | 50,000,000                        |  | Citigroup Funding Inc.
  5.250% 1/11/07             |      |   |           |  |   | 49,934,060 | 
|          |  | 35,825,000                        |  | Citigroup Funding Inc.
  5.260% 2/5/07              |      |   |           |  |   | 35,647,365 | 
|5,255,000  |  |                                  |  | Coca Cola Co.
  4.200% 2/15/08                      |      |   | 5,224,421  |  |   |           | 
|20,000,000 |  |                                  |  | Coca Cola Co.
  4.430% 2/19/08                      |      |   | 19,873,054 |  |   |           | 
|13,000,000 |  |                                  |  | Coca Cola Co.
  4.390% 2/25/08                      |      |   | 12,907,098 |  |   |           | 
|          |  | 6,000,000                         |  | Corporate Asset Funding Corp, Inc.
  5.260% 1/22/07 |      |   |           |  |   | 5,982,193  | 
|          |  | 8,760,000                         |  | Corporate Asset Funding Corp, Inc.
  5.250% 1/29/07 |      |   |           |  |   | 8,725,048  | 
|          |  | 25,000,000                        |  | Corporate Asset Funding Corp, Inc.
  5.250% 2/7/07  |      |   |           |  |   | 24,867,250 | 
|          |  | 54,000,000                        |  | Corporate Asset Funding Corp, Inc.
  5.260% 2/8/07  |      |   |           |  |   | 53,705,295 | 

76

---



TIAA REAL ESTATE ACCOUNT 
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|           |  |                                     |  |                                                   |      |   |            |  |   |            | 
|---------- |  | ----------------------------------- |  | ------------------------------------------------- | ---- | - | ---------- |  | - | ---------- | 
|Principal  |  |                                     |  | Value                                             |     
|           |  | Issuer,
  Yield(6)and Maturity Date |  |                                                   |     
|2007       |  | 2006                                |  |                                                   | 2007 |   | 2006       | 
|           |  |                                     |  |                                                   |      |   |            |  |  
|30,000,000 |  |                                    |  | Danske Corp.
  4.920% 3/6/08                      |      | $ | 29,746,338 |  | $ |           | 
|          |  | 7,000,000                           |  | Dorada Finance Inc.
  5.230% 1/9/07               |      |   |           |  |   | 6,992,704  | 
|20,000,000 |  |                                    |  | Edison Asset Securitization, LLC
  4.740% 3/11/08 |      |   | 19,789,840 |  |   |           | 
|          |  | 24,000,000                          |  | Edison Asset Securitization, LLC
  5.240% 1/19/07 |      |   |           |  |   | 23,939,287 | 
|          |  | 10,000,000                          |  | Edison Asset Securitization, LLC
  5.240% 2/1/07  |      |   |           |  |   | 9,955,666  | 
|          |  | 32,900,000                          |  | Fairway Finance Company, LLC
  5.260% 1/17/07     |      |   |           |  |   | 32,826,521 | 
|20,460,000 |  |                                    |  | General Electric Capital Corp.
  4.510% 2/19/08   |      |   | 20,330,987 |  |   |           | 
|15,340,000 |  |                                    |  | General Electric Capital Corp.
  4.550% 2/20/08   |      |   | 15,241,250 |  |   |           | 
|30,000,000 |  |                                    |  | General Electric Capital Corp.
  4.580% 4/8/08    |      |   | 29,606,721 |  |   |           | 
|          |  | 23,760,000                          |  | General Electric Capital Corp.
  5.250% 1/18/07   |      |   |           |  |   | 23,704,454 | 
|          |  | 13,155,000                          |  | General Electric Capital Corp.
  5.240% 2/8/07    |      |   |           |  |   | 13,084,017 | 
|          |  | 30,000,000                          |  | General Electric Capital Corp.
  5.240% 2/15/07   |      |   |           |  |   | 29,807,499 | 
|30,540,000 |  |                                    |  | General Electric Co
  4.540% 3/4/08               |      |   | 30,290,195 |  |   |           | 
|13,200,000 |  |                                    |  | Goldman Sachs Group Inc
  5.200% 1/08/08          |      |   | 13,186,155 |  |   |           | 
|12,000,000 |  |                                    |  | Govco Incorporated
  4.680% 1/28/08               |      |   | 11,948,442 |  |   |           | 
|20,000,000 |  |                                    |  | Govco Incorporated
  5.400% 2/12/08               |      |   | 19,869,924 |  |   |           | 
|37,860,000 |  |                                    |  | Govco Incorporated
  5.100% 2/20/08               |      |   | 37,570,693 |  |   |           | 
|29,000,000 |  |                                    |  | Govco Incorporated
  4.850% 3/13/08               |      |   | 28,687,505 |  |   |           | 
|          |  | 25,700,000                          |  | Govco Incorporated
  5.230% 3/8/07                |      |   |           |  |   | 25,454,668 | 
|          |  | 50,000,000                          |  | Govco Incorporated
  5.330% 1/5/07                |      |   |           |  |   | 49,977,665 | 
|35,140,000 |  |                                    |  | Greenwich Capital Holding
  4.850% 4/14/08        |      |   | 34,649,576 |  |   |           | 
|          |  | 33,000,000                          |  | Greyhawk Funding LLC
  5.260% 2/6/07              |      |   |           |  |   | 32,829,314 | 
|6,990,000  |  |                                    |  | Harley-Davidson Funding
  4.480% 2/21/08          |      |   | 6,943,777  |  |   |           | 

77

---



TIAA REAL ESTATE ACCOUNT 
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|           |  |                                     |  |                                                              |      |   |            |  |   |            | 
|---------- |  | ----------------------------------- |  | ------------------------------------------------------------ | ---- | - | ---------- |  | - | ---------- | 
|Principal  |  |                                     |  | Value                                                        |     
|           |  | Issuer,
  Yield(6)and Maturity Date |  |                                                              |     
|2007       |  | 2006                                |  |                                                              | 2007 |   | 2006       | 
|           |  |                                     |  |                                                              |      |   |            |  |  
|          |  | 8,415,000                           |  | HBOS Treasury Srvcs PLC
  5.250% 3/21/07                     |      | $ |           |  | $ | 8,319,680  | 
|30,000,000 |  |                                    |  | HSBC Finance Corporation
  4.700% 2/21/08                    |      |   | 29,757,135 |  |   |           | 
|          |  | 40,000,000                          |  | HSBC Finance Corporation
  5.250% 1/26/07                    |      |   |           |  |   | 39,859,012 | 
|25,000,000 |  |                                    |  | IBM Capital Inc
  4.250% 3/10/08                             |      |   | 24,773,325 |  |   |           | 
|          |  | 22,200,000                          |  | IBM Capital Inc.
  5.220% 3/16/07                            |      |   |           |  |   | 21,963,166 | 
|10,000,000 |  |                                    |  | IBM International Group
  4.725% 1/14/08                     |      |   | 9,981,644  |  |   |           | 
|18,900,000 |  |                                    |  | IBM International Group
  4.725% 1/15/08                     |      |   | 18,862,829 |  |   |           | 
|20,000,000 |  |                                    |  | IBM International Group
  4.220% 2/27/08                     |      |   | 19,851,712 |  |   |           | 
|5,420,000  |  |                                    |  | IBM (International Business Machines Corp.)
  4.230% 1/3/08  |      |   | 5,417,868  |  |   |           | 
|          |  | 19,000,000                          |  | IBM (International Business Machines Corp.)
  5.250% 1/10/07 |      |   |           |  |   | 18,966,750 | 
|20,000,000 |  |                                    |  | ING (US) Finance
  4.730% 1/30/08                            |      |   | 19,924,332 |  |   |           | 
|25,000,000 |  |                                    |  | ING (US) Finance
  4.820% 2/22/08                            |      |   | 24,832,460 |  |   |           | 
|          |  | 25,000,000                          |  | ING (US) Finance
  5.240% 3/27/07                            |      |   |           |  |   | 24,695,265 | 
|          |  | 24,000,000                          |  | Johnson & Johnson
  5.270% 1/2/07                            |      |   |           |  |   | 24,000,000 | 
|          |  | 25,000,000                          |  | Johnson & Johnson
  5.200% 1/18/07                           |      |   |           |  |   | 24,941,555 | 
|          |  | 20,259,000                          |  | Kimberly-Clark Worldwide, Inc.
  5.230% 1/29/07              |      |   |           |  |   | 20,179,184 | 
|22,904,000 |  |                                    |  | Kitty Hawk Funding Corp
  5.030% 3/14/08                     |      |   | 22,653,437 |  |   |           | 
|          |  | 10,000,000                          |  | Links Finance L.L.C.
  5.250% 1/16/07                        |      |   |           |  |   | 9,979,190  | 
|          |  | 30,000,000                          |  | Morgan Stanley Dean Witter
  5.240% 2/12/07                  |      |   |           |  |   | 29,819,598 | 
|20,000,000 |  |                                    |  | Nestle Capital Corp
  4.740% 2/6/08                          |      |   | 19,906,862 |  |   |           | 
|14,500,000 |  |                                    |  | Nestle Capital Corp
  5.090% 3/11/08                         |      |   | 14,367,337 |  |   |           | 
|20,000,000 |  |                                    |  | Nestle Capital Corp
  5.210% 3/5/08                          |      |   | 19,833,636 |  |   |           | 

78

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|           |  |            |  |                                                           |  |      |            |      |   |            | 
|---------- |  | ---------- |  | --------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|Principal  |  |            |  | Value                                                     | 
|           |  |            |  |                                                           | 
|2007       |  | 2006       |  | Issuer,
  Yield(6)and Maturity Date                       |  | 2007 |            | 2006 |  
|           |  |            |  |                                                           |  |      |            |      |  
|9,300,000  |  |           |  | Paccar Financial Corp
  4.730% 1/14/08                    |  | $    | 9,283,038  |      | $ |           | 
|10,000,000 |  |           |  | Paccar Financial Corp
  4.490% 2/11/08                    |  |      | 9,947,220  |      |   |           | 
|15,300,000 |  |           |  | Paccar Financial Corp
  4.500% 2/28/08                    |  |      | 15,185,256 |      |   |           | 
|10,000,000 |  |           |  | Park Avenue Receivables
  4.650% 3/18/08                  |  |      | 9,884,430  |      |   |           | 
|19,645,000 |  |           |  | Pfizer Inc
  4.410% 5/15/08                               |  |      | 19,285,726 |      |   |           | 
|          |  | 11,601,000 |  | Pitney Bowes Inc.
  5.300% 1/4/07                         |  |      |           |      |   | 11,597,578 | 
|28,000,000 |  |           |  | Private Export Funding Corporation
  4.640-4.750% 1/30/08 |  |      | 27,893,365 |      |   |           | 
|1,500,000  |  |           |  | Private Export Funding Corporation
  4.530% 1/31/08       |  |      | 1,494,098  |      |   |           | 
|10,000,000 |  |           |  | Private Export Funding Corporation
  4.680% 2/11/08       |  |      | 9,946,870  |      |   |           | 
|20,000,000 |  |           |  | Private Export Funding Corporation
  4.740% 2/5/08        |  |      | 19,908,760 |      |   |           | 
|10,000,000 |  |           |  | Private Export Funding Corporation
  4.680% 3/3/08        |  |      | 9,919,045  |      |   |           | 
|          |  | 20,500,000 |  | Private Export Funding Corporation
  5.220% 1/3/07        |  |      |           |      |   | 20,496,976 | 
|          |  | 1,845,000  |  | Private Export Funding Corporation
  5.260% 1/11/07       |  |      |           |      |   | 1,842,553  | 
|          |  | 23,000,000 |  | Private Export Funding Corporation
  5.22-5.23% 1/18/07   |  |      |           |      |   | 22,945,922 | 
|          |  | 6,000,000  |  | Private Export Funding Corporation
  5.220% 1/23/07       |  |      |           |      |   | 5,981,485  | 
|          |  | 15,000,000 |  | Private Export Funding Corporation
  5.230% 2/15/07       |  |      |           |      |   | 14,903,199 | 
|          |  | 14,120,000 |  | Private Export Funding Corporation
  5.230% 3/6/07        |  |      |           |      |   | 13,989,828 | 
|          |  | 25,000,000 |  | Procter & Gamble Co
  5.230% 1/12/07                      |  |      |           |      |   | 24,963,380 | 
|          |  | 25,000,000 |  | Procter & Gamble International S.C.
  5.250% 2/1/07       |  |      |           |      |   | 24,890,625 | 
|          |  | 50,000,000 |  | Procter & Gamble International S.C.
  5.250% 2/14/07      |  |      |           |      |   | 49,686,455 | 
|10,000,000 |  |           |  | Procter & Gamble International S.C.
  4.740% 1/16/08      |  |      | 9,979,155  |      |   |           | 
|10,000,000 |  |           |  | Procter & Gamble International S.C.
  4.750% 1/18/08      |  |      | 9,976,550  |      |   |           | 
|10,000,000 |  |           |  | Procter & Gamble International S.C.
  4.200% 1/31/08      |  |      | 9,960,914  |      |   |           | 

79

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|           |  |            |  |                                                       |  |      |            |      |   |            | 
|---------- |  | ---------- |  | ----------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|Principal  |  |            |  | Value                                                 | 
|           |  |            |  |                                                       | 
|2007       |  | 2006       |  | Issuer,
  Yield(6)and Maturity Date                   |  | 2007 |            | 2006 |  
|           |  |            |  |                                                       |  |      |            |      |  
|4,665,000  |  |           |  | Procter & Gamble International S.C.
  4.750% 1/4/08   |  | $    | 4,662,569  |      | $ |           | 
|30,000,000 |  |           |  | Procter & Gamble International S.C.
  4.740% 2/14/08  |  |      | 29,830,500 |      |   |           | 
|17,000,000 |  |           |  | Procter & Gamble International S.C.
  4.600% 2/1/08   |  |      | 16,931,441 |      |   |           | 
|8,000,000  |  |           |  | Procter & Gamble International S.C.
  4.350% 3/12/08  |  |      | 7,925,696  |      |   |           | 
|9,000,000  |  |           |  | Procter & Gamble International S.C.
  4.190% 3/14/08  |  |      | 8,913,882  |      |   |           | 
|12,000,000 |  |           |  | Ranger Funding Company LLC
  5.110% 1/10/08           |  |      | 11,981,685 |      |   |           | 
|31,573,000 |  |           |  | Ranger Funding Company LLC
  5.080-5.580% 1/18/08     |  |      | 31,486,411 |      |   |           | 
|          |  | 10,000,000 |  | Ranger Funding Company LLC
  5.260% 1/24/07           |  |      |           |      |   | 9,967,385  | 
|          |  | 20,000,000 |  | Ranger Funding Company LLC
  5.260% 1/25/07           |  |      |           |      |   | 19,931,856 | 
|          |  | 23,760,000 |  | Ranger Funding Company LLC
  5.300% 2/12/07           |  |      |           |      |   | 23,616,311 | 
|25,000,000 |  |           |  | Royal Bank of Scotland
  4.740% 2/8/08                |  |      | 24,877,365 |      |   |           | 
|          |  | 10,000,000 |  | Scaldis Capital LLC
  5.250% 1/10/07                  |  |      |           |      |   | 9,988,068  | 
|          |  | 25,000,000 |  | Sheffield Receivables Corporation
  5.240% 1/12/07    |  |      |           |      |   | 24,962,735 | 
|          |  | 35,750,000 |  | Sheffield Receivables Corporation
  5.260% 1/17/07    |  |      |           |      |   | 35,670,156 | 
|10,000,000 |  |           |  | Shell International Financial
  4.470% 3/28/08        |  |      | 9,884,402  |      |   |           | 
|20,000,000 |  |           |  | Societe Generale North America, Inc.
  5.155% 1/10/08 |  |      | 19,973,944 |      |   |           | 
|15,000,000 |  |           |  | Societe Generale North America, Inc.
  4.780% 2/1/08  |  |      | 14,939,506 |      |   |           | 
|25,000,000 |  |           |  | Societe Generale North America, Inc.
  4.830% 3/26/08 |  |      | 24,718,170 |      |   |           | 
|17,420,000 |  |           |  | Societe Generale North America, Inc.
  4.640% 4/4/08  |  |      | 17,201,414 |      |   |           | 
|          |  | 7,850,000  |  | Societe Generale North America, Inc.
  5.250% 1/10/07 |  |      |           |      |   | 7,836,262  | 
|          |  | 25,000,000 |  | Societe Generale North America, Inc.
  5.250% 1/19/07 |  |      |           |      |   | 24,937,902 | 
|          |  | 20,000,000 |  | SunTrust Banks, Inc.
  5.245% 5/1/07                  |  |      |           |      |   | 20,001,700 | 
|18,505,000 |  |           |  | Svensk Exportkredit AB
  4.720-4.820% 01/14/08        |  |      | 18,471,249 |      |   |           | 

80

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|           |  |            |  |                                                                  |  |      |            |      |   |            | 
|---------- |  | ---------- |  | ---------------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|Principal  |  |            |  | Value                                                            | 
|           |  |            |  |                                                                  | 
|2007       |  | 2006       |  | Issuer,
  Yield(6)and Maturity Date                              |  | 2007 |            | 2006 |  
|           |  |            |  |                                                                  |  |      |            |      |  
|17,800,000 |  |           |  | Svensk Exportkredit AB
  4.860% 1/15/08                          |  | $    | 17,765,215 |      | $ |           | 
|36,000,000 |  |           |  | Svensk Exportkredit AB
  4.740% 1/17/08                          |  |      | 35,920,267 |      |   |           | 
|16,000,000 |  |           |  | Svensk Exportkredit AB
  4.370% 3/12/08                          |  |      | 15,851,392 |      |   |           | 
|10,000,000 |  |           |  | Svensk Exportkredit AB
  4.720% 04/09/08                         |  |      | 9,867,500  |      |   |           | 
|          |  | 14,675,000 |  | Swedish Export Credit Corp.
  5.240% 1/10/07                     |  |      |           |      |   | 14,657,788 | 
|          |  | 33,895,000 |  | Swedish Export Credit Corp.
  5.24-5.26% 1/16/07                 |  |      |           |      |   | 33,825,624 | 
|          |  | 30,000,000 |  | Swedish Export Credit Corp.
  5.240% 2/13/07                     |  |      |           |      |   | 29,816,250 | 
|          |  | 5,800,000  |  | The Concentrate Manufacturing Company of
  Ireland 5.260% 1/9/07 |  |      |           |      |   | 5,790,695  | 
|10,000,000 |  |           |  | Toronto-Dominion Holdings
  5.060% 01/31/08                      |  |      | 9,960,914  |      |   |           | 
|25,000,000 |  |           |  | Toronto-Dominion Holdings
  4.710% 2/11/08                       |  |      | 24,868,050 |      |   |           | 
|19,000,000 |  |           |  | Toyota Motor Credit Corp.
  4.520% 1/8/08                        |  |      | 18,980,196 |      |   |           | 
|30,000,000 |  |           |  | Toyota Motor Credit Corp.
  4.880% 2/15/08                       |  |      | 29,826,579 |      |   |           | 
|30,000,000 |  |           |  | Toyota Motor Credit Corp.
  4.740% 2/25/08                       |  |      | 29,787,012 |      |   |           | 
|20,000,000 |  |           |  | Toyota Motor Credit Corp.
  4.530% 2/28/08                       |  |      | 19,850,008 |      |   |           | 
|          |  | 50,000,000 |  | Toyota Motor Credit Corp.
  5.230% 1/23/07                       |  |      |           |      |   | 49,846,580 | 
|          |  | 30,000,000 |  | Toyota Motor Credit Corp.
  5.230% 1/25/07                       |  |      |           |      |   | 29,899,221 | 
|20,000,000 |  |           |  | UBS Finance, (Delaware) Inc.
  5.030% 2/13/08                    |  |      | 19,889,486 |      |   |           | 
|17,215,000 |  |           |  | UBS Finance, (Delaware) Inc.
  5.000% 2/21/08                    |  |      | 17,101,908 |      |   |           | 
|25,000,000 |  |           |  | UBS Finance, (Delaware) Inc.
  4.910% 4/7/08                     |  |      | 24,675,782 |      |   |           | 
|          |  | 17,500,000 |  | UBS Finance, (Delaware) Inc.
  5.250% 2/20/07                    |  |      |           |      |   | 17,375,018 | 
|3,970,000  |  |           |  | Unilever Capital Corp
  4.230% 1/11/08                           |  |      | 3,964,274  |      |   |           | 
|10,000,000 |  |           |  | United Parcel Service Inc
  4.300% 3/18/08                       |  |      | 9,898,686  |      |   |           | 
|30,000,000 |  |           |  | United Parcel Service Inc
  4.400% 3/31/08                       |  |      | 29,640,321 |      |   |           | 

81

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                               |  |            |               |                                                       |  |               |            |      |   |            | 
|-------------------------------------------------------------- |  | ---------- | ------------- | ----------------------------------------------------- |  | ------------- | ---------- | ---- | - | ---------- | 
|Principal                                                      |  |            |               | Value                                                 | 
|                                                               |  |            |               |                                                       | 
|2007                                                           |  | 2006       |               | Issuer,
  Yield(6)and Maturity Date                   |  | 2007          |            | 2006 |  
|                                                               |  |            |               |                                                       |  |               |            |      |  
|20,000,000                                                     |  |           |               | United Parcel Service Inc
  4.340% 4/28/08            |  | $             | 19,680,880 |      | $ |           | 
|20,000,000                                                     |  |           |               | United Parcel Service Inc
  4.340% 4/29/08            |  |               | 19,678,000 |      |   |           | 
|20,000,000                                                     |  |           |               | United Parcel Service Inc
  4.380% 4/1/08             |  |               | 19,757,426 |      |   |           | 
|7,831,000                                                      |  |           |               | Variable Funding Capital Corporation
  4.640% 4/15/08 |  |               | 7,694,387  |      |   |           | 
|                                                              |  | 34,530,000 |               | Variable Funding Capital Corporation
  5.250% 2/2/07  |  |               |           |      |   | 34,371,217 | 
|                                                              |  | 30,000,000 |               | Variable Funding Capital Corporation
  5.250% 2/5/07  |  |               |           |      |   | 29,848,698 | 
|                                                              |  | 25,000,000 |               | Variable Funding Capital Corporation
  5.250% 2/6/07  |  |               |           |      |   | 24,870,208 | 
|30,000,000                                                     |  |           |               | Yorktown Capital, LLC
  4.875% 4/15/08                |  |               | 29,527,943 |      |   |           | 
|                                                              |  | 23,415,000 |               | Yorktown Capital, LLC
  5.260% 1/4/07                 |  |               |           |      |   | 23,408,027 | 
|                                                               |  |            |               |                                                       |  |               |            |      |   |            | 
|                                                              
|TOTAL COMMERCIAL PAPER(Cost
$1,755,527,807 and $1,520,729,804) |  |            | 1,755,075,702 |                                                       |  | 1,520,881,551 |           
|                                                               |  |            |               |                                                       |  |               |            |     
|                                                               |  |            |               |                                                       |  |               |           
|GOVERNMENT AGENCY BONDS5.82% and 2.36%                        |  |            |               |                                                       |  |               |           
|                                                               |  |            |               |                                                       |  |               |           
|                                                               |  |            |               | Issuer, Interest Rate and Maturity Date               |  |               |            |      |   |            | 
|                                                               |  |            |               |                                                       |  |               |            |      |   |            | 
|                                                              |  | 17,700,000 |               | Federal Home Loan Banks
  5.130% 1/5/07               |  |               |           |      |   | 17,694,938 | 
|                                                              |  | 19,745,000 |               | Federal Home Loan Banks
  5.180% 1/12/07              |  |               |           |      |   | 19,719,628 | 
|                                                              |  | 39,969,000 |               | Federal Home Loan Banks
  5.200% 1/19/07              |  |               |           |      |   | 39,877,711 | 
|                                                              |  | 23,753,000 |               | Federal Home Loan Banks
  5.180% 2/28/07              |  |               |           |      |   | 23,563,451 | 
|25,000,000                                                     |  |           |               | Federal Home Loan Banks
  4.450% 1/2/08               |  |               | 25,000,000 |      |   |           | 
|25,000,000                                                     |  |           |               | Federal Home Loan Banks
  4.450% 1/3/08               |  |               | 24,997,275 |      |   |           | 
|28,850,000                                                     |  |           |               | Federal Home Loan Banks
  4.661% 1/4/08               |  |               | 28,843,711 |      |   |           | 
|34,945,000                                                     |  |           |               | Federal Home Loan Banks
  4.450% 1/7/08               |  |               | 34,925,990 |      |   |           | 
|41,450,000                                                     |  |           |               | Federal Home Loan Banks
  4.260-4.900% 1/11/08        |  |               | 41,409,379 |      |   |           | 
|77,800,000                                                     |  |           |               | Federal Home Loan Banks
  4.280-4.290% 1/16/08        |  |               | 77,681,433 |      |   |           | 
|32,500,000                                                     |  |           |               | Federal Home Loan Banks
  4.260% 1/25/08              |  |               | 32,418,620 |      |   |           | 

82

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|           |  |            |  |                                                         |  |      |            |      |   |            | 
|---------- |  | ---------- |  | ------------------------------------------------------- |  | ---- | ---------- | ---- | - | ---------- | 
|Principal  |  |            |  | Value                                                   | 
|           |  |            |  |                                                         | 
|2007       |  | 2006       |  | Issuer,
  Interest Rate and Maturity Date               |  | 2007 |            | 2006 |  
|           |  |            |  |                                                         |  |      |            |      |  
|43,830,000 |  |           |  | Federal Home Loan Banks
  4.300% 1/28/08                |  | $    | 43,705,917 |      | $ |           | 
|2,000,000  |  |           |  | Federal Home Loan Banks
  4.480% 2/1/08                 |  |      | 1,993,134  |      |   |           | 
|25,000,000 |  |           |  | Federal Home Loan Banks
  4.200% 2/13/08                |  |      | 24,879,825 |      |   |           | 
|23,694,000 |  |           |  | Federal Home Loan Banks
  4.250% 3/12/08                |  |      | 23,504,638 |      |   |           | 
|30,000,000 |  |           |  | Federal Home Loan Banks
  4.270% 3/17/08                |  |      | 29,743,140 |      |   |           | 
|20,000,000 |  |           |  | Federal Home Loan Banks
  4.270% 3/19/08                |  |      | 19,824,180 |      |   |           | 
|85,900,000 |  |           |  | Federal Home Loan Banks
  4.260% 3/24/08                |  |      | 85,095,804 |      |   |           | 
|15,000,000 |  |           |  | Federal Home Loan Bank Systems
  4.700% 11/20/08        |  |      | 14,991,900 |      |   |           | 
|          |  | 13,654,000 |  | Federal Home Loan Mortgage Corporation
  5.110% 1/2/07  |  |      |           |      |   | 13,654,000 | 
|          |  | 22,250,000 |  | Federal Home Loan Mortgage Corporation
  5.130% 1/16/07 |  |      |           |      |   | 22,208,704 | 
|          |  | 43,400,000 |  | Federal Home Loan Mortgage Corporation
  5.150% 1/24/07 |  |      |           |      |   | 43,269,887 | 
|          |  | 50,000,000 |  | Federal Home Loan Mortgage Corporation
  5.130% 1/30/07 |  |      |           |      |   | 49,807,250 | 
|          |  | 33,675,000 |  | Federal Home Loan Mortgage Corporation
  5.150% 1/31/07 |  |      |           |      |   | 33,540,367 | 
|          |  | 30,000,000 |  | Federal National Mortgage Association
  5.150% 2/6/07   |  |      |           |      |   | 29,854,650 | 
|          |  | 23,768,000 |  | Federal National Mortgage Association
  5.150% 1/8/07   |  |      |           |      |   | 23,751,029 | 
|          |  | 50,000,000 |  | Federal National Mortgage Association
  5.160% 3/21/07  |  |      |           |      |   | 49,452,450 | 
|32,465,000 |  |           |  | Fannie Mae Discount Notes
  4.330% 1/4/08               |  |      | 32,457,922 |      |   |           | 
|18,990,000 |  |           |  | Fannie Mae Discount Notes
  4.230% 2/15/08              |  |      | 18,894,366 |      |   |           | 
|20,000,000 |  |           |  | Fannie Mae Discount Notes
  4.200% 2/19/08              |  |      | 19,890,140 |      |   |           | 
|16,600,000 |  |           |  | Fannie Mae Discount Notes
  4.280% 2/21/08              |  |      | 16,505,015 |      |   |           | 
|25,000,000 |  |           |  | Fannie Mae Discount Notes
  4.270% 2/22/08              |  |      | 24,854,075 |      |   |           | 
|23,725,000 |  |           |  | Fannie Mae Discount Notes
  4.170% 3/5/08               |  |      | 23,554,345 |      |   |           | 
|44,000,000 |  |           |  | Fannie Mae Discount Notes
  4.260% 3/6/08               |  |      | 43,678,492 |      |   |           | 

83

---



TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                                                    |  |            |               |                                                  |  |             |            |      |   |            | 
|------------------------------------------------------------------- |  | ---------- | ------------- | ------------------------------------------------ |  | ----------- | ---------- | ---- | - | ---------- | 
|Principal                                                           |  |            |               | Value                                            | 
|                                                                    |  |            |               |                                                  | 
|2007                                                                |  | 2006       |               | Issuer,
  Interest Rate and Maturity Date        |  | 2007        |            | 2006 |  
|                                                                    |  |            |               |                                                  |  |             |            |      |  
|29,045,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.190-4.280% 3/20/08 |  | $           | 28,786,354 |      | $ |           | 
|30,000,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.280% 3/21/08       |  |             | 29,729,430 |      |   |           | 
|12,840,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.285% 3/26/08       |  |             | 12,716,864 |      |   |           | 
|22,518,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.190-4.240% 3/27/08 |  |             | 22,299,485 |      |   |           | 
|17,890,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.270% 3/28/08       |  |             | 17,714,356 |      |   |           | 
|30,000,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.220% 4/24/08       |  |             | 29,613,930 |      |   |           | 
|41,650,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.150-4.180% 4/30/08 |  |             | 41,085,518 |      |   |           | 
|31,901,000                                                          |  |           |               | Fannie Mae Discount Notes
  4.100% 5/28/08       |  |             | 31,359,658 |      |   |           | 
|30,000,000                                                          |  |           |               | Freddie Mac Discount Note
  4.330% 1/24/08       |  |             | 29,928,120 |      |   |           | 
|32,470,000                                                          |  |           |               | Freddie Mac Discount Note
  4.320% 1/31/08       |  |             | 32,367,460 |      |   |           | 
|22,400,000                                                          |  |           |               | Freddie Mac Discount Note
  4.220% 2/14/08       |  |             | 22,289,770 |      |   |           | 
|25,487,000                                                          |  |           |               | Freddie Mac Discount Note
  4.210% 2/20/08       |  |             | 25,344,069 |      |   |           | 
|10,000,000                                                          |  |           |               | Freddie Mac Discount Note
  4.320% 2/21/08       |  |             | 9,942,780  |      |   |           | 
|8,500,000                                                           |  |           |               | Freddie Mac Discount Note
  4.240% 3/3/08        |  |             | 8,440,806  |      |   |           | 
|17,925,000                                                          |  |           |               | Freddie Mac Discount Note
  4.120% 3/31/08       |  |             | 17,737,868 |      |   |           | 
|26,735,000                                                          |  |           |               | Freddie Mac Discount Note
  4.145% 4/10/08       |  |             | 26,433,563 |      |   |           | 
|20,817,000                                                          |  |           |               | Freddie Mac Discount Note
  4.175% 4/18/08       |  |             | 20,563,324 |      |   |           | 
|10,795,000                                                          |  |           |               | Freddie Mac Discount Note
  4.180% 4/25/08       |  |             | 10,654,849 |      |   |           | 
|                                                                    |  |            |               |                                                  |  |             |           
|TOTAL GOVERNMENT AGENCY BONDS(Cost
$1,105,524,756 and $366,282,560) |  |            | 1,105,857,505 |                                                  |  | 366,394,065 |           
|                                                                    |  |            |               |                                                  |  |             |           
|VARIABLE NOTES0.26% and 0.12%                                      |  |            |               |                                                  |  |             |           
|                                                                   |  | 19,000,000 |               | US Bank NA
  5.735% 12/5/07                      |  |             |           |      |   | 18,998,765 | 
|25,000,000                                                          |  |           |               | Wells Fargo Bank
  4.600% 1/7/08                 |  |             | 24,999,308 |      |   |           | 

84

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TIAA REAL ESTATE ACCOUNT
STATEMENTS OF INVESTMENTS
December 31, 2007 and December 31, 2006

|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|---------------------------------------- | ------------------------------------------------------------------------- | ---------- | - | ----------------------------------------- |  | ---- | -------------- | ---- | - | ---------- | 
|Principal                                |                                                                           |            |   | Value                                     | 
|                                         |                                                                           |            |   |                                           | 
|2007                                     |                                                                           | 2006       |   | Issuer,
  Interest Rate and Maturity Date |  | 2007 |                | 2006 |  
|                                         |                                                                           |            |   |                                           |  |      |                |      |  
|25,000,000                               |                                                                           |           |   | Wells Fargo Bank
  4.600% 1/8/08          |  | $    | 24,999,210     |      | $ |           | 
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|                                         | TOTAL VARIABLE NOTES(Cost $50,000,000 and
$19,003,401)                    |            |   | 49,998,518                                |  |      | 18,998,765     |     
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|BANKERS ACCEPTANCE0.20% and 0.00%       |                                                                           |            |   |                                           |  |      |               
|4,359,000                                |                                                                           |           |   | JPMorgan Chase Bank
  4.400% 1/18/08      |  |      | 4,349,127      |      |   |           | 
|10,000,000                               |                                                                           |           |   | Wachovia Bank
  4.380% 4/21/08            |  |      | 9,850,480      |      |   |           | 
|25,000,000                               |                                                                           |           |   | Wachovia Bank
  4.300% 5/7/08             |  |      | 24,570,220     |      |   |           | 
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|                                         | TOTAL BANKERS ACCEPTANCE(Cost $38,835,657 and
$0)                         |            |   | 38,769,827                                |  |      |               |     
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|                                         | TOTAL OTHER MARKETABLE SECURITIES(Cost $3,371,895,300 and
$2,038,681,194) |            |   | 3,371,865,684                             |  |      | 2,038,938,210  |     
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|                                         | TOTAL MARKETABLE SECURITIES(Cost
    $3,811,049,548 and $2,608,007,989)   |            |   | 3,798,495,896                             |  |      | 2,743,860,533  |     
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|MORTGAGE LOAN RECEIVABLE0.38% and 0.48% |                                                                           |            |   |                                           |  |      |               
|75,000,000                               |                                                                           | 75,000,000 |   | Klingle Corporation
  6.17% 07/10/11      |  |      | 72,519,684     |      |   | 74,660,626 | 
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|                                         | TOTAL MORTGAGE LOAN RECEIVABLE(Cost $75,000,000 and
$75,000,000)          |            |   | 72,519,684                                |  |      | 74,660,626     |     
|                                         |                                                                           |            |   |                                           |  |      |                |      |   |            | 
|                                         | TOTAL INVESTMENTS(Cost $15,951,457,925 and
$13,558,801,945)               |            | $ | 19,013,601,527                            |  | $    | 15,510,036,850 |     
|                                         |                                                                           |            |   |                                           |  |      |                |     

|    |                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------
|(1) | The
  investment has a mortgage loan payable outstanding, as indicated in Note 5.                      
|    |                                                                                                        
|(2) | Leasehold
  interest only.                                                                             
|    |                                                                                                        
|(3) | The market
  value reflects the Accounts interest in the joint venture, net of any debt.              
|    |                                                                                                        
|(4) | The market
  value reflects the final settlement due the Account. The investment was sold
  on 8/24/07.
|    |                                                                                                        
|(5) | Located throughout the U.S.                                                                            
|    |                                                                                                        
|(6) | Yield
  represents the annualized yield at the date of purchase.                                       

85

---



REPORT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM

To the Participants of the TIAA Real Estate Account
and the
Board of Trustees of Teachers Insurance and Annuity Association of America:

In our
opinion, the accompanying statements of assets and liabilities, including the
statements of investments, and the related statements of operations, changes
    in net assets and cash flows, present fairly, in all material respects, the
financial position of the TIAA Real Estate Account (the Account)
at December 31, 2007 and December 31, 2006 and the results of its operations
and its cash flows for each of the three years in the period ended December 31,
2007 in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the Accounts
management. Our responsibility is to express an opinion on these financial statements
based on our audits. We conducted our audits of these statements in accordance
with the standards of the Public Company Accounting Oversight Board (United States).
Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management,
and evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.

/s/
PricewaterhouseCoopers LLP
New York, New York
March 20, 2008

86

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ADDITIONAL INFORMATION

|        |                                                                                      
|------- | -------------------------------------------------------------------------------------
|ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

Not
applicable.

|         |                         
|-------- | ------------------------
|ITEM 9A. | CONTROLS AND PROCEDURES.

(a)
The registrant maintains a system of disclosure controls and procedures that
are designed to provide reasonable assurance that 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 December 31, 2007. Based upon
the managements review, the CEO and the CFO concluded that the registrants
disclosure controls and procedures were effective as of December 31, 2007.

(b)
Managements Report on Internal Control over Financial Reporting.
Management is responsible for establishing and maintaining adequate internal
control over financial reporting for the Account. The Accounts internal
control over financial reporting is a process designed under the supervision of
the Accounts Chief Executive Officer and Chief Financial Officer to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of the Accounts financial statements for external purposes in
accordance with U.S. generally accepted accounting principles.

Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may
become inadequate because of changes in conditions, or that the degree of
compliance with the policies or procedures may deteriorate.

Management
has made a comprehensive review, evaluation, and assessment of the Accounts
internal control over financial reporting as of December 31, 2007.  In making its assessment of internal control
over financial reporting, management used the criteria issued by the Committee
of Sponsoring Organizations of the Treadway Commission in Internal Control-Integrated Framework.
Based on that assessment, management concluded that, as of December 31, 2007,
the Accounts internal control over financial reporting is effective.

87

---



This
annual report does not include an attestation report of the registrants
independent registered public accounting firm regarding internal control over
financial reporting. Managements report was not subject to attestation by the
Registrants independent registered public accounting firm pursuant to
temporary rules of the Securities and Exchange Commission that permit the
company to provide only management's report in this annual report.

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

88

---



PART III

|                 |                                                                                                   
|---------------- | --------------------------------------------------------------------------------------------------
|ITEMS 10 AND 11. | DIRECTORS, EXECUTIVE OFFICERS, AND CORPORATE GOVERNANCE OF THE REGISTRANT; EXECUTIVE COMPENSATION.

The
Real Estate Account has no officers or directors and no TIAA trustee or
executive officer receives compensation from the Account. The Trustees and
certain principal executive officers of TIAA as of March 1, 2008, their dates
of birth, and their principal occupations during the last five years, are as
follows:

Trustees

Elizabeth E. Bailey,
11/26/38

John C. Hower Professor of
Public Policy and Management, Wharton School, University of Pennsylvania.
Director, CSX Corporation and Altria Group, Inc. Chair, National Bureau of
Economic Research. Honorary Trustee, The Brookings Institution.

Glenn A. Britt,
3/6/49

Chief Executive Officer, Time
Warner Cable, since 2001, where he has held several positions since 1972.
Executive Committee of National Cable & Telecommunications Association,
Director of Walter Kaitz Foundation and Xerox Corporation; Trustee of
Polytechnic University.

Robert C. Clark,
2/26/44

Harvard University
Distinguished Service Professor and Austin Wakeman Scott Professor of Law,
Harvard Law School, Harvard University; Formerly Dean and Royall Professor of
Law, Harvard Law School from 1989 to 2003. Director, Collins & Aikman
Corporation, Time Warner, Inc. and Omnicom Group.

Edward M. Hundert, M.D.,
10/1/56

Senior lecturer in Medical
Ethics, Harvard Medical School. President, Case Western Reserve University from
2002 to 2006. Formerly, Dean, 2000-2002, University of Rochester School of
Medicine and Dentistry, Professor of Medical Humanities and Psychiatry,
1997-2002. Board Member, Rock and Roll Hall of Fame.

Marjorie Fine Knowles,
7/4/39

Professor of Law, Georgia State
University College of Law.

Donald K. Peterson,
8/13/49

Former Chairman and Chief
Executive Officer, Avaya Inc. from 2002 to 2006 and President and Chief
Executive Officer from 2000-01 Formerly, Executive Vice President and Chief
Financial Officer, Lucent Technologies. Chairman, Board of Trustees, Worcester
Polytechnic Institute. Director, Sanford C. Bernstein Fund Inc. and Emerj Inc.

Sidney A. Ribeau,
12/3/47

President, Bowling Green
University. Director, The Andersons, Convergys and Worthington Industries.

89

---



Dorothy K. Robinson,
2/18/51

Vice President and
General Counsel, Yale University since 1986. Trustee, Newark Public Radio
Inc., Youth Rights Media, Inc. and Friends of New Haven Legal Assistance.

David L. Shedlarz,
4/17/48

Retired Vice Chairman of Pfizer
Inc. from 2006 to 2007, Executive Vice President from 1999 to 2005 and Chief
Financial Officer from 1995 to 2005. Director, Pitney Bowes Inc. Trustee of
International Accounting Standards Committee Foundation and member of J.P.
Morgan Chase & Co. National Advisory Board. Chairman of the Board, Multiple
Sclerosis Society of New York.

David F. Swensen,
1/26/54

Chief Investment Officer, Yale
University, and adjunct professor of investment strategy. Trustee, The
Brookings Institution, Wesleyan University; Member, University of Cambridge
Investment Board.

Ronald L. Thompson,
6/17/49

Former Chairman and Chief
Executive Officer, Midwest Stamping and Manufacturing Company through 2005.
Director, Washington University in St. Louis.

Marta Tienda,
8/10/50

Maurice P. During 22 Professor
of Demographic Studies, Princeton University. Director, Office of Population
Research, Princeton University, 1998-2002. Director, Corporation of Brown
University, Sloan Foundation, Jacobs Foundation and RAND Corporation.

Rosalie J. Wolf,
5/8/41

Managing Partner, Botanica
Capital Partners LLC. Formerly, Senior Advisor and Managing Director, Offit
Hall Capital Management LLC and its predecessor company, Laurel Management
Company LLC from 2001 to 2003; formerly, Treasurer and Chief Investment
Officer, The Rockefeller Foundation. Director, North European Oil Royalty
Trust; Chairman, Sanford C. Bernstein Fund, Inc.

OfficerTrustees

Herbert M. Allison, Jr.,
8/2/43

Chairman, President and Chief Executive
Officer, TIAA. President and Chief Executive Officer, CREF. Formerly,
President, Chief Operating Officer and Member of the Board of Directors of
Merrill Lynch & Co., Inc., 1997-1999 and President and Chief Executive
Officer of Alliance for LifeLong Learning, 2000-2002. Advisory Board, Stanford
Business School and Yale School of Management; Chair, Business-Higher Education
Forum; Director, The Conference Board; Trustee, The Economic Club of New York.

90

---



Other TIAA Executive Officers

Georganne C. Proctor,
10/25/56

Executive Vice President and
Chief Financial Officer, TIAA and CREF since 2006. Executive Vice President of
Finance for Golden West Financial Corporation, the holding company of World
Savings Bank, from 2003 through 2005. From 1994 through 2002, served as Senior
Vice President, Chief Financial Officer and a member of the board of directors
of Bechtel Group, Inc. Director of Redwood Trust, Inc. and Kaiser Aluminum
Corporation.

Scott C. Evans,
5/11/59

Executive Vice President of
TIAA since 1999 and Head of Asset Management since 2006 of TIAA and CREF, the
TIAA-CREF Mutual Funds, the TIAA-CREF Institutional Mutual Funds, the TIAA-CREF
Life Funds and TIAA Separate Account VA-1 (collectively, the TIAA-CREF
Funds). Also served as Chief Investment Officer of TIAA between 2004 and 2006
and the TIAA-CREF Funds between 2003 and 2006.

Mary (Maliz) E. Beams,
3/29/56

Executive Vice President of
TIAA and the TIAA-CREF Funds since 2007. President and Chief Executive Officer,
TIAA-CREF Individual & Institutional Services, LLC since 2007. Senior
Managing Director and Head of Wealth Management Group of TIAA since 2004.
Partner, Spyglass Investments from 2002 to 2003.

Gary Chinery,
11/28/49

Vice President and Treasurer,
TIAA and CREF.

Marjorie M. Pierre-Merritt,
5/28/66

Vice President of TIAA and
Acting Corporate Secretary of TIAA and the TIAA-CREF Funds since 2007;
Assistant Corporate Secretary of TIAA from 2006-2007. Assistant Corporate
Secretary of The Dun & Bradstreet Corporation from 2003 to 2006. Counsel,
The New York Times Company from 2001 to 2003.

Portfolio Management Team

Margaret A. Brandwein,
11/26/46

Managing Director and Portfolio
Manager, TIAA Real Estate Account since 2004. From 2001 to 2004, Head of
Commercial MortgagesWest Coast for TIAA.

Thomas C. Garbutt,
10/12/58

Managing Director and Head of
Global Real Estate Equity Division, TIAA.

Philip J. McAndrews,
12/15/58

Managing Director and Head of
Real Estate Portfolio Management, TIAA-CREF Global Real Estate since 2005.
Between 2003 and 2005, portfolio manager for the Real Estate Account. Between
1997 and 2003, Head of the Real Estate Acquisitions and Joint Ventures group
for TIAA.

91

---



Audit Committee Financial Expert

On August 20,
2003, the Board of Trustees of TIAA determined that Rosalie J. Wolf was
qualified and would serve as the audit committee financial expert on TIAAs
audit committee. Ms. Wolf is independent (as that term is used in Item
7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934) and has
not accepted, directly or indirectly, any consulting, advisory or other
compensatory fee from TIAA, other than in her capacity as Trustee.

Code of Ethics

The Board of
Trustees of TIAA has a code of ethics for senior financial officers, including
its principal executive officer, principal financial officer, principal
accounting officer, or controller, and persons performing similar functions, in
conformity with rules promulgated under the Sarbanes-Oxley Act of 2002. The
code of ethics is filed as an exhibit to this annual report.

During the
reporting period, there were no implicit or explicit waivers granted by the
Registrant from any provision of the code of ethics.

|         |                                                                                                
|-------- | -----------------------------------------------------------------------------------------------
|ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Not
applicable.

|         |                                                                           
|-------- | --------------------------------------------------------------------------
|ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

TIAAs
general account plays a significant role in operating the Real Estate Account,
including providing a liquidity guarantee, and investment advisory and other
services. In addition, Services, a wholly-owned subsidiary of TIAA, provides
administration and distribution services for the Account.

Liquidity
Guarantee. If the Accounts liquid assets and its cash flow from operating
activities and participant transactions are insufficient to fund redemption
requests, TIAAs general account has agreed to purchase liquidity units. TIAA
thereby guarantees that a participant can redeem accumulation units at their
then-current daily net asset value. For the year ended December 31, 2007, the
Account expensed $19,409,759 for this liquidity guarantee from TIAA through a
daily deduction from the net assets of the Account.

Investment Advisory and Administrative Services/Certain Risks Borne by
TIAA.


Deductions are made each
valuation day from the net assets of the Account for various services required
to manage investments, administer the Account and distribute the contracts.
These services are performed at cost by TIAA and Services. Deductions are also
made each valuation day to cover mortality and expense risks borne by TIAA.


92

---



For
the year ended December 31, 2007, the Account expensed $49,239,366 for
investment advisory services and $8,052,314 for mortality and expense risks
provided/borne by TIAA. For the same period, the Account expensed $63,593,008
for administrative and distribution services provided by Services.

|         |                                        
|-------- | ---------------------------------------
|ITEM 14. | PRINCIPAL ACCOUNTANT FEES AND SERVICES.

PricewaterhouseCoopers
LLP (PwC) performs independent audits of the registrants financial
statements. To maintain auditor independence and avoid even the appearance of
conflicts of interest, the registrant, as a policy, does not engage PwC for
management advisory or consulting services.

Audit
Fees. PwCs fees for professional services rendered for the audits of the
Registrants annual financial statements for the years ended December 31, 2007,
2006, and 2005 and review of financial statements included in the registrants
quarterly reports were $654,000, $665,000, and $989,300, respectively.

Tax
Fees. PwC had no tax fees for the years ended December 31, 2007, 2006 and
2005.

All
Other Fees. Other than as set forth above, there were no additional fees
with respect to registrant.

Preapproval Policy. In June of 2003, TIAAs audit
committee (Audit Committee) adopted a Preapproval Policy for External Audit
Firm Services (the Policy). The Policy describes the types of services that
may be provided by the independent auditor to the registrant without impairing
the auditors independence. Under the Policy, the Audit Committee is required
to preapprove services to be performed by the registrants independent auditor
in order to ensure that such services do not impair the auditors independence.

The
Policy requires the Audit Committee to: (i) appoint the independent auditor to
perform the financial statement audit for the registrant and certain of its
affiliates, including approving the terms of the engagement and (ii) preapprove
the audit, audit-related and tax services to be provided by the independent
auditor and the fees to be charged for provision of such services from year to
year.

93

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PART IV

|         |                                            
|-------- | -------------------------------------------
|ITEM 15. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.

|     |   |      |  |                                                                              
|---- | - | ---- |  | -----------------------------------------------------------------------------
|(a)  |   | 1.   |  | Financial
 Statements. See Item 8 for required financial statements.         
|     |   |      |  |                                                                              
|     |   | 2.   |  | Financial
 Statement Schedules. See Item 8 for required financial statements.
|     |   |      |  |                                                                              
|(b)  |   |      |  | 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.7                        
|     |   |      |  |                                                                              
|(3)  |   | (A)  |  | Charter of
 TIAA (as amended)1                                               
|     |   |      |  |                                                                              
|     |   | (B)  |  | Bylaws of
 TIAA (as amended)6                                                
|(4)  |   | (A)  |  | Forms of RA,
 GRA, GSRA, SRA, IRA Real Estate Account Endorsements3,         
|     |   |      |  | Keogh
 Contract,4Retirement Select and Retirement Select Plus Contracts
 and 
|     |   |      |  | Endorsements2and Retirement Choice and Retirement Choice Plus Contracts.4    
|     |   | (B)  |  | Forms of
 Income-Paying Contracts3                                           
|(10) |   | (A)  |  | Independent
 Fiduciary Agreement, dated February 22, 2006, by and among      
|     |   |      |  | TIAA, the
 Registrant, and Real Estate Research Corporation5                 
|     |   | (B)* |  | 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.     
|(14) | * |      |  | Code of
 Ethics of TIAA                                                      
|(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 December 21, 2004 (File No.
 333-121493).                   
|2 | Previously filed and
 incorporated herein by reference to the Accounts Pre-Effective Amendment No.
 1 to the Registration Statement on Form S-1 filed April 29, 2004 (File No.
 333-113602).                      
|3 | Previously filed and
 incorporated herein by reference to the Accounts Post-Effective Amendment
 No. 2 to the Registration Statement on Form S-1 filed April 30, 1996 (File
 No. 33-92990).                       
|4 | Previously filed and
 incorporated herein by reference to the Accounts Post-Effective Amendment
 No. 1 to the Registration Statement on Form S-1 filed May 2, 2005 (File No.
 333-121493).                        
|5 | Previously filed and
 incorporated herein by reference to Exhibit 10.(a) to the Annual Report on
 Form 10-K of the Account filed on March 15, 2006.                                                                
|6 | Previously filed and
 incorporated herein by reference to Exhibit 3(B) to the Accounts Quarterly
 Report on Form 10-Q for the period ended September 30, 2006 and filed with
 the Commission on November 14, 2006.
|7 | 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.                                                                 

94

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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 20th day of March, 2008.

| |                                     |  |                             
| | ----------------------------------- |  | ----------------------------
| | TIAA REAL
 ESTATE ACCOUNT          
| |                                     |  |                             
| | By: TEACHERS
 INSURANCE AND ANNUITY
| | ASSOCIATION
 OF AMERICA            
| |                                     |  |                             
| | By:                                 |  | /s/ Herbert
 M. Allison, Jr.
| |                                     |  |                             
| |                                     |  | Herbert M.
 Allison, Jr.    
| |                                     |  | Chairman,
 President and    
| |                                     |  | Chief
 Executive Officer    

Pursuant
to the requirements of the Securities Exchange Act of 1934, as amended, this
Report has been signed by the following trustees and officers of Teachers
Insurance and Annuity Association of America, in the capacities and on the
dates indicated.

|                             |  |                                                    |  |        
|---------------------------- |  | -------------------------------------------------- |  | -------
|Signature                    |  | Title                                              |  | Date   
|                             |  |                                                    |  |        
|                             |  |                                                    |  |        
|/s/ Herbert
 M. Allison, Jr. |  | Chairman,
 President and Chief Executive           |  | 3/20/08
|                             |  | Officer
 (Principal Executive Officer) and Trustee |  |        
|Herbert M.
 Allison, Jr.     |  |                                                    |  |        
|                             |  |                                                    |  |        
|/s/
 Georganne C. Proctor    |  | Executive
 Vice President and Chief Financial      |  | 3/20/08
|                             |  | Officer
 (Principal Financial and Accounting       |  |        
|Georganne C.
 Proctor        |  | Officer)                                           |  |        

95

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|                             |  |         |  |         |     
|---------------------------- |  | ------- |  | ------- | ----
|Signature of
Trustee         |  | Title   |  |         | Date
|                             |  |         |  |         |     
|                            
|/s/
 Elizabeth E. Bailey     |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Elizabeth E.
 Bailey         |  |         |  |        
|                             |  |         |  |        
|/s/ Glenn A
 Britt           |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Glenn A
 Britt               |  |         |  |        
|                             |  |         |  |        
|/s/ Robert
 C. Clark         |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Robert C.
 Clark             |  |         |  |        
|                             |  |         |  |        
|/s/ Edward
 M. Hundert, M.D. |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Edward M.
 Hundert, M.D.     |  |         |  |        
|                             |  |         |  |        
|/s/ Marjorie
 Fine Knowles   |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Marjorie
 Fine Knowles       |  |         |  |        
|                             |  |         |  |        
|/s/ Donald
 K. Peterson      |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Donald K.
 Peterson          |  |         |  |        
|                             |  |         |  |        
|/s/ Sidney
 A. Ribeau        |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Sidney A.
 Ribeau            |  |         |  |        
|                             |  |         |  |        
|/s/ Dorothy
 K. Robinson     |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Dorothy K.
 Robinson         |  |         |  |        
|                             |  |         |  |        
|/s/ David L.
 Shedlarz       |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|David L.
 Shedlarz           |  |         |  |        
|                             |  |         |  |        
|/s/ David F.
 Swensen        |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|David F.
 Swensen            |  |         |  |        
|                             |  |         |  |        
|/s/ Ronald
 L. Thompson      |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Ronald L.
 Thompson          |  |         |  |        
|                             |  |         |  |        
|/s/ Marta
 Tienda            |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Marta Tienda                 |  |         |  |        
|                             |  |         |  |        
|/s/ Rosalie
 J. Wolf         |  | Trustee |  | 3/20/08
|                             |  |         |  |        
|Rosalie J.
 Wolf             |  |         |  |        

96

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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH
REPORTS FILED 
PURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOT
REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT

Because
the Registrant has no voting securities, nor its own management or board of
directors, no annual report or proxy materials will be sent to contractowners
holding interests in the Account.

97

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