UNITED STATESSECURITIES AND EXCHANGE COMMISSION 
Washington, D.C. 20549

FORM 10-K

|(Mark One)
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Commission file numbers 33-92990, 333-13477, 333-22809, 333-59778, 333-83964, 333-113602,333-121493, and 333-132580

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 America730 Third AvenueNew 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 ___                               NOX

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 ___                               NOX

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.

YESXNO
___

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 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 filerX

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

YES ___                               NOX

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                                               |  | 3   
|Item 2. Properties                                                  |  | 10  
|Item 3. Legal Proceedings                                           |  | 17  
|Item 4. Submission of Matters to a Vote of Security Holders         |  | 17  
|Part II                                                             |  |     
|Item 5. Market for Registrants Common Stock, Related               |  |     
|Stockholder
 Matters, and Issuer Purchases of Equity  Securities    |  | 18  
|Item 6. Selected Financial Data                                     |  | 19  
|Item 7. Managements Discussion and Analysis of                     |  |     
|Accounts
 Financial Condition and Operating  Results               |  | 21  
|Item 7A. Quantitative and Qualitative Disclosures about Market Risk |  | 36  
|Item 8. Financial Statements and Supplementary Data                 |  | 38  
|Item 9. Changes in and Disagreements with Accountants on            |  |     
|Accounting
 and Financial Disclosure                                |  | 71  
|Item 9A. Controls and Procedures                                    |  | 71  
|Part III                                                            |  |     
|Items 10 and 11. Directors, Executive Officers, and Corporate       |  |     
|Governance
 of the Registrant; Executive Compensation               |  | 72  
|Item 12. Security Ownership of Certain Beneficial Owners            |  |     
|and
        Management and Related Stockholder Matters              |  | 75  
|Item 13. Certain Relationships and Related Transactions,            |  |     
|and
 Director Independence                                          |  | 75  
|Item 14. Principal Accountant Fees and Services                     |  | 75  
|Part IV                                                             |  |     
|Item 15. Exhibits and Financial Statement Schedules                 |  | 77  
|Signatures                                                          |  | 78  

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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.

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.

Investment Strategy. The Account intends to invest between 75 percent and 90 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.

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Net Assets and Portfolio Investments. As of December 31, 2006, the Accounts net assets totaled $14,132,692,512. At December 31, 2006, the Account held a
total of 121 real estate properties (including its interests in 12 real estate-related joint ventures), representing 80.03% of the Accounts total investment portfolio (Total Investments). As of that date, the Account also held
investments in a mortgage loan receivable, representing 0.48% of Total Investments, real estate equity securities, representing 3.99% of Total Investments, commercial mortgage backed securities (CMBSs), representing 0.55% of Total Investments, real
estate limited partnerships, representing 1.80% of Total Investments, commercial paper representing 10.79% of Total Investments, and government bonds, representing 2.36% of Total Investments.

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

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

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 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. 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:

- Competition for real estate investments and any resulting delays in the acquisition of investments may increase the Accounts costs or otherwise adversely affect the
Accounts investment results.

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- The Accounts property values or rental and occupancy rates could go down due to general global economic conditions, a weak market for real estate generally or in specific
locations, changing supply and demand for certain types of properties, natural disasters, terrorist attacks or other man-made events.
- A property may be unable to attract and retain tenants, which means that rental income would decline. This situation could be exacerbated if a concentration of lease expirations
occurred during any one period.
- The Account could lose revenue if tenants do not pay rent, or if the Account is forced to terminate a lease for nonpayment. Any disputes with tenants could also involve costly litigation.
- A propertys profitability could go down if operating costs not reimbursed by tenants, such as property taxes, utilities, maintenance, and insurance costs, go up in relation to
gross rental income, or if the property needs unanticipated repairs and renovations.
- The Account may experience periods in which its investments are geographically concentrated, either regionally or in certain markets with similar demographics. In this event, the Accounts income and performance may be adversely impacted disproportionately by economic conditions in those areas in which the Accounts investments are
geographically concentrated.

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.
- Because of the nature of real estate, 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.
- The Account may need to provide financing to a purchaser if no cash buyers are available.

Appraisal Risks:Real estate appraisals are only 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. 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 appraisals are too low, those who
redeem prior to an adjustment to the valuation or a property sale will have received less than the true value of the Accounts assets. Further, the Account generally obtains appraisals only on a quarterly basis, and there will 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.

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Risks of Borrowing: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:

- The Account may not be able 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. The Account then may be forced to sell the property or other properties under unfavorable market
conditions or default on its mortgage.
- 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.

Regulatory Risks:Government regulation at the federal, state and local levels, including, without limitation, zoning laws, property taxes, and fiscal, accounting,
environmental or other government policies, could operate or change in a way that hurts 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 caused by hazardous substances used or found on its properties. Under various
environmental regulations, the Account may also be liable, as a current or previous property owner or mortgagee, for the cost of removing or cleaning up hazardous substances found on a property, even if it 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. The cost of any required cleanup and the Accounts potential liability for environmental damage, including
performance under indemnification obligations to third parties, to a single real estate investment 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

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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, if purchased when unleased, 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.
- 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 become insolvent or bankrupt, 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 not be able to make required payments
to the Account. If the leaseback interest is subordinate to other interests in the real property, such as a first mortgage or other lien, the risk to the Account increases because the lessee may have to pay the senior lienholder to prevent
foreclosure before it pays the Account. If the lessee defaults or the leaseback is terminated prematurely, the Account might not recover its investment unless the property is sold or leased on favorable terms.

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Risks of Making Mortgage Loan Investments

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

- The borrower may default, 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, thegreater the loans risk. Upon default, the Account may not be able to sell the property forits estimated or appraised value. Also, certain liens on the property, such as mechanicsor tax liens, may have priority over the Accounts security interest.
- A deterioration in the financial condition of tenants, 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 not be able 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 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.

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 not be able 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 could possibly 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 be liable for the borrowers debts.

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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, price volatility due to
changing conditions in the financial markets and, in particular, changes in overall interest rates.

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.

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.

Further, these securities may be harder to sell than other securities.

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.

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- 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.

Risks of Foreign Investments

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

- Foreign real estate markets may have different liquidity and volatility attributes than U.S. markets.
- The value of foreign investments or rental income can go up or down due to changes in currency rates, currency exchange control regulations, possible expropriation or confiscatory taxation, political, social, and economic developments, and foreign regulations.
- The Account may, but is not required to, seek to hedge its exposure to changes in currency rates, which could involve extra costs. Hedging might not be successful.
- It may be more difficult to obtain and collect a judgment on foreign investments than on domestic ones.

No Opportunity for Prior Review of Purchase

Investors do not have the opportunity to evaluate the economic 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 does not intend to register, as an investment company under the Investment Company Act of 1940, as amended (the Investment Company Act). 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.

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.

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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 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, 2006. 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.

|                            |  |                   |          |               |  |       |  |           |           |         |              | Annual Avg. |        |   |             |       
|--------------------------- |  | ----------------- | -------- | ------------- |  | ----- |  | --------- | --------- | ------- | ------------ | ----------- | ------ | - | ----------- | ------
|                            |  |                   |          |               |  |       |  | Rentable  |           |         |              | Base Rent   |        |   |             |       
|Property                    |  |                   |          | Year          |  | Year  |  | Area      |           | Percent |              | Per Leased  |        |   | Market      |       
|Investment                  |  |                   | Location |               |  | Built |  |           | Purchased |         | (Sq. ft.)(1) |             | Leased |   | Sq. Ft.(2)  |       
|                           
|OFFICE PROPERTY INVESTMENTS |  |                   |          |               |  |       |  |           |           |         |              |             |        |  
|1001 Pennsylvania Ave       |  | Washington, DC    |          | 1987          |  | 2004  |  | 802,390   |           | 100%    |              | $34.11      |        | $ | 552,502,209 | (4)   
|1 & 7 Westferry Circus      |  | London, UK        |          | 1992, 1993    |  | 2005  |  | 395,784   |           | 81%     |              | $63.96      |        | $ | 428,574,628 | (4)(5)
|50 Fremont Street           |  | San Francisco, CA |          | 1983          |  | 2004  |  | 817,412   |           | 94%     |              | $30.05      |        | $ | 421,000,000 | (4)   
|IDX Tower                   |  | Seattle, WA       |          | 2002          |  | 2004  |  | 845,533   |           | 98%     |              | $28.07      |        | $ | 398,990,017 | (4)   
|The Newbry                  |  | Boston, MA        |          | 1940-1961(6)  |  | 2006  |  | 607,685   |           | 100%    |              | $39.72      |        | $ | 370,745,525 |       
|Four Oaks Place             |  | Houston, TX       |          | 1983          |  | 2004  |  | 1,754,366 |           | 96%     |              | $17.55      |        | $ | 306,200,984 |       
|780 Third Avenue            |  | New York, NY      |          | 1984          |  | 1999  |  | 487,501   |           | 91%     |              | $40.89      |        | $ | 298,000,000 |       
|99 High Street              |  | Boston, MA        |          | 1971          |  | 2005  |  | 731,204   |           | 90%     |              | $32.30      |        | $ | 291,806,564 | (4)   
|Lincoln Centre              |  | Dallas, TX        |          | 1984          |  | 2005  |  | 1,635,352 |           | 90%     |              | $16.80      |        | $ | 270,000,000 | (4)   
|1900 K Street               |  | Washington, DC    |          | 1996          |  | 2004  |  | 342,884   |           | 100%    |              | $40.72      |        | $ | 255,002,226 |       
|701 Brickell                |  | Miami, FL         |          | 1986(7)       |  | 2002  |  | 677,667   |           | 96%     |              | $30.44      |        | $ | 231,239,379 |       
|Embarcadero Center West     |  | San Francisco, CA |          | 1988          |  | 2005  |  | 472,261   |           | 87%     |              | $30.16      |        | $ | 231,000,000 |       
|1401 H Street NW            |  | Washington, D.C.  |          | 1992          |  | 2006  |  | 348,629   |           | 96%     |              | $38.39      |        | $ | 207,806,286 | (4)   
|Wilshire Rodeo Plaza        |  | Beverly Hills, CA |          | 1935, 1984    |  | 2006  |  | 261,932   |           | 98%     |              | $48.32      |        | $ | 204,084,734 | (4)   
|161 North Clark Street(8)   |  | Chicago, IL       |          | 1992          |  | 2003  |  | 1,010,520 |           | 94%     |              | $15.10      |        | $ | 189,183,793 |       
|Yahoo! Center(9)            |  | Santa Monica, CA  |          | 1984          |  | 2004  |  | 1,082,952 |           | 99%     |              | $32.13      |        | $ | 187,766,625 |       
|Mellon Financial Center at  |  |                   |          |               |  |       |  |           |           |         |              |             |        |   |             |       
|One Boston Place(10)        |  | Boston, MA        |          | 1970(7)       |  | 2002  |  | 802,716   |           | 94%     |              | $38.17      |        | $ | 177,900,327 |       
|Ten & Twenty Westport Road  |  | Wilton, CT        |          | 1974(7), 2001 |  | 2001  |  | 538,840   |           | 100%    |              | $30.03      |        | $ | 175,000,000 |       
|980 9th Street and          |  |                   |          |               |  |       |  |           |           |         |              |             |        |   |             |       
|1010 8th Street(11)         |  | Sacramento, CA    |          | 1992          |  | 2005  |  | 481,885   |           | 94%     |              | $21.58      |        | $ | 168,000,000 |       

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|                                 |  |                      |          |            |  |             |  |           |           |         |              | Annual Avg. |        |   |               |    
|-------------------------------- |  | -------------------- | -------- | ---------- |  | ----------- |  | --------- | --------- | ------- | ------------ | ----------- | ------ | - | ------------- | ---
|                                 |  |                      |          |            |  |             |  | Rentable  |           |         |              | Base Rent   |        |   |               |    
|Property                         |  |                      |          | Year       |  | Year        |  | Area      |           | Percent |              | Per Leased  |        |   | Market        |    
|Investment                       |  |                      | Location |            |  | Built       |  |           | Purchased |         | (Sq. ft.)(1) |             | Leased |   | Sq. Ft.(2)    |    
|Millennium Corporate Park        |  | Redmond, VA          |          | 1999, 2000 |  | 2006        |  | 536,884   |           | 100%    |              | $14.83      |        | $ | 139,107,181   |    
|Urban Centre                     |  | Tampa, FL            |          | 1984, 1987 |  | 2005        |  | 549,375   |           | 96%     |              | $19.49      |        | $ | 121,000,000   |    
|Morris Corporate Center III      |  | Parsippany, NJ       |          | 1990       |  | 2000        |  | 525,154   |           | 78%     |              | $17.12      |        | $ | 114,857,104   |    
|Inverness Center                 |  | Birmingham, AL       |          | 1980-1985  |  | 2005        |  | 903,857   |           | 99%     |              | $12.00      |        | $ | 112,256,914   |    
|Prominence in Buckhead(8)        |  | Atlanta, GA          |          | 1999       |  | 2003        |  | 424,309   |           | 95%     |              | $27.17      |        | $ | 107,256,320   |    
|Treat Towers(8)                  |  | Walnut Creek, CA     |          | 1999       |  | 2003        |  | 367,313   |           | 78%     |              | $24.63      |        | $ | 94,023,131    |    
|88 Kearny Street                 |  | San Francisco, CA    |          | 1986       |  | 1999        |  | 228,470   |           | 99%     |              | $43.53      |        | $ | 90,310,024    |    
|The Ellipse at Ballston          |  | Arlington, VA        |          | 1989       |  | 2006        |  | 195,743   |           | 97%     |              | $31.61      |        | $ | 85,439,350    |    
|Oak Brook Regency Towers         |  | Oakbrook, IL         |          | 1977(7)    |  | 2002        |  | 402,318   |           | 83%     |              | $13.64      |        | $ | 83,200,000    |    
|Sawgrass Office Portfolio        |  | Sunrise, FL          |          | 1997-2000  |  | 1997,       |  |           |           |         |              |             |        |   |               |    
|                                 |  |                      |          |            |  | 1999-2000   |  | 344,009   |           | 97%     |              | $13.81      |        | $ | 72,000,000    |    
|Centerside I                     |  | San Diego, CA        |          | 1982       |  | 2004        |  | 205,137   |           | 79%     |              | $21.25      |        | $ | 67,000,000    |    
|The North 40 Office Complex      |  | Boca Raton, FL       |          | 1983, 1984 |  | 2006        |  | 350,004   |           | 100%    |              | $10.91      |        | $ | 63,500,000    |    
|8270 Greensboro Drive            |  | McLean, VA           |          | 2000       |  | 2005        |  | 158,110   |           | 90%     |              | $31.68      |        | $ | 62,000,000    |    
|West Lake North                  |  |                      |          |            |  |             |  |           |           |         |              |             |        |   |               |    
|Business Park                    |  | Westlake Village, CA |          | 2000       |  | 2004        |  | 198,558   |           | 100%    |              | $28.47      |        | $ | 61,000,000    |    
|Parkview Plaza                   |  | Oakbrook, IL         |          | 1990       |  | 1997        |  | 263,912   |           | 86%     |              | $11.77      |        | $ | 59,400,000    |    
|3 Hutton Centre                  |  | Santa Ana, CA        |          | 1985(7)    |  | 2003        |  | 197,817   |           | 100%    |              | $25.38      |        | $ | 59,011,323    |    
|Monument Place                   |  | Fairfax, VA          |          | 1990       |  | 1999        |  | 221,538   |           | 98%     |              | $20.90      |        | $ | 58,600,000    |    
|One Virginia Square              |  | Arlington, VA        |          | 1999       |  | 2004        |  | 116,077   |           | 100%    |              | $31.52      |        | $ | 53,000,000    |    
|The Pointe on Tampa Bay          |  | Tampa, FL            |          | 1982(7)    |  | 2002        |  | 250,357   |           | 100%    |              | $23.69      |        | $ | 50,573,824    |    
|Capitol Place                    |  | Sacramento, CA       |          | 1988(7)    |  | 2003        |  | 151,803   |           | 96%     |              | $27.32      |        | $ | 50,331,828    |    
|Wellpoint                        |  | Westlake Village, CA |          | 1986, 1998 |  | 2006        |  | 208,000   |           | 100%    |              | $13.23      |        | $ | 49,000,000    |    
|Park Place on Turtle Creek       |  | Dallas, TX           |          | 1986       |  | 2006        |  | 177,169   |           | 98%     |              | $24.36      |        | $ | 44,573,669    |    
|4200 West Cypress Street         |  | Tampa, FL            |          | 1989       |  | 2003        |  | 220,579   |           | 99%     |              | $21.61      |        | $ | 43,100,425    |    
|Tysons Executive Plaza II(12)    |  | McLean, VA           |          | 1988       |  | 2000        |  | 259,614   |           | 97%     |              | $24.15      |        | $ | 40,570,382    |    
|Creeksides at CenterPoint        |  | Kent, WA             |          | 1985       |  | 2006        |  | 218,589   |           | 81%     |              | $12.36      |        | $ | 40,508,139    |    
|10 Waterview Boulevard           |  | Parsippany, NJ       |          | 1984       |  | 1999        |  | 208,601   |           | 58%     |              | $12.95      |        | $ | 32,100,000    |    
|9 Hutton Centre                  |  | Santa Ana, CA        |          | 1990       |  | 2001        |  | 149,946   |           | 82%     |              | $16.40      |        | $ | 29,000,000    |    
|Columbus Portfolio               |  | Various, OH          |          | 1997-1998  |  | 1999, 2001  |  | 259,694   |           | 89%     |              | $10.00      |        | $ | 24,600,000    |    
|Needham Corporate Center         |  | Needham, MA          |          | 1987       |  | 2001        |  | 138,684   |           | 75%     |              | $13.20      |        | $ | 22,712,550    |    
|Batterymarch Park II             |  | Quincy, MA           |          | 1986       |  | 2001        |  | 104,718   |           | 53%     |              | $10.08      |        | $ | 13,234,314    |    
|Office Property Investments      |  |                      |          |            |  |             |  |           |           | 92%     |              |             |        | $ | 7,308,069,775 |    
|                                 |  |                      |          |            |  |             |  |           |           |         |              |             |        |   |               |    
|INDUSTRIAL PROPERTY INVESTMENTS  |  |                      |          |            |  |             |  |           |           |         |              |             |        |  
|Ontario Industrial Portfolio(13) |  | Various, CA          |          | 1997-1998  |  | 1998, 2000, |  |           |           |         |              |             |        |   |               |    
|                                 |  |                      |          |            |  | 2004        |  | 3,584,769 |           | 100%    |              | $  3.31     |        | $ | 270,000,000   | (4)
|Dallas Industrial Portfolio(14)  |  | Dallas and           |          |            |  |             |  |           |           |         |              |             |        |   |               |    
|                                 |  | Coppell, TX          |          | 1997-2001  |  | 2000-2002   |  | 3,886,541 |           | 90%     |              | $  2.44     |        | $ | 153,210,519   |    
|Southern California RA           |  |                      |          |            |  |             |  |           |           |         |              |             |        |   |               |    
|Industrial Portfolio             |  | Los Angeles, CA      |          | 1982       |  | 2004        |  | 920,028   |           | 96%     |              | $  5.31     |        | $ | 97,558,473    |    

11

---



|                                 |  |                    |          |             |  |             |  |           |           |         |              | Annual Avg. |        |   |            | 
|-------------------------------- |  | ------------------ | -------- | ----------- |  | ----------- |  | --------- | --------- | ------- | ------------ | ----------- | ------ | - | ---------- | 
|                                 |  |                    |          |             |  |             |  | Rentable  |           |         |              | Base Rent   |        |   |            | 
|Property                         |  |                    |          | Year        |  | Year        |  | Area      |           | Percent |              | Per Leased  |        |   | Market     | 
|Investment                       |  |                    | Location |             |  | Built       |  |           | Purchased |         | (Sq. ft.)(1) |             | Leased |   | Sq. Ft.(2) | 
|Cabot Industrial Portfolio       |  | Rancho             |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|                                 |  | Cucamonga, CA      |          | 2000-2002   |  | 2000, 2001, |  |           |           |         |              |             |        |   |            | 
|                                 |  |                    |          |             |  | 2002, 2004  |  | 1,214,475 |           | 100%    |              | $  3.71     |        | $ | 88,200,000 | 
|Chicago Industrial Portfolio(15) |  | Chicago and        |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|                                 |  | Joliet, IL         |          | 1997-2000   |  | 1998, 2000  |  | 1,577,606 |           | 90%     |              | $  3.83     |        | $ | 89,104,640 | 
|Atlanta Industrial Portfolio     |  | Lawrenceville, GA  |          | 1996-1999   |  | 2000        |  | 1,945,693 |           | 95%     |              | $  2.18     |        | $ | 77,863,416 | 
|Shawnee Ridge                    |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio(16)         |  | Atlanta, GA        |          | 2000-2005   |  | 2005        |  | 1,422,922 |           | 100%    |              | $  3.05     |        | $ | 76,117,193 | 
|Chicago Caleast                  |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio             |  | Chicago, IL        |          | 1974-2005   |  | 2003        |  | 1,493,706 |           | 93%     |              | $  2.52     |        | $ | 74,999,590 | 
|Northern California RA           |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio             |  | Oakland, CA        |          | 1981        |  | 2004        |  | 741,456   |           | 93%     |              | $  4.06     |        | $ | 71,317,741 | 
|IDI National Portfolio(17)       |  | Various, U.S.      |          | 1999-2004   |  | 2004        |  | 3,655,671 |           | 98%     |              | $  3.30     |        | $ | 70,348,753 | 
|Rainier Corporate Park           |  | Fife, WA           |          | 1991-1997   |  | 2003        |  | 1,104,646 |           | 97%     |              | $  4.03     |        | $ | 69,362,219 | 
|IDI Kentucky Portfolio           |  | Various, KY        |          | 1998-2000   |  | 1998, 2000, |  |           |           |         |              |             |        |   |            | 
|                                 |  |                    |          |             |  | 2005        |  | 1,437,022 |           | 100%    |              | $  3.24     |        | $ | 66,552,034 | 
|Regal Logistics Campus           |  | Seattle, WA        |          | 1999-2004   |  | 2005        |  | 968,535   |           | 100%    |              | $  4.15     |        | $ | 66,000,000 | 
|South River Road Industrial      |  | Cranbury, NJ       |          | 1999        |  | 2001        |  | 858,957   |           | 100%    |              | $  4.24     |        | $ | 60,600,000 | 
|Memphis Caleast                  |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio             |  | Memphis, TN        |          | 1996-1997   |  | 2003        |  | 1,600,232 |           | 100%    |              | $  2.01     |        | $ | 52,500,000 | 
|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%    |              | $  3.49     |        | $ | 45,874,807 | 
|New Jersey Caleast               |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio             |  | Cranbury, NJ       |          | 1982-1989   |  | 2003        |  | 807,773   |           | 50%     |              | $  2.23     |        | $ | 41,920,988 | 
|East North Central RA            |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio             |  | Chicago, IL        |          | 1978        |  | 2004        |  | 541,266   |           | 96%     |              | $  4.65     |        | $ | 37,503,284 | 
|Broadlands Business Park         |  | Elkton, MD         |          | 2006        |  | 2006        |  | 756,690   |           | 100%    |              | $  2.85     |        | $ | 35,002,731 | 
|Centre Pointe and                |  | Los Angeles        |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Valley View                      |  | County, CA         |          | 1965-1989   |  | 2004        |  | 307,685   |           | 100%    |              | $  4.10     |        | $ | 32,385,980 | 
|Northeast RA                     |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio             |  | Boston, MA         |          | 2000        |  | 2004        |  | 384,000   |           | 100%    |              | $  5.60     |        | $ | 30,900,000 | 
|1900 South Burgundy Place        |  | Ontario, CA        |          | 1988-1999   |  | 2006        |  | 397,125   |           | 100%    |              | $  3.69     |        | $ | 28,045,226 | 
|Summit Distribution Center       |  | Memphis, TN        |          | 2002        |  | 2003        |  | 708,532   |           | 100%    |              | $  2.52     |        | $ | 26,300,000 | 
|Eastgate Distribution Center     |  | San Diego, CA      |          | 1996        |  | 1997        |  | 200,000   |           | 100%    |              | $  7.02     |        | $ | 25,558,962 | 
|Airways Distribution Center      |  | Memphis, TN        |          | 2005        |  | 2006        |  | 556,600   |           | 100%    |              | $  3.20     |        | $ | 24,857,278 | 
|Konica Photo Imaging             |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Headquarters                     |  | Mahwah, NJ         |          | 1999        |  | 1999        |  | 168,000   |           | 100%    |              | $11.25      |        | $ | 23,100,000 | 
|Weber Distribution               |  | Rancho             |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|                                 |  | Cucamonga, CA      |          | 1988        |  | 2006        |  | 275,760   |           | 100%    |              | $  4.04     |        | $ | 20,800,000 | 
|Northwest RA                     |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|Industrial Portfolio             |  | Seattle, WA        |          | 1996        |  | 2004        |  | 312,321   |           | 100%    |              | $  3.51     |        | $ | 20,684,499 | 
|Landmark at Salt Lake City       |  |                    |          |             |  |             |  |           |           |         |              |             |        |   |            | 
|(Building #4)                    |  | Salt Lake City, UT |          | 2000        |  | 2000        |  | 328,508   |           | 85%     |              | $  2.77     |        | $ | 16,509,871 | 

12

---



|                                      |  |                  |          |           |  |       |  |           |           |         |              | Annual Avg. |        |   |                |    
|------------------------------------- |  | ---------------- | -------- | --------- |  | ----- |  | --------- | --------- | ------- | ------------ | ----------- | ------ | - | -------------- | ---
|                                      |  |                  |          |           |  |       |  | Rentable  |           |         |              | Base Rent   |        |   |                |    
|Property                              |  |                  |          | Year      |  | Year  |  | Area      |           | Percent |              | Per Leased  |        |   | Market         |    
|Investment                            |  |                  | Location |           |  | Built |  |           | Purchased |         | (Sq. ft.)(1) |             | Leased |   | Sq. Ft.(2)     |    
|Mideast RA                            |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|Industrial Portfolio                  |  | Wilmington, DE   |          | 1989      |  | 2004  |  | 266,141   |           | 90%     |              | $ 3.22      |        | $ | 16,014,758     |    
|UPS Distribution Facility             |  | Fernley, NV      |          | 1998      |  | 1998  |  | 256,000   |           | 100%    |              | $ 4.07      |        | $ | 15,000,000     |    
|FEDEX Distribution Facility           |  | Crofton, MD      |          | 1998      |  | 1998  |  | 110,842   |           | 100%    |              | $ 7.18      |        | $ | 8,500,000      |    
|Mountain RA                           |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|Industrial Portfolio                  |  | Phoenix, AZ      |          | 1989      |  | 2004  |  | 136,704   |           | 100%    |              | $ 2.14      |        | $ | 6,605,429      |    
|Butterfield Industrial Park(18)       |  | El Paso, TX      |          | 1980-1981 |  | 1995  |  | 183,510   |           | 100%    |              | $ 2.39      |        | $ | 5,100,000      |    
|Industrial Property Investments       |  |                  |          |           |  |       |  |           |           | 96%     |              |             |        | $ | 1,892,398,391  |    
|                                      |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|RETAIL PROPERTY INVESTMENTS           |  |                  |          |           |  |       |  |           |           |         |              |             |        |  
|Florida Retail Portfolio(19)          |  | Various, FL      |          | 1974-2005 |  | 2006  |  | 1,259,554 |           | 100%    |              | $15.94      |        | $ | 265,396,677    |    
|The Florida Mall(20)                  |  | Orlando, FL      |          | 1986(7)   |  | 2002  |  | 921,370   | (21)      | 99%     |              | $37.71      |        | $ | 237,919,775    |    
|West Town Mall(20)                    |  | Knoxville, TN    |          | 1972(7)   |  | 2002  |  | 761,357   | (21)      | 97%     |              | $19.18      |        | $ | 126,214,963    |    
|Miami International Mall(20)          |  | Miami, FL        |          | 1982(7)   |  | 2002  |  | 290,299   | (21)      | 97%     |              | $37.03      |        | $ | 97,300,131     |    
|Marketfair                            |  | West Windsor, NJ |          | 1987      |  | 2006  |  | 235,144   |           | 99%     |              | $20.74      |        | $ | 94,058,427     |    
|Westwood Marketplace                  |  | Los Angeles, CA  |          | 1950(7)   |  | 2002  |  | 202,201   |           | 100%    |              | $29.95      |        | $ | 91,467,954     |    
|Mazza Gallerie                        |  | Washington, DC   |          | 1975      |  | 2004  |  | 293,935   |           | 98%     |              | $18.46      |        | $ | 86,350,179     |    
|Publix at Weston Commons              |  | Weston, FL       |          | 2005      |  | 2006  |  | 126,922   |           | 97%     |              | $22.04      |        | $ | 54,411,436     | (4)
|Plainsboro Plaza                      |  | Plainsboro, NJ   |          | 1987      |  | 2005  |  | 218,653   |           | 90%     |              | $11.55      |        | $ | 50,900,000     |    
|South Frisco Village                  |  | Frisco, TX       |          | 2002      |  | 2006  |  | 227,175   |           | 99%     |              | $13.47      |        | $ | 47,014,065     | (4)
|The Market at Southpark               |  | Littleton, CO    |          | 1988      |  | 2004  |  | 190,080   |           | 96%     |              | $12.03      |        | $ | 35,800,000     |    
|Suncrest Village                      |  | Orlando, FL      |          | 1987      |  | 2005  |  | 93,358    |           | 100%    |              | $  9.48     |        | $ | 17,009,378     |    
|Plantation Grove                      |  | Ocoee, FL        |          | 1995      |  | 1995  |  | 73,655    |           | 100%    |              | $12.31      |        | $ | 15,010,406     |    
|Retail Property Investments           |  |                  |          |           |  |       |  |           |           | 98%     |              |             |        | $ | 1,218,853,391  |    
|                                      |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|OTHER COMMERCIAL PROPERTY INVESTMENTS |  |                  |          |           |  |       |  |           |           |         |              |            
|Storage Portfolio I(22)               |  | Various, U.S.    |          | 1972-1990 |  | 2003  |  | 2,226,549 |           | 83%     |              | $  9.64     |        | $ | 74,864,074     |    
|Commercial Property Investments       |  |                  |          |           |  |       |  |           |           | 94%     |              |             |        | $ | 10,494,185,631 |    
|                                      |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|RESIDENTIAL PROPERTY INVESTMENTS(23)  |  |                  |          |           |  |       |  |           |           |         |              |             |        |  
|Houston Apartment                     |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|Portfolio(24)                         |  | Houston, TX      |          | 1984-2004 |  | 2006  |  | NA        |           | 93%     |              | NA          |        | $ | 306,042,523    |    
|Kierland Apartment                    |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|Portfolio(25)                         |  | Scottsdale, AZ   |          | 1996-2000 |  | 2006  |  | NA        |           | 96%     |              | NA          |        | $ | 206,100,000    |    
|Palomino Park Apartments              |  | Denver, CO       |          | 1996-2001 |  | 2005  |  | NA        |           | 92%     |              | NA          |        | $ | 184,000,000    |    
|Phoenix Apartment                     |  | Greater Phoenix  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|Portfolio(26)                         |  | Area, AZ         |          | 1995-1998 |  | 2006  |  | NA        |           | 94%     |              | NA          |        | $ | 182,900,000    |    
|The Legacy at Westwood                |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|Apartments                            |  | Los Angeles, CA  |          | 2001      |  | 2002  |  | NA        |           | 94%     |              | NA          |        | $ | 110,231,593    |    
|The Colorado                          |  | New York, NY     |          | 1987      |  | 1999  |  | NA        |           | 99%     |              | NA          |        | $ | 100,000,000    |    
|Larkspur Courts                       |  | Larkspur, CA     |          | 1991      |  | 1999  |  | NA        |           | 93%     |              | NA          |        | $ | 93,043,346     |    
|Ashford Meadows                       |  |                  |          |           |  |       |  |           |           |         |              |             |        |   |                |    
|Apartments                            |  | Herndon, VA      |          | 1998      |  | 2000  |  | NA        |           | 92%     |              | NA          |        | $ | 89,091,341     |    

13

---



|                                 |  |                      |          |            |  |       |  |          |           |         |              | Annual Avg. |        |   |                |    
|-------------------------------- |  | -------------------- | -------- | ---------- |  | ----- |  | -------- | --------- | ------- | ------------ | ----------- | ------ | - | -------------- | ---
|                                 |  |                      |          |            |  |       |  | Rentable |           |         |              | Base Rent   |        |   |                |    
|Property                         |  |                      |          | Year       |  | Year  |  | Area     |           | Percent |              | Per Leased  |        |   | Market         |    
|Investment                       |  |                      | Location |            |  | Built |  |          | Purchased |         | (Sq. ft.)(1) |             | Leased |   | Sq. Ft.(2)     |    
|1050 Lenox Park                  |  | Atlanta, GA          |          | 2001       |  | 2005  |  | NA       |           | 97%     |              | NA          |        | $ | 79,470,836     |    
|Regents Court Apartments         |  | San Diego, CA        |          | 2001       |  | 2002  |  | NA       |           | 92%     |              | NA          |        | $ | 67,800,000     |    
|South Florida Apartment          |  | Boca Raton and       |          |            |  |       |  |          |           |         |              |             |        |   |                |    
|Portfolio                        |  | Plantation, FL       |          | 1986       |  | 2001  |  | NA       |           | 96%     |              | NA          |        | $ | 65,099,785     |    
|The Caruth                       |  | Dallas, TX           |          | 1999       |  | 2005  |  | NA       |           | 96%     |              | NA          |        | $ | 60,007,237     |    
|The Reserve at Sugarloaf         |  | Duluth, GA           |          | 2000       |  | 2005  |  | NA       |           | 99%     |              | NA          |        | $ | 49,500,000     | (4)
|Glenridge Walk                   |  | Atlanta, GA          |          | 1996, 2001 |  | 2005  |  | NA       |           | 97%     |              | NA          |        | $ | 48,710,574     |    
|The Lodge at Willow Creek        |  | Denver, CO           |          | 1997       |  | 1997  |  | NA       |           | 96%     |              | NA          |        | $ | 39,501,399     |    
|The Maroneal                     |  | Houston, TX          |          | 1998       |  | 2005  |  | NA       |           | 95%     |              | NA          |        | $ | 39,113,694     |    
|Lincoln Woods Apartments         |  | Lafayette Hill, PA   |          | 1991       |  | 1997  |  | NA       |           | 93%     |              | NA          |        | $ | 37,781,555     |    
|Westcreek Apartments             |  | Westlake Village, CA |          | 1988       |  | 1997  |  | NA       |           | 95%     |              | NA          |        | $ | 35,300,000     |    
|The Legends at Chase Oaks        |  | Plano, TX            |          | 1997       |  | 1998  |  | NA       |           | 98%     |              | NA          |        | $ | 29,025,236     |    
|The Fairways of Carolina         |  | Margate, FL          |          | 1993       |  | 2001  |  | NA       |           | 96%     |              | NA          |        | $ | 25,309,965     |    
|Royal St. George                 |  | W. Palm Beach, FL    |          | 1995       |  | 1996  |  | NA       |           | 97%     |              | NA          |        | $ | 25,000,000     |    
|Quiet Water at Coquina Lakes     |  | Deerfield Beach, FL  |          | 1995       |  | 2001  |  | NA       |           | 95%     |              | NA          |        | $ | 24,006,100     |    
|The Greens at Metrowest          |  |                      |          |            |  |       |  |          |           |         |              |             |        |   |                |    
|Apartments                       |  | Orlando, FL          |          | 1990       |  | 1995  |  | NA       |           | 91%     |              | NA          |        | $ | 21,011,825     |    
|Residential Property Investments |  |                      |          |            |  |       |  |          |           | 95%     |              |             |        | $ | 1,918,047,009  |    
|TotalAll Property Investments   |  |                      |          |            |  |       |  |          |           |         |              |             |        | $ | 12,412,232,640 |    

|(1)  | The square footage is an approximate measure and is subject to periodic remeasurement.                                                                                                                                                                                                                                       
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2)  | Based on total contractual rent on leases existing as of December 31, 2006. For those properties purchased in the fourth quarter of 2006, the rent is based on the existing leases as of the date of purchase.
The contractual rent can either be on a gross or a net basis, depending on the terms of the individual 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 (contained in Item 8. Financial
Statements and Supplementary Data).                                                                                       
|(4)  | Market value shown represents the Accounts interest gross of debt.                                                                                                                                                                                                                                                          
|(5)  | This property is located in London, the United Kingdom, and the market value is converted from British pounds to U.S. dollars at the exchange rate as of December 31, 2006.                                                                                                                                                  
|(6)  | This property was renovated in 2004 and 2006.                                                                                                                                                                                                                                                                                
|(7)  | Undergone extensive renovations since original construction.                                                                                                                                                                                                                                                                 
|(8)  | The 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.                                                                                                                                                   
|(9)  | 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.                                                                                                
|(10) | 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.                                               
|(11) | Formerly known as U.S. Bank Plaza.                                                                                                                                                                                                                                                                                         
|(12) | The 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.                                                                                                                                         
|(13) | The Ontario Industrial Portfolio contains six investment properties, including one portfolio which consists of 1.1million square feet located in Mira Loma, California.                                                                                                                                                      
|(14) | The Dallas Industrial Portfolio contains 11 warehouse distribution properties located in Dallas and Copell, Texas.                                                                                                                                                                                                           
|(15) | On October 5, 2006, the Account purchased Prairie Point Corporate Park, an industrial building in Bolingbrook, IL. This property was consolidated into the existing Chicago Industrial Portfolio.                                                                                                                            
|    

14

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|(16) | On October 5, 2006, the Account purchased Hamilton Mill Business Center, an industrial building in Buford, GA. This property was consolidated into the existing Shawnee Ridge Industrial Portfolio.                                                                                                                                     
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(17) | The property is 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) | Leasehold Interest Only.                                                                                                                                                                                                                                                                                                                
|(19) | This property investment 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. This portfolio
contains seven neighborhood and/or community shopping centers located in the Ft. Lauderdale, Miami, Orlando and Tampa, Florida areas.
|(20) | Each property is held in a 50%/50% joint venture with the Simon Property Group. Market value shown reflects the value of the Accounts interest in the joint venture, net of debt.                                                                                                                                                      
|(21) | Reflects the square footage owned by the joint venture.                                                                                                                                                                                                                                                                                 
|(22) | The property is held in a 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.                                                                                                                                                                    
|(23) | For the average unit size and annual average rent per unit for each residential property, see Residential Properties below.                                                                                                                                                                                                           
|(24) | 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.                                                                                                                                                                          
|(25) | 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.                                                                                                                                                                 
|(26) | 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.                                                                                                                                                   
|    

15

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Commercial (Non-Residential) Properties

At December 31, 2006, the Account held 98 commercial (non-residential) property investments in its portfolio, including a portfolio of storage facilities located throughout the United States. Twelve
of these properties were held through joint ventures, and 18 were subject to mortgages. 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 well diversified by both property type and geographic location. The portfolio consists of: 49 office properties containing approximately 23
million square feet located in 13 states, the District of Columbia and the United Kingdom; 35 industrial properties containing 35 million square feet located in 14 states, including a 60% interest in a portfolio of industrial properties located
throughout the United States; and 13 retail properties containing approximately five million square feet located in six states and the District of Columbia. In addition, the Account has a 75% interest in a portfolio of storage facilities located
throughout the United States containing approximately 2.2 million square feet.

As of December 31, 2006, the average overall occupancy rate of the Accounts commercial real estate portfolio was 94%. On an average basis, the Accounts office properties were 92% leased,
industrial properties were 96% leased, retail properties were 98% leased, and the storage portfolio was 83% leased.

Residential Properties

The Accounts residential property portfolio currently consists of 23 property investments comprised of first class or luxury multi-family, garden, mid-rise, and high-rise apartment buildings.
The portfolio contains approximately 11,106 units located in nine states and has a 95% 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.

16

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The table below contains detailed information regarding the apartment complexes in the Accounts portfolio as of December 31, 2006.

|                                  |                            |          |               |                 |          
|--------------------------------- | -------------------------- | -------- | ------------- | --------------- | ---------
|                                  |                            |          |               | Average         | Avg. Rent
|                                  |                            | Number   | Unit Size     | Per Unit/      
|Property                          | Location                   | of Units | (Square Feet) | Per
      Month
|                                 
|                                  |                            |          |               |                 |          
|The Greens at Metrowest           | Orlando, FL                | 200      |               | 920             |          
|The Royal St. George Apts         | West Palm Beach, FL        | 224      |               | 870             |          
|Westcreek Apartments              | Westlake Village, CA       | 126      |               | 951             |          
|Lincoln Woods Apartments          | Lafayette Hill, PA         | 216      |               | 774             |          
|Lodge at Willow Creek             | Denver, CO                 | 316      |               | 996             |          
|Legends at Chase Oaks             | Plano, TX                  | 346      |               | 972             |          
|The Colorado                      | New York, NY               | 256      |               | 622             |          
|Larkspur Courts                   | Larkspur, CA               | 248      |               | 1,001           |          
|Ashford Meadows                   | Herndon, VA                | 440      |               | 1,050           |          
|South Florida Apartment Portfolio | Boca Raton, Plantation, FL | 550      |               | 889             |          
|Fairways of Carolina              | Margate, FL                | 208      |               | 1,026           |          
|Quiet Waters Apartments           | Deerfield Beach, FL        | 200      |               | 1,048           |          
|Legacy at Westwood                | Los Angeles, CA            | 187      |               | 1,181           |          
|Regents Court                     | San Diego, CA              | 251      |               | 884             |          
|The Reserve at Sugarloaf          | Duluth, GA                 | 333      |               | 1,220           |          
|The Maroneal                      | Houston, TX                | 309      |               | 928             |          
|Glenridge Walk                    | Atlanta, GA                | 296      |               | 1,142           |          
|1050 Lenox Park                   | Atlanta, GA                | 407      |               | 1,023           |          
|Caruth at Lincoln Park            | Dallas, TX                 | 338      |               | 1,168           |          
|Palomino Park                     | Highlands Ranch, CO        | 1,184    |               | 1,095           |          
|Houston Apartment Portfolio       | Houston, TX                | 2,295    |               | 1,062           |          
|Phoenix Apartment Portfolio       | Greater Phoenix, AZ        | 1,176    |               | 996             |          
|Kierland Apartment Portfolio      | Scottsdale, AZ             | 1,000    |               | 1,049           |          
|                                  |                            |          |               |                 |          

ITEM 3.    LEGAL PROCEEDINGS.Other than lawsuits in the ordinary course of business, which we believe will have no material impact on our business, there are no lawsuits in which the Account is a
party.

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

17

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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, 2006 to December 31,
2006, the high and low accumulation unit values for the Account were $273.6530 and $239.9535, respectively. For the period January 1, 2005 to December 31, 2005, the high and low accumulation unit values for the Account were $239.9535 and
$210.0714, respectively.

Approximate Number of Holders. The number of contract owners at December 31, 2006 was 1,001,694.

Dividends. Not applicable.

(b) Use of Proceeds: Not applicable.

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

18

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ITEM 6.SELECTEDFINANCIALDATA.

Thefollowingselectedfinancialdata should
beconsideredinconjunctionwith theAccountsfinancialstatementsand notesprovidedin this report.

|                                                                                  |  |              | Year Ended     |  |   | Year Ended     |  |   | Year Ended    |  |   | Year Ended    |  |   | Year Ended    |  
|--------------------------------------------------------------------------------- |  | ------------ | -------------- |  | - | -------------- |  | - | ------------- |  | - | ------------- |  | - | ------------- | -
|                                                                                  |  |              | December 31,   |  |   | December 31,   |  |   | December 31,  |  |   | December 31,  |  |   | December 31,  |  
|                                                                                  |  |              | 2006           |  |   | 2005           |  |   | 2004          |  |   | 2003          |  |   | 2002          |  
|Investment income:                                                                |  |              |                |  |   |                |  |   |               |  |   |               |  |   |               |  
|Real estate income, net                                                           |  | $            | 444,782,843    |  | $ | 340,089,550    |  | $ | 239,429,500   |  | $ | 224,938,080   |  | $ | 198,998,685   |  
|Income from real estate joint ventures and limited partnerships                   |  |              | 84,671,528     |  |   | 71,826,443     |  |   | 71,390,397    |  |   | 31,989,569    |  |   | 17,077,072    |  
|Dividends and interest                                                            |  |              | 135,407,210    |  |   | 70,999,212     |  |   | 27,508,560    |  |   | 19,461,931    |  |   | 26,437,901    |  
|Total investment income                                                           |  |              | 664,861,581    |  |   | 482,915,205    |  |   | 338,328,457   |  |   | 276,389,580   |  |   | 242,513,658   |  
|Expenses                                                                          |  |              | 83,448,664     |  |   | 56,100,197     |  |   | 36,728,425    |  |   | 31,654,065    |  |   | 23,304,336    |  
|Investment income, net                                                            |  |              | 581,412,917    |  |   | 426,815,008    |  |   | 301,600,032   |  |   | 244,735,515   |  |   | 219,209,322   |  
|Net realized and unrealized gain (loss) on investments and mortgage notes payable |  |              | 1,032,787,765  |  |   | 765,970,272    |  |   | 414,580,303   |  |   | 58,837,371    |  |   | (102,967,284  | )
|Net increase in net assets resulting from operations                              |  |              | 1,614,200,682  |  |   | 1,192,785,280  |  |   | 716,180,335   |  |   | 303,572,886   |  |   | 116,242,038   |  
|Participant transactions                                                          |  |              | 1,969,780,728  |  |   | 2,110,375,836  |  |   | 1,735,947,490 |  |   | 813,860,715   |  |   | 346,079,345   |  
|Net increase in net assets                                                        |  | $            | 3,583,981,410  |  | $ | 3,303,161,116  |  | $ | 2,452,127,825 |  | $ | 1,117,433,601 |  | $ | 462,321,383   |  
|                                                                                 
|                                                                                  |  | December 31, |               
|                                                                                  |  |              | 2006           |  |   | 2005           |  |   | 2004          |  |   | 2003          |  |   | 2002          |  
|Total assets                                                                      |  | $            | 15,759,961,333 |  | $ | 11,685,426,413 |  | $ | 7,843,979,924 |  | $ | 4,867,089,727 |  | $ | 3,731,503,245 |  
|Total liabilities                                                                 |  |              | 1,627,268,821  |  |   | 1,136,715,311  |  |   | 598,429,938   |  |   | 73,667,566    |  |   | 55,514,685    |  
|Total net assets                                                                  |  | $            | 14,132,692,512 |  | $ | 10,548,711,102 |  | $ | 7,245,549,986 |  | $ | 4,793,422,161 |  | $ | 3,675,988,560 |  
|Accumulation units outstanding                                                    |  |              | 50,142,688     |  |   | 42,623,491     |  |   | 33,337,597    |  |   | 24,724,183    |  |   | 20,346,696    |  
|Accumulation unit value                                                           |  | $            | 273.65         |  | $ | 239.95         |  | $ | 210.44        |  | $ | 186.94        |  | $ | 173.90        |  
|Mortgage notes payable                                                            |  | $            | 1,437,149,148  |  |   | 973,502,186    |  | $ | 499,479,256   |  |   |              |  |   |              |  

19

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Quarterly Selected Financial Information

The following selected unaudited financial data for each full quarter of 2006 and 2005 are derived from the financial statements of the Account for the years ended December 31, 2006 and
2005.

|                                     |  | 2006                      
|------------------------------------ |  | --------------------------
|                                     |  | For the Three Months Ended
|                                     |  |                           
|Investment income, net               |  | $                         
|Net realized and unrealized gain     |  |                           
|on investments and mortgage          |  |                           
|loans payable                        |  |                           
|Net increase in net assets resulting |  |                           
|from operations                      |  | $                         
|Total return                         |  |                           
|                                    
|                                     |  | 2005                      
|                                     |  | For the Three Months Ended
|                                     |  |                           
|Investment income, net               |  | $                         
|Net realized and unrealized gain     |  |                           
|on investments and mortgage          |  |                           
|loans payable                        |  |                           
|Net increase in net assets resulting |  |                           
|from operations                      |  | $                         
|Total return                         |  |                           

20

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|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 on page 35, and the section entitled Item 1A. Risk Factors, which begins on page 3. The past performance of the Account is not indicative of
future results.

2006 Overview

The TIAA Real Estate Account (the Account) invests primarily in 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. Commerical real estate enjoyed another strong year of performance in 2006. The continued positive performance of commercial real estate markets is a reflection of positive economic indicators
and improved real estate market fundamentals, as discussed in the following section. While economic growth was relatively strong throughout the year, the Federal Reserve Board reported in its January 2007 Beige Book, which summarizes
economic conditions in the 12 Federal Reserve Districts, that economic activity had moderated in several Districts since its November 2006 report. However, the Federal Reserve Board also stated that commercial real estate markets remained very
active throughout the country: in contrast to the housing sector, commercial real estate markets continued to see strong activity in most Districts.

Investor demand for commercial real estate in 2006 was fueled by the solid performance of the U.S. economy, healthy market fundamentals, a dip in interest rates in the second half of 2006, and
relatively attractive returns when compared to other asset classes. Unlike the single family housing market, which experienced softening in demand and prices, commercial real estate prices and investment activity increased in 2006. According to Real
Capital Analytics, one of the primary industry sources of commercial real estate transaction data, commercial real estate transactional volume in 2006 totaled approximately $307 billion, an 11% increase over 2005. A number of REIT privatization
transactions and the $5 billion purchase price paid for a single property (Peter Cooper Village/Stuyvesant Town in New York City) were responsible for a sizeable share of the 2006 increase, which may make it difficult for the commercial real
estate market to sustain this pace in 2007.

While management believes that economic and real estate market fundamentals should remain stable to positive in the near term, commercial real estate markets are cyclical over the longer term and,
therefore, are subject to change. Geopolitical and economic risks, changes in interest rates or monetary policy, industry or sector slowdowns, the dynamics of supply and demand for commercial real estate and changing demographics are but a few of
the factors which can affect commercial real estate values and, consequently, the performance of the Account. While management cannot predict the exact nature or timing of such changes or the magnitude of their impact, our experience has
demonstrated that market fluctuations can and will take place without advance notice, and any significant changes could have a direct and

21

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meaningful impact on the returns of the Account. Please refer to the section entitled Item 1A. Risk Factors, which begins on page 3, for a more detailed description of the risks associated with an investment in the
Account.

It is also important to note that, while the single family residential real estate market has slowed to varying degrees in particular markets throughout the country, the Account does not directly
invest in single family residential real estate. Historically, there has not been a strong link between commercial real estate and single family housing because different market fundamentals drive the performance of each. The volatility in interest
rates had an immediate negative impact on the affordability of single family housing while not affecting commercial real estate values in the short term. During this same period, the commercial real estate market has been experiencing improved
market conditions (improving occupancies and increases in rental rates) and moderate levels of new construction.

Investments as of December 31, 2006

As of December 31, 2006, the Account had total net assets in the amount of $14,132,692,512, a 4% increase from the end of the third quarter of 2006 and a 34% increase from year-end 2005. The
growth in net assets was due to the strong inflow of premiums and net transfers into the Account, combined with a healthy increase in net investment income and capital appreciation on the Accounts investment portfolio during the year ended
December 31, 2006, as compared to 2005.

As of December 31, 2006, the Account owned a total of 121 real estate property investments (109 of which were wholly-owned and 12 of which were held in joint ventures) representing 80.03% of the
Accounts total investment portfolio. The real estate portfolio included 49 office properties (six of which were held in joint ventures and one located in London, UK), 35 industrial properties (including one held in a joint venture), 23
apartment complexes, 13 retail properties (including four held in joint ventures), and a 75% joint venture interest in a portfolio of storage facilities. Of the 121 real estate property investments, only 18 were subject to debt. Total debt on the
Accounts wholly-owned real estate portfolio as of December 31, 2006 was $1,437,149,148, representing 10.17% 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, 2006 was $1,909,316,373, representing 13.51% of Total Net Assets.

Management believes the Accounts real estate and real estate-related transactional activity in the year ended December 31, 2006 was strong. The Account purchased 23 property investments,
including a joint venture interest, for a total net equity investment of $2.3 billion. These purchases were diversified by both location (12 states and Washington, D.C.) and sector. The Account purchased an 80% joint venture interest in four
retail centers, and purchased nine office properties, seven industrial properties, three retail properties and three apartment properties. Two of the seven industrial properties were consolidated into existing portfolios. The Account also sold nine
property investments (four apartment and five office properties), for approximately $381.9 million. These properties had either maximized in value, under-performed,

22

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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 total net realized gain of $76.1
million. In addition, the Account made a $75 million mortgage loan receivable investment secured by an apartment complex in Washington, D.C.

Management believes that the Accounts real estate portfolio is diversified by location and property type and, at December 31, 2006, no single property investment represented more than 3.56% of
its total investments or more than 4.45% of its 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 as stated in the financial statements as of December 31, 2006.

Real Estate Property Investment
    Diversification by Market Value


|                |  | East  |  | West  |  | South |  | Midwest |  | Other* |  | Foreign** |  | TOTAL 
|--------------- |  | ----- |  | ----- |  | ----- |  | ------- |  | ------ |  | --------- |  | ------
|                |  | (32)  |  | (40)  |  | (39)  |  | (7)     |  | (2)    |  | (1)       |  | (121) 
|Office (49)     |  | 22.6% |  | 18.4% |  | 11.5% |  | 2.9%    |  | 0.0%   |  | 3.5%      |  | 58.9% 
|Apartment (23)  |  | 1.9%  |  | 7.4%  |  | 6.2%  |  | 0.0%    |  | 0.0%   |  | 0.0%      |  | 15.5% 
|Industrial (35) |  | 2.6%  |  | 6.6%  |  | 3.8%  |  | 1.6%    |  | 0.6%   |  | 0.0%      |  | 15.2% 
|Retail (13)     |  | 1.9%  |  | 1.0%  |  | 6.9%  |  | 0.0%    |  | 0.0%   |  | 0.0%      |  | 9.8%  
|Other (1)       |  | 0.0%  |  | 0.0%  |  | 0.0%  |  | 0.0%    |  | 0.6%   |  | 0.0%      |  | 0.6%  
|TOTAL (121)     |  | 29.0% |  | 33.4% |  | 28.4% |  | 4.5%    |  | 1.2%   |  | 3.5%      |  | 100.0%

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

Top Ten Real Estate Property Investments


|                             |  |               |      |        |        |            |      |           |               | % of Total  |           |           
|---------------------------- |  | ------------- | ---- | ------ | ------ | ---------- | ---- | --------- | ------------- | ----------- | --------- | ----------
|                             |  |               |      | State/ |        | Property   |      | Market    |               | Real Estate |           | % of Total
|Property Name                |  |               | City |        | County |            | Type |           | Value ($M)(a) |             | Portfolio |           
|1001 Pennsylvania Ave        |  | Washington    |      | DC     |        | Office     |      | $552.5(b) |               | 4.45%       |           | 3.56%     
|1 & 7 Westferry Circus       |  | London        |      | UK     |        | Office     |      | $428.6(c) |               | 3.45%       |           | 2.76%     
|50 Fremont Street            |  | San Francisco |      | CA     |        | Office     |      | $421.0(d) |               | 3.39%       |           | 2.71%     
|IDX Tower                    |  | Seattle       |      | WA     |        | Office     |      | $399.0(e) |               | 3.21%       |           | 2.57%     
|The Newbry                   |  | Boston        |      | MA     |        | Office     |      | $370.7    |               | 2.99%       |           | 2.39%     
|Four Oaks Place              |  | Houston       |      | TX     |        | Office     |      | $306.2    |               | 2.47%       |           | 1.97%     
|Houston Apartment Portfolio  |  | Houston       |      | TX     |        | Apartment  |      | $306.0    |               | 2.47%       |           | 1.97%     
|780 Third Avenue             |  | New York City |      | NY     |        | Office     |      | $298.0    |               | 2.40%       |           | 1.92%     
|99 High Street               |  | Boston        |      | MA     |        | Office     |      | $291.8(f) |               | 2.35%       |           | 1.88%     
|Ontario Industrial Portfolio |  | Ontario       |      | CA     |        | Industrial |      | $270.0(g) |               | 2.18%       |           | 1.74%     

|(a) | Value as reported in the 12/31/06 Statement
        of Investments, unless otherwise indicated. Investments owned 100% by
        TIAA are reported based on market value. Investments in joint ventures
        are reported based on the Accounts ownership percentage in the
    joint ventures.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | This property is shown gross of debt. The
    value of the Accounts interest less leverage is $332.4M.                                                                                                                                                                                             
|(c) | This property is shown gross of debt. The
        value of the Accounts interest less leverage is $168.3M. The
        market value has been converted to U.S dollars from British pounds at
    the exchange rate as of December 31, 2006.                                                        
|(d) | This property is shown gross of debt. The value
    of the Accounts interest less leverage is $278.6M.                                                                                                                                                                                             
|(e) | This property is shown gross of debt. The value
    of the Accounts interest less leverage is $246.0M.                                                                                                                                                                                             
|(f) | This property is shown gross of debt. The value
    of the Accounts interest less leverage is $106.8M.                                                                                                                                                                                             
|(g) | This property is shown gross of debt. The
    value of the Accounts interest less leverage is $260.1M.                                                                                                                                                                                             



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Top Five Overall Market Exposure


|                                     |  | %     |        | # of |             | % Total |            
|------------------------------------ |  | ----- | ------ | ---- | ----------- | ------- | -----------
|Metropolitan Statistical Area        |  |       | Leased |      | Investments |         | Investments
|                                    
|Washington-Arlington-Alexandria      |  | 96.8% |        | 10   |             | 9.61%   |            
|Boston-Quincy                        |  | 85.3% |        | 6    |             | 5.85%   |            
|San Francisco-San Mateo-Redwood City |  | 93.3% |        | 4    |             | 5.39%   |            
|Los Angeles-Long Beach-Glendale      |  | 98.4% |        | 8    |             | 5.37%   |            
|Seattle-Bellevue-Everett             |  | 95.8% |        | 5    |             | 4.29%   |            

As of December 31, 2006, the Account also held investments in real estate limited partnerships, representing 1.80% of Total Investments, real estate equity securities, representing 3.99% of Total
Investments, commercial mortgage-backed securities (CMBSs), representing 0.55% of Total Investments, a mortgage loan receivable representing 0.48% of Total Investments, commercial paper representing 10.79% of Total Investments, and government bonds,
representing 2.36% of Total Investments.

Real Estate Market OutlookIn General

(Commercial real estate market statistics discussed in this section are obtained by the Account from sources that management considers reliable, but the data is preliminary for the year ended
December 31, 2006 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.)

The United States commercial real estate markets and the national economy continued to experience improvements throughout 2006. Commercial real estate market fundamentals improved while the national
economy moved ahead, albeit more slowly in the second half of 2006. Despite the slower economic growth, capital inflow from investors to commercial real estate assets remained strong in 2006, continuing to support commercial real estate values,
while moderating investment returns. Management believes it is important to remember that real estate values can be affected by prospective changes in economic and capital market conditions, as well as by changes in supply and demand at the local
level.

Economic activity expanded throughout the nation in 2006. The United States economy added a total of 2.24 million new jobs over the course of 2006 and 2.54 million new jobs in 2005. The unemployment
rate dropped to 4.5% as of December 2006, from 4.9% in December 2005. Economic gains were broadly based, both geographically and across industries. While the economy did grow throughout 2006, the Federal Reserve Board reported in its January 2007
Beige Book that economic activity had moderated in several Districts during December. The Federal Reserve also noted, however, that ...in contrast to the housing sector, commercial real estate markets continued to see strong
activity in most Districts.

Payroll employment growth in the Accounts primary metropolitan areas remained positive in 2006. Of the Accounts five top markets (Washington, D.C., Boston, San Francisco, Los Angeles and
Seattle), based on the net equity value of the Accounts property investments, employment growth was strongest in the Seattle metropolitan area, where payroll employment grew 3.9% in

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2006. Employment growth was also strong in the Washington, D.C. metropolitan area, where payroll employment grew 2.5% over the course of 2006. Employment growth was more modest in the Boston (+0.9%), San Francisco (+1.5%) and Los
Angeles (+1.2%) metropolitan areas. By comparison, payroll employment grew 1.4% in the United States as a whole in 2006.

Growth in payroll employment is highly correlated with tenant demand for commercial real estate; however, growth in employment may not immediately result in demand for space. Space demand can lag
growth in employment due to the nature of the leasing cycle. Alternatively, absorption can be a leading indicator as companies lease space to accommodate anticipated hiring. The financial activities and professional and business
services sectors are the primary office users, and growth in these sectors is correlated with office space demand over the long term. These two sectors added 179,000 and 442,000 jobs, respectively, over the course of 2006, and office space
demand responded in kind. According to Torto Wheaton Research, an independent subsidiary of CB Richard Ellis and a widely-used source of real estate market data, office absorption in the United States, which is the net change in occupied space and a
fundamental indicator of demand, totaled a healthy 75 million square feet in 2006. Gains in net absorption during 2006 lowered office vacancy rates throughout much of the country. Torto Wheaton Research reported that office market vacancies averaged
12.5% at year-end 2006, as compared with 13.6% at the end of 2005. In comparison, at year-end 2006, the vacancy rate of the Accounts office portfolio was 8%, well below the national average.

Real estate conditions in the Accounts top office markets were solid in 2006. For example, in the Washington D.C. metropolitan area, where the largest concentration of the Accounts real
estate investments are located, office vacancies were well below the national average at 9.1% as of year-end 2006, down from 9.3% at year-end 2005. In comparison, the average vacancy rate of the Accounts office portfolio in the Washington,
D.C. metropolitan area was significantly better and stood at 3.0% at the end of 2006. Office vacancy rates in the Boston, Los Angeles, San Francisco, and Seattle metropolitan areas, which were the Accounts other top office markets, experienced
steady declines over the past year, and the average office vacancy rates in those three markets at year-end 2006 were 11.9%, 10.0%, 10.8% and 9.4%, respectively. In comparison, the Accounts office portfolios in Los Angeles, San Francisco,
Seattle and Boston had an average vacancy rate at year-end 2006 of 1%, 7%, 7% and 18%, respectively. It is important to note that three of the five property investments owned by the Account in the Boston metropolitan area are located within the city
of Boston and had an average vacancy rate of 5%. The remaining two property investments are located in suburban areas and had an average vacancy rate of 36% due to a slower leasing pace.

Industrial space demand is related to a number of factors, including the national business cycle, national industrial production, international trade volumes, changes in corporate logistics and
distribution systems, and employment growth in the manufacturing, wholesale trade and transportation & warehousing industries. Most of these factors have experienced sustained growth over the last several years. For example, U.S. gross domestic
product (GDP), a basic indicator of the national business cycle, grew an estimated 3.3% in 2006, after growing 3.2% in 2005 and 3.9% in 2004. Similarly, national industrial production grew at a 4.4% rate in 2006, following growth of 3.2% in 2005 and
2.5% in 2004. While GDP

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growth and growth in industrial production slowed during the second half of the year due primarily to a slowdown in domestic auto production and weakness in the single-family housing market, those factors continued to grow at
relatively healthy rates. According to Torto Wheaton Research, industrial space absorption in major U.S. metropolitan areas totaled 188 million square feet in 2006, which is a reflection of U.S. economic growth, and, as a result of the healthy
absorption, industrial vacancies dipped lower in 2006. According to Torto Wheaton Research, industrial vacancies averaged 9.4% at year-end 2006 compared with 9.9% at the end of 2005. In comparison, at year-end 2006, the vacancy rate of the
Accounts industrial portfolio was 4%, well below the national average.

Industrial market vacancies in the Riverside, California metropolitan area, where the largest concentration of the Accounts industrial properties are located, averaged 7.9% at year-end 2006,
which was below the national average, but up from 6.1% at year-end 2005. Still, the Riverside industrial market remained the most active industrial market in the country with over 21 million square feet of absorption in 2006, which was 30% greater
than that in the next most active market. In Los Angeles, another of the Accounts top industrial markets, vacancies were also well below the national average at 4.5% at year-end 2006. The industrial market vacancy rates in the Chicago (11.4%),
Dallas (11.7%), and Atlanta (13.0%) metropolitan areas were above the national average, but vacancies in these markets declined over the course of 2006. In comparison, at December 31, 2006, the Accounts industrial portfolio in Riverside was
100% occupied, and, in Los Angeles and Dallas, the Accounts industrial market vacancy rates were 2% and 5%, respectively. In the Accounts remaining top two industrial markets, Chicago and Atlanta, average vacancy rates at year-end 2006
were 7% and 2%, respectively.

The apartment market remained healthy throughout 2006, with the slow-down in the single-family housing market producing mostly positive effects for the apartment market. While the growth of
single-family housing prices slowed in 2006, past price increases had pushed housing affordability to its lowest level since 2001. The supply of rental units was significantly reduced in a number of markets by developers who removed units from the
rental stock as they pursued condominium conversion plans. The pace of condo conversions and conversion-driven acquisitions slowed significantly in the second half of 2006, but the reduction in rental supply during 2005 and the first half of 2006
was sufficient to keep apartment vacancies relatively low. According to Torto Wheaton Research, apartment vacancies increased to 5.1% at year-end 2006, as compared with 5.0% at the end of 2005. In addition, apartment rents increased in a number of
markets for the first time in several years, and rental concessions such as free rent were reduced or eliminated in many markets. The average vacancy rate for the Accounts apartment portfolio was 5% at the end of 2006.

Market vacancy rates in the Phoenix metropolitan area, the Accounts top apartment market, averaged 5.3% at year-end 2006. In the Accounts other top apartment markets, market vacancy rates
were higher: Houston (7.6%), Denver (5.8%), Atlanta (5.9%), and Los Angeles (2.8%) . In comparison, at December 31, 2006, the Accounts apartments located in Atlanta had an average vacancy rate of 2%, Phoenix had a vacancy rate of 5%, and in
Denver, Houston and Los Angeles, average vacancy rates were 6%.

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Retail markets remained healthy in 2006. Preliminary data from the U.S. Department of Commerce indicated that retail and food service sales (excluding autos and auto parts) increased 7.3% in 2006, a
significant gain given the elevated prices of oil and gasoline during much of the year. According to Torto Wheaton Research, vacancies in neighborhood and community centers increased to 8.7% at the end of 2006, versus 7.7% at year-end 2005. In
comparison, the average vacancy rate at the end of 2006 for the Accounts entire retail portfolio, as well as, for its neighborhood and community centers, was 3%.

Overall, Torto Wheaton Research believes that commercial real estate construction remains at appropriate levels to maintain the favorable real estate supply/demand conditions that existed in 2006 over
the near term. Space demand is expected to track closely with construction for most property types over the next several years. According to Torto Wheaton Research, office construction nationally should total 87 million square feet over the
2007-2008 period and absorption should total 91 million square feet. Construction of industrial space is projected to total 340 million square feet over the 2007-2008 period, as compared with absorption of 304 million square feet. While industrial
vacancies are expected to increase modestly to 9.8% at year-end 2008, rents are projected to grow 4.3% per year. Apartment construction is expected to total almost 425,000 units over the 2007-2008 period, and absorption is projected to total
approximately 350,000 units. While apartment vacancies are expected to increase modestly in 2007-2008, they will remain low by historical standards. Further, apartment rents are projected to grow 3.2% in 2007 and 3.0% in 2008. Torto Wheaton Research
expects construction of neighborhood and community centers to total 41.6 million square feet over the 2007-2008 period and absorption to total 40.8 million square feet. With construction and absorption closely aligned, retail rents are projected to
grow 4.4% in 2007 and 3.3% in 2008.

Economic Outlook for 2007

On balance, management believes that prospects for U.S. commercial real estate markets remain promising given current economic and property market conditions. Several years into recovery, the national
economy shows signs of a modest slowdown in economic activity primarily due to high energy prices and a weakened single-family housing market; however, many economists believe that the economy is in the midst of a soft landing and that
economic activity should remain healthy throughout 2007. Nationally, employment is growing at a solid pace, as is employment in key office-using industries. In addition to promising fundamentals, domestic and foreign investor demand for commercial
real estate shows little sign of abating. Strong inflows should provide support to current values but are also likely to continue to exert continued pressure on property prices and future returns. The Account will seek to balance the promising
market fundamentals against pricing pressures when executing its investment strategy. However, market conditions affecting real estate investments at any given time cannot be predicted, and an unexpected, sudden economic downturn in one or a number
of the markets in which the Account invests could significantly and adversely impact the Accounts returns.

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Results of Operations

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 reflects the continued strong performance of the Accounts real estate property investments and an increase in interest rates on its marketable securities.

Commercial real estate has been experiencing historically high pricing for the past several years 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, 2006 was 13.53%, 10.22% and 9.43%,
respectively.

The Accounts total net assets grew 34.0% 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 last twelve months. Management believes that the net participant transfers into the Account are 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 36.2% 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 79.6% and 85.3% 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 34.9% 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,

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2005 compared to 109 at December 31, 2006). Income from real estate joint ventures and limited partnerships was $84,671,528 for the year ended December 31, 2006, as compared with $71,826,443 for the year ended December 31,
2005. This 17.9% increase was due to an increase in gross rental income from the properties owned in joint ventures, as well as increased income from limited partnerships. Investment income on the Accounts investments in marketable securities
increased by 90.7%, from $70,999,212 in 2005 to $135,407,210 in 2006. This increase was due to an increase in the related investments and higher interest rates in 2006.

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 $1,032,787,765 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 $619,333,773 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 $193,477,741 for the year ended December 31, 2006, as compared to unrealized gains of $167,019,921
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

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existing real estate assets. This trend, which has continued for several years, 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.

Year Ended December 31, 2005 Compared to Year Ended December 31, 2004

Performance

The Accounts total return was 14.02% for the year ended December 31, 2005, 145 basis points higher than the 2004 total return of 12.57% . The substantial increase in the Accounts overall
performance on a year-to-year basis reflected the strong performance of the Accounts real estate properties. The market value of the Accounts real estate portfolio increased substantially in 2005 due to capital appreciation of these
assets as a result of the sustained growth in capital investment in the real estate market from institutional investors as well as foreign investors.

Income and Expenses

The Accounts net investment income, after deduction of all expenses, was 41.5% higher for the year ended December 31, 2005, as compared to 2004. This increase is related to a 45.6% growth in
Total Net Assets from year-end 2004 to year-end 2005. The growth in Total Net Assets was driven by a year-to-year 84.8% increase in net realized and unrealized gains on its investments and a 24.8% increase in net transfers and premiums into the
Account.

The Accounts real estate holdings, including real estate joint ventures and limited partnerships, generated approximately 85.3% and 91.9% of the Accounts total investment income (before
deducting Account level expenses) during 2005 and 2004, respectively. The remaining portion of the Accounts total investment income was generated by investments in marketable securities. The decline in the real estate component was due to the
growth in the non-real estate assets owned by the Account as a percentage of Total Net Assets. As of year-end 2005, the Account held 89.1% of its Total Net Assets in real estate, joint ventures and limited partnership holdings, as compared to 92.2%
in 2004.

Gross real estate rental income increased approximately 55.7% in the year ended December 31, 2005 as compared to 2004. This increase was primarily due to the increased number and size of properties
owned by the Account. Income from the real estate joint ventures and limited partnerships was $71,826,443 for the year ended December 31, 2005 as compared with $71,390,397 for the year ended December 31, 2004. Interest and dividend income on
the Accounts marketable securities increased from $27,508,560 in 2004 to $70,999,212 in 2005 due to the increase in the amount of non-real estate assets held by the Account, as well as an increase in short term rates from 2004 to
2005.

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Total property level expenses for the years ended December 31, 2005 and 2004 were $278,544,030 and $157,768,776, respectively. In 2005, operating expenses and real estate taxes represented
54.0% and 31.6% of the total property level expenses, respectively, with the remaining 14.4% due to interest payments on mortgages. In comparison, operating expenses, real estate taxes, and interest expense represented 64.0%, 35.5% and 0.5% of the
total property level expenses, respectively in 2004. Overall, property level expenses increased by 76.6% from 2004 to 2005, with approximately one-third of this increase attributable to interest expense in 2005. The interest expense incurred by the
Account was $830,361 and $40,028,630, respectively, in 2004 and 2005. The factors influencing these year-to-year increases were an increase in the number of wholly-owned properties subject to debt, which increased from four in 2004 (all
acquired in the fourth quarter of 2004) to seven in 2005, and the purchase of additional properties in 2005.

The Account also incurred expenses for the years ended December 31, 2005 and 2004 for investment advisory services ($19,603,225 and $14,393,388, respectively), administrative and distribution
services ($27,130,406 and $16,372,446, respectively) and mortality, expense risk and liquidity guarantee charges ($9,366,566 and $5,962,591, respectively). The overall 52.7% increase in expenses was a result of the larger net asset
base in the Account and the increased costs associated with managing and administering the Account.

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

The Account had net realized and unrealized gains on investments and mortgage loans payable of $765,970,272 for the year ended December 31, 2005, as compared to $414,580,303 for the year ended
December 31, 2004. This positive variance was primarily due to a substantial increase in net realized and unrealized gain on the Accounts real estate properties to $619,333,773 for the year ended December 31, 2005, as compared to
$186,313,976 for the year ended December 31, 2004. The increase was due to the capital appreciation of real estate assets attributable to the continued inflow of capital into the real estate market from institutional and other investors, which
had the effect of increasing the value of real estate. This trend, which began in 2004 and increased in 2005, is further evidenced by the net realized gain of $84.8 million on the properties sold in 2005. The net proceeds of these sales were
$511.5 million. The Account also had unrealized gains on its real estate joint ventures and limited partnership holdings of $167,019,921 for the year ended December 31, 2005, as compared to $162,245,601 in 2004. The Accounts
marketable securities had net realized and unrealized gains totaling $8,770,726 for the year ended December 31, 2005, as compared to $67,803,292 for the year ended December 31, 2004. The primary factor in the decline was the net effect on
the Accounts real estate equity securities of the relatively weak performance of the REIT market in 2005, as compared to the strong performance of this market in 2004.

Liquidity and Capital Resources

At year-end 2006 and 2005, the Accounts liquid assets (i.e., cash and marketable securities) had a value of $2,747,445,678 and $2,090,768,483, respectively. The increase in the
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, which

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management believes was in response to the continued strong relative performance of the Account.

In 2006, the Account received $1,085,057,614 in premiums and $1,354,697,847 in net participant transfers from TIAA, CREF Accounts and affiliated mutual funds, while, for 2005, the Account
received $968,189,436 in premiums and $1,435,432,984 in net participant transfers. The Accounts net investment income increased from $426,815,008 for the year ended December 31, 2005 to $581,412,917 for the year ended December
31, 2006.

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 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.,
to make leveraged real estate investments). Also, to meet any short-term cash needs, the Account may obtain a line of credit whose terms may require that the Account secure 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 costs incurred in developing a property.

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.

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

Valuation of Real Estate Properties:Investments in real estate properties are stated at fair value, as determined in accordance with procedures approved by the
Investment Committee of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole; accordingly, the Account does not record depreciation. Fair value for real estate properties is defined as the most probable
price for which a property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value involves subjective judgment because the actual market value of real estate can be determined only by negotiation
between the parties in a sales transaction. Real estate properties owned by the Account are initially valued at their respective purchase prices (including acquisition costs). Subsequently, the properties are valued on a quarterly cycle, and
independent appraisers value each real estate property at least once a year. TIAAs appraisal staff performs the other quarterly valuations of each real estate property and updates the property value if it believes that the value of a property
has changed since the previous valuation or appraisal. The appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices (USPAP), the real estate appraisal industry standards created by The Appraisal Foundation.
Real estate appraisals are estimates of property values based on a professionals opinion. Real estate properties subject to a mortgage are generally valued as described; the mortgage is valued independently of the property, and its fair value
is reported separately.

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, adjusted, for the joint ventures, to value their real estate holdings and mortgage notes payable at fair value.

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

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

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Mortgage Loans Payable: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 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. Accordingly, a small risk charge is paid by the Account to TIAA to assume these risks.

Accounting for Investments:Real estate transactions are accounted for as of the date on which the purchase or sale transactions for the real estate properties close
(settlement date). The Account recognizes a gain to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A loss occurs when the cost-to-date exceeds the sales price. As the Account is fair valued and all
properties are appraised quarterly, any accumulated unrealized gains and losses are reversed in the calculation of realized gains 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

34

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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 in the income earned by the joint venture.

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

Forward-Looking Statements

Some statements in this report which are not historical facts may be forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934 and the Private
Securities Litigation Reform Act of 1995. Forward-looking statements include statements about our expectations, beliefs, intentions or strategies for the future, and include the assumptions underlying these forward-looking statements.
Forward-looking statements appear in this report, among other places, in Managements Discussion and Analysis of Financial Conditions and Results of Operations. Forward-looking statements involve risks and uncertainties, some of
which are referenced in the sections of this Annual Report on Form 10-K entitled Item 1A. Risk Factors and in 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.

35

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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, 2006 represented 81.8% 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, 2006, 18.2% 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.

36

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- 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.

37

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ITEM 8.    FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

INDEX TO FINANCIAL STATEMENTSTIAA REAL ESTATE ACCOUNT



|                                                         |  |     
|-------------------------------------------------------- |  | ----
|                                                         |  | Page
|Report of Management Responsibility                      |  | 39  
|Report of the Audit Committee                            |  | 40  
|                                                        
|Audited Financial Statements:                            |  |     
|Statements of Assets and Liabilities                     |  | 41  
|Statements of Operations                                 |  | 42  
|Statements of Changes in Net Assets                      |  | 43  
|Statements of Cash Flows                                 |  | 44  
|Notes to Financial Statements                            |  | 45  
|Statements of Investments                                |  | 52  
|Report of Independent Registered Public Accounting Firm. |  | 69  

38

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REPORT OF MANAGEMENT RESPONSIBILITY

To the Participants of theTIAA 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 a sound system of internal controls and disclosure controls designed to provide reasonable assurance that assets are properly safeguarded and 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 a continuing review of the internal controls
and operations of the Account, and the chief audit executive regularly reports to the TIAA Audit Committee.

The accompanying financial statements have been audited by an independent registered public accounting firm. To maintain auditor independence and avoid any conflict of interest, it continues to be the Accounts policy
that any management advisory or consulting services be obtained from a firm other than the independent registered public accounting firm. The reports of the independent registered public accounting firms, which follow the statements of investments,
express independent opinions on the fairness of presentation of these financial statements.

The Audit Committee of the TIAA Board of Trustees, consisting entirely of trustees who are not officers of TIAA, meets regularly with management, representatives of PricewaterhouseCoopers LLP and the internal audit group to
review matters relating to financial reporting, internal controls and auditing. In addition to the annual audit of the Accounts financial statements by the independent registered public accounting firm, the New York State Insurance Department
and other state insurance departments perform periodic examinations of the Accounts operations.



|March 15, 2007 |  | /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     

39

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REPORT OF THE AUDIT COMMITTEE

To the Participants of theTIAA 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 ChairDonald K. Peterson, Audit Committee MemberLeonard S. Simon, Audit Committee MemberPaul R. Tregurtha, Audit Committee Member

March 15, 2007

40

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF ASSETS AND LIABILITIES

|                                                         |  | December 31, |                | December 31,
|-------------------------------------------------------- |  | ------------ | -------------- | ------------
|                                                         |  | 2006         |                | 2005        
|ASSETS                                                   |  |              |                |             
|Investments, at value:                                   |  |              |                |             
|Real estate properties                                   |  |              |                |             
|(cost: $9,462,471,032 and $7,355,833,152)                |  | $            | 10,743,487,689 |             
|Real estate joint ventures and limited partnerships      |  |              |                |             
|(cost: $1,413,322,924 and $1,086,041,287)                |  |              | 1,948,028,002  |             
|Marketable securities:                                   |  |              |                |             
|Real estate-related                                      |  |              | 704,922,323    |             
|(cost: $569,326,795 and $433,482,015)                    |  |              |                |             
|Other                                                    |  |              |                |             
|(cost: $2,038,681,194 and $1,640,676,190)                |  |              | 2,038,938,210  |             
|Mortgage loan receivable                                 |  |              |                |             
|(cost: $75,000,000)                                      |  |              | 74,660,626     |             
|Total investments                                        |  |              |                |             
|(cost: $13,558,801,945 and $10,516,032,644)              |  |              | 15,510,036,850 |             
|                                                         |  |              |                |             
|Cash                                                     |  |              | 3,585,145      |             
|                                                         |  |              |                |             
|Due from investment advisor                              |  |              | 8,461,793      |             
|                                                         |  |              |                |             
|Other                                                    |  |              | 237,877,545    |             
|                                                         |  |              |                |             
|TOTAL ASSETS                                             |  |              | 15,759,961,333 |             
|                                                         |  |              |                |             
|LIABILITIES                                              |  |              |                |             
|Mortgage loans payableNote 5                            |  |              |                |             
|(principal outstanding: $1,384,920,990 and $943,291,236) |  |              | 1,437,149,148  |             
|                                                         |  |              |                |             
|Payable for securities transactions                      |  |              | 1,219,323      |             
|                                                         |  |              |                |             
|Accrued real estate property level expenses              |  |              | 169,657,402    |             
|                                                         |  |              |                |             
|Security deposits held                                   |  |              | 19,242,948     |             
|                                                         |  |              |                |             
|TOTAL LIABILITIES                                        |  |              | 1,627,268,821  |             
|                                                         |  |              |                |             
|NET ASSETS                                               |  |              |                |             
|                                                         |  |              |                |             
|Accumulation Fund                                        |  |              | 13,722,700,176 |             
|                                                         |  |              |                |             
|Annuity Fund                                             |  |              | 409,992,336    |             
|                                                         |  |              |                |             
|TOTAL NET ASSETS                                         |  | $            | 14,132,692,512 |             
|                                                         |  |              |                |             
|NUMBER OF ACCUMULATION UNITS                             |  |              |                |             
|OUTSTANDINGNotes 6 and 7                                |  |              | 50,146,354     |             
|                                                         |  |              |                |             
|NET ASSET VALUE, PER ACCUMULATION UNITNote 6            |  | $            | 273.65         |             

See notes to the financial statements.

41

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF OPERATIONS

|                                                         |  |   | Years Ended December 31, |  
|-------------------------------------------------------- |  | - | ------------------------ | -
|                                                         |  |   | 2006                     |  
|                                                        
|INVESTMENT INCOME                                        |  |   |                          |  
|Real estate income, net:                                 |  |   |                          |  
|Rental income                                            |  | $ | 834,455,788              |  
|Real estate property level expenses and taxes:           |  |   |                          |  
|Operating expenses                                       |  |   | 207,452,982              |  
|Real estate taxes                                        |  |   | 110,059,852              |  
|Interest expense                                         |  |   | 72,160,111               |  
|Total real estate property level expenses and taxes      |  |   | 389,672,945              |  
|Real estate income, net                                  |  |   | 444,782,843              |  
|Income from real estate joint ventures                   |  |   |                          |  
|and limited partnerships                                 |  |   | 84,671,528               |  
|Interest                                                 |  |   | 118,621,441              |  
|Dividends                                                |  |   | 16,785,769               |  
|TOTAL INCOME                                             |  |   | 664,861,581              |  
|ExpensesNote 2:                                         |  |   |                          |  
|Investment advisory charges                              |  |   | 26,899,307               |  
|Administrative and distribution charges                  |  |   | 45,712,473               |  
|Mortality and expense risk charges                       |  |   | 6,931,833                |  
|Liquidity guarantee charges                              |  |   | 3,905,051                |  
|TOTAL EXPENSES                                           |  |   | 83,448,664               |  
|INVESTMENT
          INCOMENET                          |  |   | 581,412,917              |  
|REALIZED AND UNREALIZED GAIN (LOSS) ON                   |  |   |                          |  
|INVESTMENTS AND MORTGAGE LOANS PAYABLE                   |  |   |                          |  
|Net realized gain (loss) on:                             |  |   |                          |  
|Real estate properties                                   |  |   | 76,137,064               |  
|Marketable securities                                    |  |   | 10,257,108               |  
|Total realized gain on investments                       |  |   | 86,394,172               |  
|Net change in unrealized appreciation (depreciation) on: |  |   |                          |  
|Real estate properties                                   |  |   | 659,370,445              |  
|Real estate joint ventures and limited partnerships      |  |   | 193,477,741              |  
|Marketable securities                                    |  |   | 120,453,638              |  
|Mortgage loan receivable.                                |  |   | (339,374                 | )
|Mortgage loans payable                                   |  |   | (26,568,857              | )
|Net change in unrealized appreciation on                 |  |   |                          |  
|investments and mortgage loans
  payable                 |  |   | 946,393,593              |  
|NET REALIZED AND UNREALIZED GAIN ON                      |  |   |                          |  
|INVESTMENTS AND MORTGAGE LOANS PAYABLE                   |  |   | 1,032,787,765            |  
|NET INCREASE IN NET ASSETS                               |  |   |                          |  
|RESULTING FROM OPERATIONS                                |  | $ | 1,614,200,682            |  

See notes to the financial statements.

42

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF CHANGES IN NET ASSETS

|                                                |  |   | Years Ended December 31, |  
|----------------------------------------------- |  | - | ------------------------ | -
|                                                |  |   | 2006                     |  
|FROM OPERATIONS                                 |  |   |                          |  
|                                                |  |   |                          |  
|Investment income, net                          |  | $ | 581,412,917              |  
|                                                |  |   |                          |  
|Net realized gain on investments                |  |   | 86,394,172               |  
|                                                |  |   |                          |  
|Net change in unrealized appreciation           |  |   |                          |  
|on investments and mortgage loans payable       |  |   | 946,393,593              |  
|                                                |  |   |                          |  
|NET INCREASE IN NET ASSETS                      |  |   |                          |  
|RESULTING FROMOPERATIONS                        |  |   | 1,614,200,682            |  
|                                               
|FROM PARTICIPANT TRANSACTIONS                   |  |   |                          |  
|                                                |  |   |                          |  
|Premiums                                        |  |   | 1,085,057,614            |  
|                                                |  |   |                          |  
|Net transfers from TIAA                         |  |   | 215,893,898              |  
|                                                |  |   |                          |  
|Net transfers from CREF Accounts                |  |   | 1,154,122,836            |  
|                                                |  |   |                          |  
|Net transfers from (to) TIAA-CREF Institutional |  |   |                          |  
|Mutual Funds                                    |  |   | (15,318,887              | )
|                                                |  |   |                          |  
|Annuity and other periodic payments             |  |   | (65,192,000              | )
|                                                |  |   |                          |  
|Withdrawals and death benefits                  |  |   | (404,782,733             | )
|                                                |  |   |                          |  
|NET INCREASE IN NET ASSETS
          RESULTING  |  |   |                          |  
|FROM PARTICIPANTTRANSACTIONS                    |  |   | 1,969,780,728            |  
|                                                |  |   |                          |  
|NET INCREASE IN NET ASSETS                      |  |   | 3,583,981,410            |  
|                                               
|NET ASSETS                                      |  |   |                          |  
|                                                |  |   |                          |  
|Beginning of year                               |  |   | 10,548,711,102           |  
|                                                |  |   |                          |  
|End of year                                     |  | $ | 14,132,692,512           |  

See notes to the financial statements.

43

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF CASH FLOWS

|                                                              |  |   | Years Ended December 31, |  
|------------------------------------------------------------- |  | - | ------------------------ | -
|                                                              |  |   | 2006                     |  
|CASH FLOWS FROM OPERATING ACTIVITIES                          |  |   |                          |  
|Net increase in net assets resulting from operations          |  | $ | 1,614,200,682            |  
|Adjustments to reconcile net increase in net assets resulting |  |   |                          |  
|from operations to net cash used in operating activities:     |  |   |                          |  
|Purchase of real estate properties                            |  |   | (2,016,229,061           | )
|Capital improvements on real estate properties                |  |   | (117,041,456             | )
|Proceeds from sale of real estate properties                  |  |   | 387,290,000              |  
|Increase in other investments                                 |  |   | (859,898,769             | )
|Increase in mortgage loan receivable                          |  |   | (74,660,626              | )
|Increase in other assets                                      |  |   | (47,865,701              | )
|Decrease in amounts due to bank                               |  |   |                         |  
|Increase in accrued real estate property level expenses       |  |   |                          |  
|and taxes                                                     |  |   | 23,868,125               |  
|Increase in security deposits held                            |  |   | 2,812,909                |  
|Increase (decrease) in other liabilities                      |  |   | 225,514                  |  
|Net realized gain on investments                              |  |   | (86,394,172              | )
|Unrealized gain on investments and mortgage loans payable     |  |   | (946,393,593             | )
|                                                              |  |   |                          |  
|NET CASH USED IN                                              |  |   |                          |  
|OPERATINGACTIVITIES                                           |  |   | (2,120,086,148           | )
|                                                              |  |   |                          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                          |  |   |                          |  
|Mortgage loans payable acquired                               |  |   | 153,000,000              |  
|Principal payments on mortgage loans payable                  |  |   | (320,805                 | )
|Premiums                                                      |  |   | 1,085,057,614            |  
|Net transfers from TIAA                                       |  |   | 215,893,898              |  
|Net transfers from CREF Accounts                              |  |   | 1,154,122,836            |  
|Net transfers from (to) TIAA-CREF Institutional               |  |   |                          |  
|Mutual Funds                                                  |  |   | (15,318,887              | )
|Annuity and other periodic payments                           |  |   | (65,192,000              | )
|Withdrawals and death benefits                                |  |   | (404,782,733             | )
|                                                              |  |   |                          |  
|NET CASH PROVIDED BY                                          |  |   |                          |  
|FINANCINGACTIVITIES                                           |  |   | 2,122,459,923            |  
|                                                              |  |   |                          |  
|NET INCREASE IN CASH                                          |  |   | 2,373,775                |  
|                                                              |  |   |                          |  
|CASH                                                          |  |   |                          |  
|Beginning of year                                             |  |   | 1,211,370                |  
|End of year                                                   |  | $ | 3,585,145                |  
|                                                              |  |   |                          |  
|SUPPLEMENTAL DISCLOSURES:                                     |  |   |                          |  
|Cash paid for interest                                        |  | $ | 68,034,179               |  
|Debt assumed upon acquisition of properties                   |  | $ | 288,950,559              |  

See notes to the financial statements.

44

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TIAA REAL ESTATE ACCOUNTNOTES TO FINANCIAL STATEMENTS

Note 1Organization and Significant Accounting Policies

The TIAA Real Estate Account (Account) is a segregated investment account of Teachers Insurance and Annuity Association of America (TIAA) and was established by resolution of TIAAs Board of
Trustees on February 22, 1995, under the insurance laws of the State of New York, for the purpose of funding variable annuity contracts issued by TIAA. The investment objective of the Account is a favorable long-term rate of return primarily through
rental income and capital appreciation from real estate investments owned by the Account. The Account holds real estate properties directly and through wholly-owned subsidiaries. The Account also holds interests in limited partnerships and real
estate joint ventures in which the Account does not hold a controlling interest. Such joint ventures are not consolidated for financial statement purposes. The Account also invests in publicly-traded securities and other instruments to maintain
adequate liquidity for operating expenses, capital expenditures and to make benefit payments. The Account also invests in mortgage loans receivable collateralized by commercial real estate properties. 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.

Valuation of Real Estate Properties:Investments in real estate properties are stated at fair value, as determined in accordance with procedures approved by the Investment Committee
of the TIAA Board of Trustees and in accordance with the responsibilities of the Board as a whole; accordingly, the Account does not record depreciation. Fair value for real estate properties is defined as the most probable price for which a
property will sell in a competitive market under all conditions requisite to a fair sale. Determination of fair value involves subjective judgment because the actual market value of real estate can be determined only by negotiation between the
parties in a sales transaction. Real estate properties owned by the Account are initially valued at their respective purchase prices (including acquisition costs). Subsequently, the properties are valued on a quarterly cycle, and independent
appraisers value 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 valuation reviews of each real estate property and updates the property value if it believes that the value of a property has changed since the
previous valuation review or appraisal. The appraisals are performed in accordance with Uniform Standards of Professional Appraisal Practices (USPAP), the real estate appraisal industry standards created by The Appraisal Foundation. Real estate
appraisals are estimates of property values based on a professionals opinion. The independent fiduciary can also require additional appraisals if it believes that a propertys value has changed materially and that such change is not
reflected in the quarterly valuation review, or otherwise to ensure that the Account is valued correctly. The independent fiduciary must also approve an appraisal where a propertys value changed by 6% or more from the most recent annual
appraisal. Real estate properties subject to a mortgage are generally valued as described; the mortgage is valued independently of the property, and its fair value is reported separately. The independent fiduciary reviews and approves any such
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, adjusted, for the joint ventures, to value their real estate holdings and mortgage notes payable at fair value.

45

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

Mortgage Loans Payable: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 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 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 to the extent that the contract sales price exceeds the cost-to-date of the property being sold. A loss occurs when the cost-to-date exceeds the sales price. As the Account is fair valued and all properties are
appraised quarterly, any accumulated unrealized gains and losses are reversed in the calculation of realized gains 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

46

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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 real estate joint ventures is recorded based on the Accounts proportional interest in the income earned by the joint venture.

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

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

Reclassifications:Certain prior 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.

Note 2Management Agreements

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

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 member of the National Association of Securities Dealers, Inc.

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 actual expenses. Any differences between actual expenses and the amounts paid are adjusted quarterly.

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

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

47

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Note 3Leases

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

|Years Ending |  |   |              
|------------ |  | - | -------------
|December 31, |  |   |              
|2007         |  | $ | 795,495,322  
|2008         |  |   | 728,447,351  
|2009         |  |   | 654,178,920  
|2010         |  |   | 557,829,144  
|2011         |  |   | 443,396,596  
|2012-2035    |  |   | 1,527,743,118
|            
|Total        |  | $ | 4,707,090,451

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

Note 4Investment in Joint Ventures and Limited Partnerships

The Account owns 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, 2006, the Account held 12 joint venture investments with ownership interest percentages that ranged from 50% to 80%. The Accounts
allocated portion of the mortgage notes payable was $472,167,225 and $468,664,313 at December 31, 2006 and December 31, 2005, respectively. The Accounts equity in the joint ventures at December 31, 2006 and December 31, 2005 was
$1,668,744,951 and $1,222,036,564, respectively. A condensed summary of the financial position and results of operations of the joint ventures is shown below.

|                                 |  |                   |             |                   | December 31, 2006 |                   | December 31, 2005
|-------------------------------- |  | ----------------- | ----------- | ----------------- | ----------------- | ----------------- | -----------------
|Assets                           |  |                   |             |                   |                   |                   |                  
|Real estate properties, at value |  |                   |             |                   | $                 | 3,650,902,513     |                  
|Other assets                     |  |                   |             |                   |                   | 101,949,855       |                  
|Total assets                     |  |                   |             |                   | $                 | 3,752,852,368     |                  
|Liabilities and Equity           |  |                   |             |                   |                   |                   |                  
|Mortgage loans payable, at value |  |                   |             |                   | $                 | 875,560,195       |                  
|Other liabilities                |  |                   |             |                   |                   | 74,287,727        |                  
|Total liabilities                |  |                   |             |                   |                   | 949,847,922       |                  
|Equity                           |  |                   |             |                   |                   | 2,803,004,446     |                  
|Total liabilities and equity     |  |                   |             |                   | $                 | 3,752,852,368     |                  
|                                
|                                 |  | Year Ended        |             | Year Ended        |                   | Year Ended       
|                                 |  | December 31, 2006 |             | December 31, 2005 |                   | December 31, 2004
|Operating Revenues and Expenses  |  |                   |             |                   |                   |                   |                  
|Revenues                         |  | $                 | 299,078,956 |                   | $                 | 270,519,206       |                  
|Expenses                         |  |                   | 157,686,944 |                   |                   | 142,782,169       |                  
|Excess of revenues over expenses |  | $                 | 141,392,012 |                   | $                 | 127,737,037       |                  

48

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The account invests in limited partnerships that own real estate properties and receives distributions from the limited partnerships based on the Accounts ownership interest percentages. At December 31, 2006, the
Account held six limited partnership investments with ownership interest percentages that ranged from 5.27% to 19.75% . The Accounts investment in limited partnerships was $279,283,051 and $196,546,978 at December 31, 2006 and December
31, 2005, respectively.

Note 5Mortgage Loans Payable

At December 31, 2006, the Account had outstanding mortgage loans payable on the following properties:

|                             |  | Interest                  |                 | Amount |                   |   | 
|---------------------------- |  | ------------------------- | --------------- | ------ | ----------------- | - | 
|Property                     |  |                           | Rate Percentage |        | December 31, 2006 |   | 
|50 Fremont                   |  | 6.40 paid monthly         |                 | $      | 135,000,000       |   | 
|Ontario Industrial Portfolio |  | 7.42 paid monthly         |                 |        | 9,119,033         |   | 
|IDX Tower                    |  | 6.40 paid monthly         |                 |        | 145,000,000       |   | 
|1001 Pennsylvania Ave        |  | 6.40 paid monthly         |                 |        | 210,000,000       |   | 
|99 High Street               |  | 5.5245 paid monthly       |                 |        | 185,000,000       |   | 
|Reserve at Sugarloaf         |  | 5.49 paid monthly         |                 |        | 26,266,057        |   | 
|Westferry Circus             |  | 5.4003 paid quarterly (a) |                 |        | 232,585,341       |   | 
|Lincoln Centre               |  | 5.51 paid monthly         |                 |        | 153,000,000       |   | 
|Wilshire Rodeo Plaza         |  | 5.28 paid monthly         |                 |        | 112,700,000       |   | 
|1401 H Street                |  | 5.97 paid monthly         |                 |        | 115,000,000       |   | 
|South Frisco Village         |  | 5.85 paid monthly         |                 |        | 26,250,559        |   | 
|Publix at Weston Commons     |  | 5.08 paid monthly         |                 |        | 35,000,000        |   | 
|Total principal outstanding  |  |                           |                 | $      | 1,384,920,990     |   | 
|Unamortized discount         |  |                           |                 |        | (5,277,414        | ) | 
|Amortized cost               |  |                           |                 |        | 1,379,643,576     |   | 
|Fair value adjustment        |  |                           |                 |        | 57,505,572        |   | 
|Total mortgage loans payable |  |                           |                 | $      | 1,437,149,148     |   | 

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

Principal on mortgage loans payable is due as follows:

|                 |  | Amount |              
|---------------- |  | ------ | -------------
|2007             |  | $      | 576,135      
|2008             |  |        | 575,921      
|2009             |  |        | 619,325      
|2010             |  |        | 659,550      
|2011             |  |        | 8,647,276    
|Thereafter       |  |        | 1,373,842,783
|Total maturities |  |        | 1,384,920,990

49

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Note 6Condensed Financial Information

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

|                                        |  | Years Ended December 31, | 
|--------------------------------------- |  | ------------------------ | 
|                                        |  | 2006                     | 
|Per Accumulation Unit data:             |  |                          | 
|                                        |  |                          | 
|Rental income                           |  | $ 16.717                 | 
|                                        |  |                          | 
|Real estate property level expenses     |  |                          | 
|and taxes                               |  | 7.807                    | 
|                                        |  |                          | 
|Real estate income, net                 |  | 8.910                    | 
|                                        |  |                          | 
|Other income                            |  | 4.409                    | 
|                                        |  |                          | 
|Total income                            |  | 13.319                   | 
|                                        |  |                          | 
|Expense charges (1)                     |  | 1.671                    | 
|                                        |  |                          | 
|Investment income, net                  |  | 11.648                   | 
|                                        |  |                          | 
|Net realized and unrealized             |  |                          | 
|gain (loss) on investments and          |  |                          | 
|mortgage loans payable                  |  | 22.052                   | 
|                                        |  |                          | 
|Net increase in Accumulation Unit Value |  | 33.700                   | 
|                                        |  |                          | 
|Accumulation Unit Value:                |  |                          | 
|                                        |  |                          | 
|Beginning of year                       |  | 239.953                  | 
|                                        |  |                          | 
|End of year                             |  | $273.653                 | 
|                                        |  |                          | 
|Total return                            |  | 14.04%                   | 
|                                        |  |                          | 
|Ratios to Average Net Assets:           |  |                          | 
|                                        |  |                          | 
|Expenses (1)                            |  | 0.67%                    | 
|                                        |  |                          | 
|Investment income, net                  |  | 4.68%                    | 
|                                        |  |                          | 
|Portfolio turnover rate:                |  |                          | 
|                                        |  |                          | 
|Real estate properties                  |  | 3.62%                    | 
|                                        |  |                          | 
|Marketable securities                   |  | 51.05%                   | 
|                                        |  |                          | 
|Accumulation Units outstanding          |  |                          | 
|at end of year (in thousands)           |  | 50,146                   | 
|                                        |  |                          | 
|Net assets end of year (in thousands)   |  | $14,132,693              | 

|(1) | Expense charges per Accumulation Unit and the Ratio of Expenses to Average Net Assets exclude real estate property level expenses. If the real estate property level expenses were included, the expense charge
per Accumulation Unit for the year ended December 31, 2006 would be $9.478 ($8.441, $6.572, $7.255, and $5.920 for the years ended December 31, 2005, 2004, 2003, and 2002, respectively), and the Ratio of Expenses to Average Net
Assets for the year ended December 31, 2006 would be 3.81% (3.78%, 3.33%, 4.04%, and 3.61% for the years ended December 31, 2005, 2004, 2003, and 2002, respectively).
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   

50

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Note 7Accumulation Units

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

|                                                    |  | For the Years Ended December 31,
|--------------------------------------------------- |  | --------------------------------
|                                                    |  | 2006                            
|Credited for premiums                               |  | 4,056,196                       
|Net units credited for transfers, net disbursements |  |                                 
|and amounts applied to the Annuity Fund             |  | 3,466,667                       
|Outstanding:                                        |  |                                 
|Beginning of year                                   |  | 42,623,491                      
|End of year                                         |  | 50,146,354                      

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 property investments. As of December 31, 2006, the Account had outstanding commitments in the total
gross amount of approximately $2.8 billion to purchase two property investments: i) a portfolio of existing retail properties, which are located predominately in the Southeastern United States, for approximately $2.5 billion, subject to
approximately $1.5 billion in debt, and ii) a retail property located in France for approximately $263.7 million. The retail portfolio will be acquired through the Accounts investment in a newly-formed joint venture. The amounts
disclosed above represent the Accounts share of the retail portfolio and the related debt, and the Accounts share of the joint venture will be a non-controlling 85% interest. The acquisition of the retail portfolio and the French
property closed in February and March of 2007, respectively.

In addition, the Account had outstanding commitments to purchase interests in six limited partnerships, which totaled approximately $366.7 million in the aggregate. As of December 31, 2006, approximately $43.9
million remains to be funded under these commitments.

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

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 Account does not expect FIN 48 to have a significant impact on
the Accounts financial position or 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 in generally accepted accounting principles, 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. The Account plans to
adopt this guidance effective January 1, 2008. The Account is currently assessing the impact of Statement No. 157 but does not expect it to have a significant impact on the Accounts financial position or results of operations when
implemented.

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 many financial instruments and certain
other items at fair value and is expected to expand the use of fair value measurement. The Statement is effective for fiscal years beginning after November 15, 2007. The Account is currently assessing the impact of Statement No. 159 on the
Accounts financial position and results of operations.

51

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|REAL ESTATE PROPERTIES69.27% and 69.46%                  |  |   | Value       |    
|--------------------------------------------------------- |  | - | ----------- | ---
|Location / Description                                    |  |   | 2006        |    
|Alabama:                                                  |  |   |             |    
|Inverness Center - Office building                        |  | $ | 112,256,914 |    
|Arizona:                                                  |  |   |             |    
|Kierland Apartment Portfolio - Apartments                 |  |   | 206,100,000 |    
|Mountain RA Industrial Portfolio - Industrial building    |  |   | 6,605,429   |    
|Phoenix Apartment Portfolio - Apartments                  |  |   | 182,900,000 |    
|California:                                               |  |   |             |    
|3 Hutton Centre Drive - Office building                   |  |   | 59,011,323  |    
|9 Hutton Centre - Office building                         |  |   | 29,000,000  |    
|50 Fremont - Office building                              |  |   | 421,000,000 | (1)
|88 Kearny Street - Office building                        |  |   | 90,310,024  |    
|980 9th Street and 1010 8th Street - Office building      |  |   | 168,000,000 |    
|1900 South Burgundy Place - Industrial building           |  |   | 28,045,226  |    
|Cabot Industrial Portfolio - Industrial building          |  |   | 88,200,000  |    
|Capitol Place - Office building                           |  |   | 50,331,828  |    
|Centerside I - Office building                            |  |   | 67,000,000  |    
|Centre Pointe and Valley View - Industrial building       |  |   | 32,385,980  |    
|Eastgate Distribution Center - Industrial building        |  |   | 25,558,962  |    
|Embarcadero Center West - Office building                 |  |   | 231,000,000 |    
|Kenwood Mews - Apartments                                 |  |   |            |    
|Larkspur Courts - Apartments                              |  |   | 93,043,346  |    
|Northern CA RA Industrial Portfolio - Industrial building |  |   | 71,317,741  |    
|Ontario Industrial Portfolio - Industrial building        |  |   | 270,000,000 | (1)
|Regents Court - Apartments                                |  |   | 67,800,000  |    
|Southern CA RA Industrial Portfolio - Industrial building |  |   | 97,558,473  |    
|The Legacy at Westwood - Apartments                       |  |   | 110,231,593 |    
|Weber Distribution - Industrial building                  |  |   | 20,800,000  |    
|Wellpoint - Office building                               |  |   | 49,000,000  |    
|Westcreek - Apartments                                    |  |   | 35,300,000  |    
|West Lake North Business Park - Office building           |  |   | 61,000,000  |    
|Westwood Marketplace - Shopping center                    |  |   | 91,467,954  |    
|Wilshire Rodeo Plaza - Office building                    |  |   | 204,084,734 | (1)
|Colorado:                                                 |  |   |             |    
|Monte Vista - Apartments                                  |  |   |            |    
|Palomino Park - Apartments                                |  |   | 184,000,000 |    
|The Lodge at Willow Creek - Apartments                    |  |   | 39,501,399  |    
|The Market at Southpark - Shopping center                 |  |   | 35,800,000  |    
|Connecticut:                                              |  |   |             |    
|Ten & Twenty Westport Road - Office building              |  |   | 175,000,000 |    
|Delaware:                                                 |  |   |             |    
|Mideast RA Industrial Portfolio - Industrial building     |  |   | 16,014,758  |    
|Florida:                                                  |  |   |             |    
|701 Brickell - Office building                            |  |   | 231,239,379 |    
|4200 West Cypress Street - Office building                |  |   | 43,100,425  |    
|Golfview - Apartments                                     |  |   |            |    
|Maitland Promenade One - Office building                  |  |   |            |    

52

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|                                                                    |  |   | Value       |    
|------------------------------------------------------------------- |  | - | ----------- | ---
|Location / Description                                              |  |   | 2006        |    
|Plantation Grove - Shopping center                                  |  | $ | 15,010,406  |    
|Pointe on Tampa Bay - Office building                               |  |   | 50,573,824  |    
|Publix at Weston Commons - Shopping center                          |  |   | 54,411,436  | (1)
|Quiet Waters at Coquina Lakes - Apartments                          |  |   | 24,006,100  |    
|Royal St. George - Apartments                                       |  |   | 25,000,000  |    
|Sawgrass Office Portfolio - Office building                         |  |   | 72,000,000  |    
|South Florida Apartment Portfolio - Apartments                      |  |   | 65,099,785  |    
|Suncrest Village - Shopping center                                  |  |   | 17,009,378  |    
|The Fairways of Carolina - Apartments                               |  |   | 25,309,965  |    
|The Greens at Metrowest - Apartments                                |  |   | 21,011,825  |    
|The North 40 Office Complex - Office building                       |  |   | 63,500,000  |    
|Urban Centre - Office building                                      |  |   | 121,000,000 |    
|Georgia:                                                            |  |   |             |    
|1050 Lenox Park - Apartments                                        |  |   | 79,470,836  |    
|Alexan Buckhead - Apartments                                        |  |   |            |    
|Atlanta Industrial Portfolio - Industrial building                  |  |   | 77,863,416  |    
|Glenridge Walk - Apartments                                         |  |   | 48,710,574  |    
|Reserve at Sugarloaf - Apartments                                   |  |   | 49,500,000  | (1)
|Shawnee Ridge Industrial Portfolio - Industrial building            |  |   | 76,117,193  |    
|Illinois:                                                           |  |   |             |    
|Chicago Caleast Industrial Portfolio - Industrial building          |  |   | 74,999,590  |    
|Chicago Industrial Portfolio - Industrial building                  |  |   | 89,104,640  |    
|Columbia Centre III - Office building                               |  |   |            |    
|East North Central RA Industrial Portfolio - Industrial building    |  |   | 37,503,284  |    
|Oak Brook Regency Towers - Office building                          |  |   | 83,200,000  |    
|Parkview Plaza - Office building                                    |  |   | 59,400,000  |    
|Kentucky:                                                           |  |   |             |    
|IDI Kentucky Portfolio - Industrial building                        |  |   | 66,552,034  |    
|Maryland:                                                           |  |   |             |    
|Broadlands Business Park - Industrial building                      |  |   | 35,002,731  |    
|FEDEX Distribution Facility - Industrial building                   |  |   | 8,500,000   |    
|GE Appliance East Coast Distribution Facility - Industrial building |  |   | 48,000,000  |    
|Massachusetts:                                                      |  |   |             |    
|99 High Street - Office building                                    |  |   | 291,806,564 | (1)
|Batterymarch Park II - Office building                              |  |   | 13,234,314  |    
|Needham Corporate Center - Office building                          |  |   | 22,712,550  |    
|Northeast RA Industrial Portfolio - Industrial building             |  |   | 30,900,000  |    
|The Newbry - Office building                                        |  |   | 370,745,525 |    
|Nevada:                                                             |  |   |             |    
|UPS Distribution Facility - Industrial building                     |  |   | 15,000,000  |    
|New Jersey:                                                         |  |   |             |    
|10 Waterview Boulevard - Office building                            |  |   | 32,100,000  |    
|371 Hoes Lane - Office building                                     |  |   |            |    
|Konica Photo Imaging Headquarters - Industrial building             |  |   | 23,100,000  |    
|Marketfair - Shopping center                                        |  |   | 94,058,427  |    
|Morris Corporate Center III - Office building                       |  |   | 114,857,104 |    
|NJ Caleast Industrial Portfolio - Industrial building               |  |   | 41,920,988  |    

53

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|                                                               |  |   | Value       |    
|-------------------------------------------------------------- |  | - | ----------- | ---
|Location / Description                                         |  |   | 2006        |    
|Plainsboro Plaza - Shopping center                             |  | $ | 50,900,000  |    
|South River Road Industrial - Industrial building              |  |   | 60,600,000  |    
|New York:                                                      |  |   |             |    
|780 Third Avenue - Office building                             |  |   | 298,000,000 |    
|The Colorado - Apartments                                      |  |   | 100,000,000 |    
|Ohio:                                                          |  |   |             |    
|Columbus Portfolio - Office building                           |  |   | 24,600,000  |    
|Pennsylvania:                                                  |  |   |             |    
|Lincoln Woods - Apartments                                     |  |   | 37,781,555  |    
|Tennessee:                                                     |  |   |             |    
|Airways Distribution Center - Industrial building              |  |   | 24,857,278  |    
|Memphis Caleast Industrial Portfolio - Industrial building     |  |   | 52,500,000  |    
|Summit Distribution Center - Industrial building               |  |   | 26,300,000  |    
|Texas:                                                         |  |   |             |    
|Butterfield Industrial Park - Industrial building              |  |   | 5,100,000   | (2)
|Dallas Industrial Portfolio - Industrial building              |  |   | 153,210,519 |    
|Four Oaks Place - Office building                              |  |   | 306,200,984 |    
|Houston Apartment Portfolio - Apartments                       |  |   | 306,042,523 |    
|Lincoln Centre - Office building                               |  |   | 270,000,000 | (1)
|Park Place on Turtle Creek - Office building                   |  |   | 44,573,669  |    
|Pinnacle Industrial /DFW Trade Center - Industrial building    |  |   | 45,874,807  |    
|South Frisco Village - Shopping center                         |  |   | 47,014,065  | (1)
|The Caruth - Apartments                                        |  |   | 60,007,237  |    
|The Legends at Chase Oaks - Apartments                         |  |   | 29,025,236  |    
|The Maroneal - Apartments                                      |  |   | 39,113,694  |    
|United Kingdom:                                                |  |   |             |    
|1& 7 Westferry Circus - Office building                        |  |   | 428,574,628 | (1)
|Utah:                                                          |  |   |             |    
|Landmark at Salt Lake City (Building #4) - Industrial building |  |   | 16,509,871  |    
|Virginia:                                                      |  |   |             |    
|8270 Greensboro Drive - Office building                        |  |   | 62,000,000  |    
|Ashford Meadows - Apartments                                   |  |   | 89,091,341  |    
|Fairgate at Ballston - Office building                         |  |   |            |    
|Monument Place - Office building                               |  |   | 58,600,000  |    
|One Virginia Square - Office building                          |  |   | 53,000,000  |    
|The Ellipse at Ballston - Office building                      |  |   | 85,439,350  |    
|Washington:                                                    |  |   |             |    
|Creeksides at Centerpoint - Office building                    |  |   | 40,508,139  |    
|IDX Tower - Office building                                    |  |   | 398,990,017 | (1)
|Millennium Corporate Park - Office building                    |  |   | 139,107,181 |    
|Northwest RA Industrial Portfolio - Industrial building        |  |   | 20,684,499  |    
|Rainier Corporate Park - Industrial building                   |  |   | 69,362,219  |    
|Regal Logistics Campus - Industrial building                   |  |   | 66,000,000  |    
|Washington DC:                                                 |  |   |             |    
|1001 Pennsylvania Avenue - Office building                     |  |   | 552,502,209 | (1)
|1015 15th Street - Office building                             |  |   |            |    
|1401 H Street, NW - Office building                            |  |   | 207,806,286 | (1)

54

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|                                                                      |  |   | Value          |    
|--------------------------------------------------------------------- |  | - | -------------- | ---
|Location / Description                                                |  |   | 2006           |    
|1900 K Street - Office building                                       |  | $ | 255,002,226    |    
|Mazza Gallerie - Shopping center                                      |  |   | 86,350,179     |    
|                                                                     
|TOTAL REAL ESTATE PROPERTIES                                          |  |   |                |    
|(Cost $9,462,471,032 and $7,355,833,152)                              |  |   | 10,743,487,689 |    
|                                                                      |  |   |                |    
|REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS12.56% and 12.35% |  |   |                |    
|                                                                      |  |   |                |    
|REAL ESTATE JOINT VENTURES10.76% and 10.64%                          |  |   |                |    
|CAColorado Center LP                                                 |  |   |                |    
|Yahoo Center (50% Account Interest)                                   |  |   | 187,766,625    | (4)
|CATreat Towers LP                                                    |  |   |                |    
|Treat Towers (75% Account Interest)                                   |  |   | 94,023,131     |    
|GABuckhead LLC                                                       |  |   |                |    
|Prominence in Buckhead (75% Account Interest)                         |  |   | 107,256,320    |    
|Florida Mall Associates, Ltd.                                         |  |   |                |    
|The Florida Mall (50% Account Interest)                               |  |   | 237,919,775    | (4)
|IL161 Clark Street LLC                                               |  |   |                |    
|161 North Clark Street (75% Account Interest)                         |  |   | 189,183,793    |    
|One Boston Place REIT                                                 |  |   |                |    
|One Boston Place (50.25% Account Interest)                            |  |   | 177,900,327    |    
|Storage Portfolio I, LLC                                              |  |   |                |    
|Storage Portfolio(3)(75% Account Interest)                            |  |   | 74,864,074     | (4)
|Strategic Ind Portfolio I, LLC                                        |  |   |                |    
|IDI Nationwide Industrial Portfolio(3)(60% Account Interest)          |  |   | 70,348,753     | (4)
|Teachers REA IV, LLC                                                  |  |   |                |    
|Tysons Executive Plaza II (50% Account Interest)                     |  |   | 40,570,382     |    
|TREA Florida Retail, LLC                                              |  |   |                |    
|Florida Retail Portfolio (80% Account Interest)                       |  |   | 265,396,677    |    
|West Dade Associates                                                  |  |   |                |    
|Miami International Mall (50% Account Interest)                       |  |   | 97,300,131     | (4)
|West Town Mall, LLC                                                   |  |   |                |    
|West Town Mall (50% Account Interest)                                 |  |   | 126,214,963    | (4)
|                                                                      |  |   |                |    
|TOTAL REAL ESTATE JOINT VENTURES                                      |  |   |                |    
|(Cost $1,168,027,179 and $888,034,873)                                |  |   | 1,668,744,951  |    
|                                                                      |  |   |                |    
|LIMITED PARTNERSHIPS1.80% and 1.71%                                  |  |   |                |    
|Cobalt Industrial REIT (11.0131% Account Interest)                    |  |   | 26,506,381     |    
|Colony Realty Partners LP (5.27% Account Interest)                    |  |   | 26,382,659     |    
|Essex Property Trust, Inc. (10% Account Interest)                     |  |   |               |    
|Heitman Value Partners Fund (8.43% Account Interest)                  |  |   | 24,578,388     |    
|Lion Gables Apartment Fund (18.45% Account Interest)                  |  |   | 179,013,211    |    
|Mezz Fund (19.75% Account Interest)                                   |  |   | 454,319        |    
|Mony/Transwestern Mezz RP (16.67% Account Interest)                   |  |   | 22,348,093     |    
|                                                                      |  |   |                |    
|TOTAL LIMITED PARTNERSHIPS                                            |  |   |                |    
|(Cost $245,295,745 and $198,006,414)                                  |  |   | 279,283,051    |    
|                                                                      |  |   |                |    
|TOTAL REAL ESTATE JOINT VENTURES AND LIMITED PARTNERSHIPS             |  |   |                |    
|(Cost $1,413,322,924 and $1,086,041,287)                              |  |   | 1,948,028,002  |    

55

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

MARKETABLE SECURITIES17.69% and 18.19%

REAL ESTATE-RELATED MARKETABLE SECURITIES4.54% and 3.91%

REAL ESTATE EQUITY SECURITIES3.99% and 3.72%

|Shares  |  |         |  |                                       | Value
|------- |  | ------- |  | ------------------------------------- | -----
|2006    |  | 2005    |  | Issuer                                |      
|       |  | 75,000  |  | Aames Investment Corp.                |      
|53,300  |  |        |  | Acadia Realty Trust                   |      
|68,700  |  | 550,000 |  | Affordable Residential Communities LP |      
|68,700  |  |        |  | Affordable Residential Communities LP |      
|        |  |         |  | share rights (expiring 1/23/07)       |      
|       |  | 303,820 |  | Alesco Financial Inc.                 |      
|3,800   |  |        |  | Alexanders Inc.                      |      
|54,400  |  |        |  | Alexandria Real Estate Equities Inc.  |      
|166,985 |  | 36,685  |  | AMB Property Corp.                    |      
|42,500  |  | 40,000  |  | American Campus Communities Inc.      |      
|244,900 |  | 919,000 |  | American Financial Realty Trust       |      
|181,500 |  |        |  | Apartment Investment & Management Co. |      
|408,900 |  | 450,000 |  | ArchstoneSmith Trust                 |      
|118,500 |  | 150,000 |  | Ashford Hospitality Trust Inc.        |      
|33,300  |  |        |  | Associated Estates Realty Corp.       |      
|138,900 |  | 40,000  |  | AvalonBay Communities Inc.            |      
|       |  | 150,000 |  | Bimini Mortgage Management Inc.       |      
|122,400 |  |        |  | BioMed Realty Trust Inc.              |      
|217,200 |  |        |  | Boston Properties Inc.                |      
|171,500 |  |        |  | Brandywine Realty Trust               |      
|94,200  |  | 30,000  |  | BRE Properties Inc.                   |      
|220,300 |  | 270,000 |  | Brookfield Properties Corp.           |      
|105,200 |  |        |  | Camden Property Trust                 |      
|       |  | 194,000 |  | Carramerica Realty Corp.              |      
|121,500 |  |        |  | CBL & Associates Properties Inc.      |      
|74,900  |  | 424,000 |  | Cedar Shopping Centers Inc.           |      
|       |  | 50,000  |  | Centerpoint Properties Corp.          |      
|       |  | 280,000 |  | Cogdell Spencer Inc.                  |      
|87,600  |  |        |  | Colonial Properties Trust             |      
|80,600  |  |        |  | Corporate Office Properties Trust     |      
|75,500  |  |        |  | Cousins Properties Inc.               |      
|179,000 |  |        |  | Crescent Real Estate Equities Company |      
|       |  | 976,000 |  | Deerfield Triarc Capital Corp.        |      
|204,000 |  | 380,000 |  | Developers Diversified Realty Corp.   |      
|125,500 |  |        |  | DiamondRock Hospitality Co.           |      
|84,100  |  |        |  | Digital Realty Trust Inc.             |      
|123,500 |  |        |  | Douglas Emmett Inc.                   |      
|252,100 |  | 193,400 |  | Duke Realty Corp.                     |      
|42,900  |  |        |  | EastGroup Properties Inc.             |      

56

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Shares  |  |           |  |                                    | Value
|------- |  | --------- |  | ---------------------------------- | -----
|2006    |  | 2005      |  | Issuer                             |      
|       |  | 1,087,000 |  | ECC Capital Corp.                  |      
|49,900  |  | 600,000   |  | Education Realty Trust Inc.        |      
|103,400 |  |          |  | Equity Inns Inc.                   |      
|38,800  |  |          |  | Equity Lifestyle Properties Inc.   |      
|654,500 |  |          |  | Equity Office Properties Trust     |      
|69,900  |  |          |  | Equity One Inc.                    |      
|544,300 |  | 180,000   |  | Equity Residential                 |      
|43,600  |  |          |  | Essex Property Trust Inc.          |      
|120,200 |  | 580,577   |  | Extra Space Storage Inc.           |      
|103,200 |  |          |  | Federal Realty Investment Trust    |      
|115,300 |  |          |  | FelCor Lodging Trust Inc.          |      
|       |  | 1,367,000 |  | Feldman Mall Properties Inc.       |      
|84,300  |  |          |  | First Industrial Realty Trust Inc. |      
|41,600  |  | 111,600   |  | First Potomac Realty Trust         |      
|423,600 |  | 110,000   |  | General Growth Properties Inc.     |      
|69,600  |  |          |  | Glimcher Realty Trust              |      
|73,800  |  | 404,800   |  | GMH Communities Trust              |      
|       |  | 348,700   |  | Gramercy Capital Corp./New York    |      
|       |  | 300,000   |  | Great Wolf Resorts Inc.            |      
|59,500  |  | 562,000   |  | Hersha Hospitality Trust           |      
|107,500 |  | 150,000   |  | Highland Hospitality Corp.         |      
|101,700 |  |          |  | Highwoods Properties Inc.          |      
|       |  | 60,000    |  | Hilton Hotels Corp.                |      
|64,000  |  | 80,000    |  | Home Properties Inc.               |      
|       |  | 450,000   |  | HomeBanc Corp./Atlanta GA          |      
|147,900 |  |          |  | Hospitality Properties Trust       |      
|973,570 |  | 300,000   |  | Host Hotels & Resorts Inc.         |      
|396,700 |  |          |  | HRPT Properties Trust              |      
|116,700 |  |          |  | Inland Real Estate Corp.           |      
|84,800  |  |          |  | Innkeepers USA Trust               |      
|       |  | 300,000   |  | Interstate Hotels & Resorts Inc.   |      
|       |  | 80,000    |  | Istar Financial Inc.               |      
|       |  | 1,958,000 |  | Jameson Inns Inc.                  |      
|       |  | 100,000   |  | JER Investors Trust Inc.           |      
|59,400  |  |          |  | Kilroy Realty Corp.                |      
|409,521 |  | 108,000   |  | Kimco Realty Corp.                 |      
|55,300  |  | 426,000   |  | Kite Realty Group Trust            |      
|       |  | 300,000   |  | KKR Financial Corp.                |      
|75,000  |  | 200,000   |  | LaSalle Hotel Properties           |      
|       |  | 120,000   |  | Lexington Realty Trust             |      
|167,000 |  |          |  | Liberty Property Trust             |      
|       |  | 1,266,660 |  | Lodgian Inc.                       |      
|       |  | 200,000   |  | LTC Properties Inc.                |      
|135,900 |  | 75,000    |  | Macerich Co./The                   |      
|118,700 |  | 400,000   |  | MackCali Realty Corp.             |      
|81,000  |  |          |  | Maguire Properties Inc.            |      
|       |  | 200,000   |  | Medical Properties Trust Inc.      |      

57

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Shares                               |  |         |             |                                           | Value      
|------------------------------------ |  | ------- | ----------- | ----------------------------------------- | -----------
|2006                                 |  | 2005    |             | Issuer                                    |            
|44,000                               |  |        |             | MidAmerica Apartment Communities         |            
|100,200                              |  | 40,000  |             | Mills Corp./The                           |            
|                                    |  | 100,000 |             | Mission West Properties                   |            
|                                    |  | 331,200 |             | Monmouth Reit                             |            
|                                    |  | 300,000 |             | Mortgage IT Holdings Inc.                 |            
|198,000                              |  |        |             | New Plan Excel Realty Trust               |            
|                                    |  | 130,000 |             | Newcastle Investment Corp.                |            
|                                    |  | 100,000 |             | Novastar Financial Inc.                   |            
|                                    |  | 525,000 |             | Origen Financial Inc.                     |            
|25,100                               |  | 328,100 |             | Parkway Properties Inc./Md                |            
|69,500                               |  |        |             | Pennsylvania Real Estate Investment Trust |            
|79,300                               |  |        |             | Post Properties Inc.                      |            
|462,500                              |  | 400,000 |             | Prologis                                  |            
|30,200                               |  |        |             | PS Business Parks Inc.                    |            
|241,114                              |  | 30,000  |             | Public Storage Inc.                       |            
|                                    |  | 100,000 |             | RAIT Financial Trust                      |            
|28,500                               |  |        |             | RamcoGershenson Properties               |            
|157,000                              |  |        |             | Reckson Associates Realty Corp.           |            
|129,300                              |  | 236,000 |             | Regency Centers Corp.                     |            
|                                    |  | 384,000 |             | Republic Property Trust                   |            
|20,600                               |  |        |             | Saul Centers Inc.                         |            
|412,821                              |  | 305,721 |             | Simon Property Group Inc.                 |            
|86,300                               |  |        |             | SL Green Realty Corp.                     |            
|33,500                               |  |        |             | Sovran Self Storage Inc.                  |            
|                                    |  | 350,000 |             | Starwood Hotels & Resorts Worldwide       |            
|134,700                              |  |        |             | Strategic Hotels & Resorts Inc.           |            
|30,900                               |  |        |             | Sun Communities Inc.                      |            
|109,400                              |  |        |             | Sunstone Hotel Investors Inc.             |            
|58,300                               |  |        |             | Tanger Factory Outlet Centers             |            
|98,400                               |  |        |             | Taubman Centers Inc.                      |            
|                                    |  | 111,200 |             | Thomas Properties Group Inc.              |            
|                                    |  | 50,000  |             | Trizec Properties Inc.                    |            
|250,400                              |  | 100,000 |             | United Dominion Realty Trust Inc.         |            
|95,400                               |  |        |             | U-Store-It Trust                          |            
|                                    |  | 95,000  |             | Ventas Inc.                               |            
|245,800                              |  | 200,000 |             | Vornado Realty Trust                      |            
|85,500                               |  |        |             | Washington Real Estate Investment Trust   |            
|148,500                              |  |        |             | Weingarten Realty Investors               |            
|                                    |  | 944     |             | Windrose Medical Properties Trust         |            
|44,700                               |  |        |             | Winston Hotels Inc.                       |            
|                                    
|TOTAL REAL ESTATE EQUITY SECURITIES  |  |         |             |                                           |            
|(Cost $484,071,757 and $411,877,936) |  |         | 619,342,386 |                                           | 426,781,565

58

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

COMMERCIAL MORTGAGE-BACKED SECURITIES0.55% and 0.19%

|Principal                                       |  |            |             |                                         | Value
|----------------------------------------------- |  | ---------- | ----------- | --------------------------------------- | -----
|2006                                            |  | 2005       |             | Issuer, Interest Rate and Maturity Date |      
|10,000,000                                      |  |           |             | Commercial Mortgage Pass                |      
|                                                |  |            |             | 5.450% 12/15/20                         |      
|3,389,773                                       |  |           |             | Credit Suisse Mortgage Company          |      
|                                                |  |            |             | 5.470% 4/15/21                          |      
|10,000,000                                      |  | 10,000,000 |             | GS Mortgage Securities Co               |      
|                                                |  |            |             | 5.682% 5/3/18                           |      
|8,780,566                                       |  |           |             | GS Mortgage Securities Co               |      
|                                                |  |            |             | 5.420% 6/6/20                           |      
|9,996,970                                       |  |           |             | JP Morgan Chase Commercial              |      
|                                                |  |            |             | 5.440% 11/15/18                         |      
|9,298,609                                       |  |           |             | Lehman Brothers Floating                |      
|                                                |  |            |             | 5.430% 9/15/21                          |      
|9,143,864                                       |  |           |             | Morgan Stanley Capital                  |      
|                                                |  |            |             | 5.440% 7/15/19                          |      
|10,000,000                                      |  | 10,000,000 |             | Morgan Stanley Dean Witter              |      
|                                                |  |            |             | 5.712% 2/3/16                           |      
|                                               |  | 1,601,634  |             | TrizecHahn Office Property              |      
|                                                |  |            |             | 5.700% 3/15/13                          |      
|14,642,368                                      |  |           |             | Wachovia Bank Commercial                |      
|                                                |  |            |             | 5.440% 9/15/21                          |      
|                                               
|TOTAL COMMERCIAL MORTGAGE-BACKED SECURITIES     |  |            |             |                                         |      
|(Cost $85,255,038 and $21,604,079)              |  |            | 85,579,937  |                                         |      
|                                               
|TOTAL REAL ESTATE-RELATED MARKETABLE SECURITIES |  |            |             |                                         |      
|(Cost $569,326,795 and $433,482,015)            |  |            | 704,922,323 |                                         |      
|                                               
|OTHER MARKETABLE SECURITIES13.15% and 14.28%   |  |            |             |                                         |      
|                                               
|COMMERCIAL PAPER10.79%
          and 11.67%    |  |            |             |                                         |      
|                                               |  | 25,000,000 |             | Abbey National North America LLC        |      
|                                                |  |            |             | 4.330% 1/5/06                           |      
|25,000,000                                      |  |           |             | Abbey National North America LLC        |      
|                                                |  |            |             | 5.260% 1/17/07                          |      
|                                               |  | 25,000,000 |             | Abbey National Plc                      |      
|                                                |  |            |             | 4.280% 1/17/06                          |      
|                                               |  | 10,000,000 |             | Alabama Power Co                        |      
|                                                |  |            |             | 4.250% 1/12/06                          |      
|10,000,000                                      |  |           |             | American Express Bank, FSB              |      
|                                                |  |            |             | 5.565% 1/8/07                           |      
|1,500,000                                       |  |           |             | American Express Bank, FSB              |      
|                                                |  |            |             | 5.290% 1/12/07                          |      
|24,000,000                                      |  |           |             | American Express Bank, FSB              |      
|                                                |  |            |             | 5.280% 1/18/07                          |      

59

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal  |  |            |  |                                         | Value
|---------- |  | ---------- |  | --------------------------------------- | -----
|2006       |  | 2005       |  | Issuer, Interest Rate and Maturity Date |      
|20,000,000 |  |           |  | American Express Centurion Bank         |      
|           |  |            |  | 5.290% 1/9/07                           |      
|19,165,000 |  |           |  | American Express Centurion Bank         |      
|           |  |            |  | 5.290% 1/8/07                           |      
|          |  | 25,000,000 |  | American Express Centurion Bank         |      
|           |  |            |  | 4.310% 1/19/06                          |      
|25,000,000 |  |           |  | American Express Centurion Bank         |      
|           |  |            |  | 5.290% 1/3/07                           |      
|          |  | 2,430,000  |  | American Honda Finance, Corp            |      
|           |  |            |  | 4.240% 1/9/06                           |      
|50,000,000 |  |           |  | American Honda Finance, Corp            |      
|           |  |            |  | 5.260% 1/22/07                          |      
|17,475,000 |  |           |  | American Honda Finance, Corp            |      
|           |  |            |  | 5.210% 2/9/07                           |      
|10,000,000 |  |           |  | Anheuser  Busch Co.                    |      
|           |  |            |  | 5.240% 1/19/07                          |      
|          |  | 25,000,000 |  | Atlantis One Funding Corp.              |      
|           |  |            |  | 4.205% 2/8/06                           |      
|          |  | 10,000,000 |  | Atlantis One Funding Corp.              |      
|           |  |            |  | 4.380% 2/24/06                          |      
|          |  | 25,000,000 |  | Bank Of Montreal                        |      
|           |  |            |  | 4.285% 1/26/06                          |      
|          |  | 30,000,000 |  | Barclays Bank, PLC                      |      
|           |  |            |  | 4.420% 3/14/06                          |      
|          |  | 15,000,000 |  | Barclays Bank, PLC                      |      
|           |  |            |  | 4.329% 8/30/06                          |      
|25,000,000 |  |           |  | Barclays U.S. Funding Corp             |      
|           |  |            |  | 5.240% 1/26/07                          |      
|          |  | 18,040,000 |  | Becton Dickinson & Co                   |      
|           |  |            |  | 4.210% 1/24/06                          |      
|          |  | 13,100,000 |  | Beta Finance, Inc                       |      
|           |  |            |  | 4.140% 1/12/06                          |      
|          |  | 11,000,000 |  | Beta Finance, Inc                       |      
|           |  |            |  | 4.070% 1/17/06                          |      
|20,000,000 |  |           |  | BMW US Capital Corp                     |      
|           |  |            |  | 5.250% 2/7/07                           |      
|23,050,000 |  |           |  | BMW US Capital Corp                     |      
|           |  |            |  | 5.210% 2/9/07                           |      
|          |  | 20,000,000 |  | Calyon                                  |      
|           |  |            |  | 4.100% 1/19/06                          |      
|          |  | 10,000,000 |  | Canadian Wheat Board (The)              |      
|           |  |            |  | 1.870% 2/6/06                           |      
|          |  | 14,000,000 |  | CC (USA), Inc                           |      
|           |  |            |  | 3.830% 1/13/06                          |      
|          |  | 40,000,000 |  | Ciesco LP                               |      
|           |  |            |  | 4.280% 1/23/06                          |      

60

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal  |  |            |  |                                         | Value
|---------- |  | ---------- |  | --------------------------------------- | -----
|2006       |  | 2005       |  | Issuer, Interest Rate and Maturity Date |      
|          |  | 10,000,000 |  | Ciesco LP                               |      
|           |  |            |  | 4.370% 2/24/06                          |      
|25,000,000 |  |           |  | Ciesco LP                               |      
|           |  |            |  | 5.260% 1/9/07                           |      
|14,000,000 |  |           |  | Ciesco LP                               |      
|           |  |            |  | 5.260% 1/25/07                          |      
|          |  | 37,000,000 |  | Citigroup Funding Inc.                  |      
|           |  |            |  | 4.220% 1/20/06                          |      
|          |  | 13,000,000 |  | Citigroup Funding Inc.                  |      
|           |  |            |  | 4.350% 2/21/06                          |      
|50,000,000 |  |           |  | Citigroup Funding Inc.                  |      
|           |  |            |  | 5.250% 1/11/07                          |      
|35,825,000 |  |           |  | Citigroup Funding Inc.                  |      
|           |  |            |  | 5.250% 2/5/07                           |      
|          |  | 24,150,000 |  | Colgate-Palmolive Co                    |      
|           |  |            |  | 4.250% 1/6/06                           |      
|          |  | 15,000,000 |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 4.150% 1/13/06                          |      
|          |  | 5,035,000  |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 4.200% 1/23/06                          |      
|          |  | 16,000,000 |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 4.210% 1/25/06                          |      
|          |  | 5,905,000  |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 4.290% 1/31/06                          |      
|          |  | 2,020,000  |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 4.340% 2/17/06                          |      
|6,000,000  |  |           |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 5.240% 1/22/07                          |      
|8,760,000  |  |           |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 5.260% 1/29/07                          |      
|25,000,000 |  |           |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 5.250% 2/7/07                           |      
|54,000,000 |  |           |  | Corporate Asset Funding Corp, Inc       |      
|           |  |            |  | 5.250% 2/8/07                           |      
|          |  | 25,000,000 |  | Deutsche Bank                           |      
|           |  |            |  | 4.270% 2/14/06                          |      
|3,000,000  |  |           |  | Deutsche Bank                           |      
|           |  |            |  | 5.290% 1/9/07                           |      
|30,000,000 |  |           |  | Deutsche Bank                           |      
|           |  |            |  | 5.300% 1/22/07                          |      
|          |  | 50,000,000 |  | Dexia Bank                              |      
|           |  |            |  | 4.280% 1/30/06                          |      
|          |  | 8,000,000  |  | Dorada Finance Inc.                     |      
|           |  |            |  | 3.900% 1/23/06                          |      
|          |  | 21,500,000 |  | Dorada Finance Inc.                     |      
|           |  |            |  | 4.250% 2/16/06                          |      

61

---



TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal  |  |            |  |                                         | Value
|---------- |  | ---------- |  | --------------------------------------- | -----
|2006       |  | 2005       |  | Issuer, Interest Rate and Maturity Date |      
|          |  | 20,000,000 |  | Dorada Finance Inc.                     |      
|           |  |            |  | 4.300% 2/27/06                          |      
|7,000,000  |  |           |  | Dorada Finance Inc.                     |      
|           |  |            |  | 5.250% 1/9/07                           |      
|          |  | 13,000,000 |  | Edison Asset Securitization, LLC        |      
|           |  |            |  | 4.190% 1/17/06                          |      
|          |  | 20,000,000 |  | Edison Asset Securitization, LLC        |      
|           |  |            |  | 1.720% 2/22/06                          |      
|          |  | 7,248,000  |  | Edison Asset Securitization, LLC        |      
|           |  |            |  | 4.390% 4/7/06                           |      
|24,000,000 |  |           |  | Edison Asset Securitization, LLC        |      
|           |  |            |  | 5.230% 1/19/07                          |      
|10,000,000 |  |           |  | Edison Asset Securitization, LLC        |      
|           |  |            |  | 5.240% 2/1/07                           |      
|32,900,000 |  |           |  | Fairway Finance Company, LLC            |      
|           |  |            |  | 5.240% 1/17/07                          |      
|          |  | 20,000,000 |  | FCAR Owner Trust I                      |      
|           |  |            |  | 4.340% 2/7/06                           |      
|          |  | 17,000,000 |  | First Tennessee National Bank           |      
|           |  |            |  | 4.330% 2/6/06                           |      
|          |  | 21,590,000 |  | General Electric Capital Corp           |      
|           |  |            |  | 4.440% 4/28/06                          |      
|          |  | 25,000,000 |  | General Electric Capital Corp           |      
|           |  |            |  | 4.520% 6/28/06                          |      
|23,760,000 |  |           |  | General Electric Capital Corp           |      
|           |  |            |  | 5.250% 1/18/07                          |      
|13,155,000 |  |           |  | General Electric Capital Corp           |      
|           |  |            |  | 5.240% 2/8/07                           |      
|30,000,000 |  |           |  | General Electric Capital Corp           |      
|           |  |            |  | 5.250% 2/15/07                          |      
|          |  | 35,000,000 |  | Goldman Sachs Group, LP                 |      
|           |  |            |  | 4.280% 2/3/06                           |      
|          |  | 29,140,000 |  | Govco Incorporated                      |      
|           |  |            |  | 4.020% 1/9/06                           |      
|          |  | 10,000,000 |  | Govco Incorporated                      |      
|           |  |            |  | 2.280% 1/18/06                          |      
|          |  | 9,000,000  |  | Govco Incorporated                      |      
|           |  |            |  | 4.390% 3/14/06                          |      
|50,000,000 |  |           |  | Govco Incorporated                      |      
|           |  |            |  | 5.240% 1/5/07                           |      
|25,700,000 |  |           |  | Govco Incorporated                      |      
|           |  |            |  | 5.260% 3/8/07                           |      
|          |  | 5,015,000  |  | Grampian Funding LLC                    |      
|           |  |            |  | 4.320% 1/23/06                          |      
|          |  | 20,000,000 |  | Grampian Funding LLC                    |      
|           |  |            |  | 4.040% 2/1/06                           |      

62

---



TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal  |  |            |  |                                           | Value
|---------- |  | ---------- |  | ----------------------------------------- | -----
|2006       |  | 2005       |  | Issuer, Interest Rate and Maturity Date   |      
|          |  | 10,000,000 |  | Greyhawk Funding LLC                      |      
|           |  |            |  | 4.000% 1/6/06                             |      
|33,000,000 |  |           |  | Greyhawk Funding LLC                      |      
|           |  |            |  | 5.230% 2/6/07                             |      
|          |  | 25,000,000 |  | Harrier Finance Funding (US) LLC          |      
|           |  |            |  | 3.810% 1/25/06                            |      
|          |  | 10,085,000 |  | HBOS Treasury Srvcs Plc                   |      
|           |  |            |  | 4.200% 2/15/06                            |      
|8,415,000  |  |           |  | HBOS Treasury Srvcs Plc                   |      
|           |  |            |  | 5.260% 3/21/07                            |      
|40,000,000 |  |           |  | HSBC Finance Corporation                  |      
|           |  |            |  | 5.250% 1/26/07                            |      
|19,000,000 |  |           |  | IBM (International Business Machine Corp) |      
|           |  |            |  | 5.240% 1/10/07                            |      
|22,200,000 |  |           |  | IBM Capital Inc.                          |      
|           |  |            |  | 5.250% 3/16/07                            |      
|25,000,000 |  |           |  | ING (US) Finance                          |      
|           |  |            |  | 5.230% 3/27/07                            |      
|24,000,000 |  |           |  | Johnson & Johnson                         |      
|           |  |            |  | 5.200% 1/2/07                             |      
|25,000,000 |  |           |  | Johnson & Johnson                         |      
|           |  |            |  | 5.250% 1/18/07                            |      
|20,259,000 |  |           |  | KimberlyClark Worldwide, Inc.            |      
|           |  |            |  | 5.265% 1/29/07                            |      
|          |  | 31,740,000 |  | Kitty Hawk Funding Corp.                  |      
|           |  |            |  | 4.295% 1/12/06                            |      
|          |  | 10,000,000 |  | Kitty Hawk Funding Corp.                  |      
|           |  |            |  | 1.680% 2/15/06                            |      
|          |  | 25,000,000 |  | Links Finance L.L.C.                      |      
|           |  |            |  | 4.270% 2/10/06                            |      
|          |  | 25,000,000 |  | Links Finance L.L.C.                      |      
|           |  |            |  | 4.380% 3/13/06                            |      
|10,000,000 |  |           |  | Links Finance L.L.C.                      |      
|           |  |            |  | 5.230% 1/16/07                            |      
|30,000,000 |  |           |  | Morgan Stanley Dean Witter                |      
|           |  |            |  | 5.255% 2/12/07                            |      
|          |  | 10,000,000 |  | Paccar Financial Corp                     |      
|           |  |            |  | 4.020% 1/12/06                            |      
|          |  | 13,655,000 |  | Paccar Financial Corp                     |      
|           |  |            |  | 4.360% 3/3/06                             |      
|          |  | 10,000,000 |  | Park Avenue Receivables Corp              |      
|           |  |            |  | 2.150% 1/4/06                             |      
|          |  | 20,080,000 |  | Park Avenue Receivables Corp              |      
|           |  |            |  | 4.270% 1/27/06                            |      
|11,601,000 |  |           |  | Pitney Bowes Inc                          |      
|           |  |            |  | 5.240% 1/4/07                             |      

63

---



TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal  |  |            |  |                                         | Value
|---------- |  | ---------- |  | --------------------------------------- | -----
|2006       |  | 2005       |  | Issuer, Interest Rate and Maturity Date |      
|          |  | 10,000,000 |  | Preferred Receivables Funding Corp      |      
|           |  |            |  | 4.130% 1/6/06                           |      
|          |  | 19,150,000 |  | Private Export Funding Corporation      |      
|           |  |            |  | 4.170% 2/7/06                           |      
|          |  | 15,000,000 |  | Private Export Funding Corporation      |      
|           |  |            |  | 4.080% 2/13/06                          |      
|          |  | 9,000,000  |  | Private Export Funding Corporation      |      
|           |  |            |  | 4.300% 3/9/06                           |      
|          |  | 5,000,000  |  | Private Export Funding Corporation      |      
|           |  |            |  | 4.335% 4/4/06                           |      
|20,500,000 |  |           |  | Private Export Funding Corporation      |      
|           |  |            |  | 5.220% 1/3/07                           |      
|1,845,000  |  |           |  | Private Export Funding Corporation      |      
|           |  |            |  | 5.300% 1/11/07                          |      
|23,000,000 |  |           |  | Private Export Funding Corporation      |      
|           |  |            |  | 5.260% 1/18/07                          |      
|6,000,000  |  |           |  | Private Export Funding Corporation      |      
|           |  |            |  | 5.230% 1/23/07                          |      
|15,000,000 |  |           |  | Private Export Funding Corporation      |      
|           |  |            |  | 5.220% 2/15/07                          |      
|14,120,000 |  |           |  | Private Export Funding Corporation      |      
|           |  |            |  | 5.230% 3/6/07                           |      
|          |  | 20,000,000 |  | Procter & Gamble                        |      
|           |  |            |  | 4.025% 1/10/06                          |      
|          |  | 3,500,000  |  | Procter & Gamble                        |      
|           |  |            |  | 4.090% 1/26/06                          |      
|25,000,000 |  |           |  | Procter & Gamble                        |      
|           |  |            |  | 5.225% 1/12/07                          |      
|25,000,000 |  |           |  | Procter & Gamble International S.C      |      
|           |  |            |  | 5.250% 2/1/07                           |      
|50,000,000 |  |           |  | Procter & Gamble International S.C      |      
|           |  |            |  | 5.230% 2/14/07                          |      
|          |  | 50,000,000 |  | Ranger Funding Company LLC              |      
|           |  |            |  | 4.075% 1/17/06                          |      
|10,000,000 |  |           |  | Ranger Funding Company LLC              |      
|           |  |            |  | 5.250% 1/24/07                          |      
|20,000,000 |  |           |  | Ranger Funding Company LLC              |      
|           |  |            |  | 5.260% 1/25/07                          |      
|23,760,000 |  |           |  | Ranger Funding Company LLC              |      
|           |  |            |  | 5.260% 2/12/07                          |      
|          |  | 17,000,000 |  | Regions Bank (Alabama)                  |      
|           |  |            |  | 4.180% 1/30/06                          |      
|10,000,000 |  |           |  | Scaldis Capital LLC                     |      
|           |  |            |  | 5.300% 1/10/07                          |      
|25,000,000 |  |           |  | Sheffield Receivables Corporation       |      
|           |  |            |  | 5.250% 1/12/07                          |      

64

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal  |  |            |  |                                          | Value
|---------- |  | ---------- |  | ---------------------------------------- | -----
|2006       |  | 2005       |  | Issuer, Interest Rate and Maturity Date  |      
|35,750,000 |  |           |  | Sheffield Receivables Corporation        |      
|           |  |            |  | 5.240% 1/17/07                           |      
|          |  | 540,000    |  | SherwinWilliams Co                      |      
|           |  |            |  | 4.080% 2/7/06                            |      
|          |  | 14,390,000 |  | Sigma Finance Inc                        |      
|           |  |            |  | 3.890% 1/12/06                           |      
|          |  | 17,000,000 |  | Sigma Finance Inc                        |      
|           |  |            |  | 4.230% 1/31/06                           |      
|          |  | 5,575,000  |  | Sigma Finance Inc                        |      
|           |  |            |  | 4.340% 2/27/06                           |      
|          |  | 5,000,000  |  | Sigma Finance Inc                        |      
|           |  |            |  | 3.940% 3/1/06                            |      
|          |  | 8,000,000  |  | Sigma Finance Inc                        |      
|           |  |            |  | 4.390% 3/8/06                            |      
|7,850,000  |  |           |  | Societe Generale North America, Inc      |      
|           |  |            |  | 5.255% 1/10/07                           |      
|25,000,000 |  |           |  | Societe Generale North America, Inc      |      
|           |  |            |  | 5.250% 1/19/07                           |      
|          |  | 6,030,000  |  | Societe Generale North America, Inc      |      
|           |  |            |  | 4.390% 3/20/06                           |      
|20,000,000 |  |           |  | SunTrust Banks, Inc.                     |      
|           |  |            |  | 5.245% 5/1/07                            |      
|          |  | 27,600,000 |  | Swedish Export Credit Corp               |      
|           |  |            |  | 4.260% 1/18/06                           |      
|14,675,000 |  |           |  | Swedish Export Credit Corp               |      
|           |  |            |  | 5.319% 1/10/07                           |      
|33,895,000 |  |           |  | Swedish Export Credit Corp               |      
|           |  |            |  | 5.250% 1/16/07                           |      
|30,000,000 |  |           |  | Swedish Export Credit Corp               |      
|           |  |            |  | 5.240% 2/13/07                           |      
|5,800,000  |  |           |  | The Concentrate Manufacturing Company of |      
|           |  |            |  | Ireland 5.260% 1/9/07                    |      
|50,000,000 |  |           |  | Toyota Motor Credit Corp                 |      
|           |  |            |  | 5.235% 1/23/07                           |      
|30,000,000 |  |           |  | Toyota Motor Credit Corp                 |      
|           |  |            |  | 5.230% 1/25/07                           |      
|          |  | 15,000,000 |  | Toyota Motor Credit Corp                 |      
|           |  |            |  | 4.300% 10/10/06                          |      
|19,000,000 |  |           |  | U.S. Bancorp                             |      
|           |  |            |  | 5.245% 12/5/07                           |      
|          |  | 24,000,000 |  | UBS Finance, (Delaware) Inc              |      
|           |  |            |  | 4.310% 2/10/06                           |      
|          |  | 3,120,000  |  | UBS Finance, (Delaware) Inc              |      
|           |  |            |  | 1.760% 4/19/06                           |      
|17,500,000 |  |           |  | UBS Finance, (Delaware) Inc              |      
|           |  |            |  | 5.230% 2/20/07                           |      

65

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal                                |  |            |               |                                         | Value
|---------------------------------------- |  | ---------- | ------------- | --------------------------------------- | -----
|2006                                     |  | 2005       |               | Issuer, Interest Rate and Maturity Date |      
|34,530,000                               |  |           |               | Variable Funding Capital Corporation    |      
|                                         |  |            |               | 5.320% 2/2/07                           |      
|30,000,000                               |  |           |               | Variable Funding Capital Corporation    |      
|                                         |  |            |               | 5.250% 2/5/07                           |      
|25,000,000                               |  |           |               | Variable Funding Capital Corporation    |      
|                                         |  |            |               | 5.250% 2/6/07                           |      
|                                        |  | 25,000,000 |               | Variable Funding Capital Corporation    |      
|                                         |  |            |               | 4.000% 1/5/06                           |      
|                                        |  | 5,010,000  |               | Washington Gas Light Co                 |      
|                                         |  |            |               | 4.330% 1/9/06                           |      
|                                        |  | 20,000,000 |               | Wells Fargo                             |      
|                                         |  |            |               | 4.320% 2/9/06                           |      
|                                        |  | 19,460,000 |               | Yorktown Capital, LLC                   |      
|                                         |  |            |               | 4.190% 1/4/06                           |      
|                                        |  | 4,066,000  |               | Yorktown Capital, LLC                   |      
|                                         |  |            |               | 4.275% 1/6/06                           |      
|                                        |  | 2,625,000  |               | Yorktown Capital, LLC                   |      
|                                         |  |            |               | 4.280% 2/10/06                          |      
|23,415,000                               |  |           |               | Yorktown Capital, LLC                   |      
|                                         |  |            |               | 1.340% 1/4/07                           |      
|                                        
|TOTAL COMMERCIAL PAPER                   |  |            |               |                                         |      
|(Cost $1,672,398,634 and $1,340,511,661) |  |            | 1,672,544,145 |                                         |      
|                                        
|GOVERNMENT AGENCY BONDS2.36% and 2.61%  |  |            |               |                                         |      
|17,700,000                               |  |           |               | Federal Home Loan Banks                 |      
|                                         |  |            |               | 5.135% 1/5/07                           |      
|19,745,000                               |  |           |               | Federal Home Loan Banks                 |      
|                                         |  |            |               | 5.190% 1/12/07                          |      
|39,969,000                               |  |           |               | Federal Home Loan Banks                 |      
|                                         |  |            |               | 5.130% 1/19/07                          |      
|23,753,000                               |  |           |               | Federal Home Loan Banks                 |      
|                                         |  |            |               | 2.330% 2/28/07                          |      
|                                        |  | 7,030,000  |               | Federal Home Loan Banks                 |      
|                                         |  |            |               | 1.750% 1/3/06                           |      
|                                        |  | 50,000,000 |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 4.150% 1/31/06                          |      
|13,654,000                               |  |           |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 2.190% 1/2/07                           |      
|22,250,000                               |  |           |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 1.250% 1/16/07                          |      
|43,400,000                               |  |           |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 5.151% 1/24/07                          |      
|50,000,000                               |  |           |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 1.240% 1/30/07                          |      
|33,675,000                               |  |           |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 5.150% 1/31/07                          |      

66

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

|Principal                                |  |            |               |                                         | Value
|---------------------------------------- |  | ---------- | ------------- | --------------------------------------- | -----
|2006                                     |  | 2005       |               | Issuer, Interest Rate and Maturity Date |      
|                                        |  | 30,000,000 |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 2.380% 1/3/06                           |      
|                                        |  | 3,840,000  |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 1.780% 1/9/06                           |      
|                                        |  | 18,000,000 |               | Federal Home Loan Mortgage Corporation  |      
|                                         |  |            |               | 4.210% 2/9/06                           |      
|                                        |  | 46,555,000 |               | Federal National Mortgage               |      
|                                         |  |            |               | 4.350% 1/11/06                          |      
|30,000,000                               |  |           |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 1.260% 2/6/07                           |      
|23,768,000                               |  |           |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 1.740% 1/8/07                           |      
|50,000,000                               |  |           |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 1.240% 3/21/07                          |      
|                                        |  | 37,615,000 |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 2.290% 1/10/06                          |      
|                                        |  | 3,015,000  |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 1.830% 2/1/06                           |      
|                                        |  | 29,320,000 |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 4.200% 2/2/06                           |      
|                                        |  | 1,766,000  |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 1.740% 2/15/06                          |      
|                                        |  | 50,000,000 |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 4.240% 2/17/06                          |      
|                                        |  | 23,940,000 |               | Federal National Mortgage Association   |      
|                                         |  |            |               | 4.240% 2/23/06                          |      
|                                        
|TOTAL GOVERNMENT AGENCY BONDS            |  |            |               |                                         |      
|(Cost $366,282,560 and $300,164,529)     |  |            | 366,394,065   |                                         |      
|                                        
|TOTAL OTHER MARKETABLE SECURITIES        |  |            |               |                                         |      
|(Cost $2,038,681,194 and $1,640,676,190) |  |            | 2,038,938,210 |                                         |      
|                                        
|TOTAL MARKETABLE SECURITIES              |  |            |               |                                         |      
|(Cost $2,608,007,989 and $2,074,158,205) |  |            | 2,743,860,533 |                                         |      

67

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TIAA REAL ESTATE ACCOUNTSTATEMENTS OF INVESTMENTSDecember 31, 2006 and December 31, 2005

MORTGAGE LOAN RECEIVABLE0.48% and 0.00%

|Principal                                  |  |      |                |                                          | Value
|------------------------------------------ |  | ---- | -------------- | ---------------------------------------- | -----
|2006                                       |  | 2005 |                | Borrower, Current Rate and Maturity Date |      
|75,000,000                                 |  |     |                | Klingle Corporation                      |      
|                                           |  |      |                | 6.17% 07/10/11                           |      
|                                           |  |      |                |                                          |      
|TOTAL MORTGAGE LOAN RECEIVABLE             |  |      |                |                                          |      
|(Cost $75,000,000)                         |  |      | 74,660,626     |                                          |      
|                                           |  |      |                |                                          |      
|TOTAL INVESTMENTS                          |  |      |                |                                          |      
|(Cost $13,558,801,945 and $10,516,032,644) |  | $    | 15,510,036,850 |                                          | $    

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

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

In our opinion, the accompanying statements of assets and liabilities, including the statement 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, 2005 and 2006, the results of its operations and its cash flows for the years then ended 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 LLPNew York, New YorkMarch 15, 2007

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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

We have audited the accompanying statements of operations, changes in net assets and cash flows of the TIAA Real Estate Account (Account) of Teachers Insurance and Annuity Association of America
(TIAA) for the year ended December 31, 2004. These financial statements are the responsibility of TIAAs management. Our responsibility is to express an opinion on these financial statements based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit 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. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations, changes in net assets and cash flows of the Account for the year ended December 31, 2004, in
conformity with U.S. generally accepted accounting principles.

|New York, New York 
    April 14, 2005 | /s/ Ernst & Young LLP
|-------------------------------------- | ---------------------

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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 ensure 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, 2006. 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, 2006.

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

71

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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 principal executive officers of TIAA as of the
date hereof, and their principal occupations during the last five years, are as follows:

Trustees

Elizabeth E. Bailey,68John 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.

Robert C. Clark,63Harvard
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. Director, Collins & Aikman
Corporation, Time Warner, Inc. and Omnicom Group.

Edward M. Hundert, M.D.,50Former President, Case Western Reserve University. 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, the Greater Cleveland Partnership and Nortech.

Marjorie Fine Knowles,67Professor of Law, Georgia State University College of Law.

Donald K. Peterson,57Former Chairman and Chief Executive Officer, Avaya Inc. Formerly, Executive Vice President and Chief Financial Officer, Lucent Technologies. Chairman, Board of Trustees, Worcester Polytechnic Institute. Director,
Opti-Scrip.

Sidney A. Ribeau,59President, Bowling Green University. Director, The Andersons, Convergys and Worthington Industries.

Dorothy K. Robinson,56Vice President and General Counsel, Yale University (since 1986). Director, Newark Public Radio Inc., Youth Rights Media and Friends of New Haven Legal Assistance.

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David L. Shedlarz,58Vice
Chairman of Pfizer Inc. Executive Vice President of Pfizer Inc. from 1999 to
2005 and Chief Financial Officer from 1995 to 2005. Director, Pitney Bowes Inc.
Trustee of the International Accounting Standards Committee Foundation. Member
of the J.P. Morgan Chase & Co. National Advisory Board. Director of the Board
of Overseers, Leonard N. Stern School of Business, New York University. Chairman
of the Board of the Multiple Sclerosis Society of New York and Director of the
National Multiple Sclerosis Society. Director of Junior Achievement of New York.

Leonard S. Simon,70Former Vice Chairman, Charter One Financial, Inc. Formerly, Chairman, President and Chief Executive Officer, RCSB Financial, Inc. and Chairman and Chief Executive Officer, Rochester Community Savings Bank. Director, Landmark
Technology Partners, Inc., Integrated Nano-Technologies, LLC and I3T Corporation.

David F. Swensen,53Chief Investment Officer, Yale University. Trustee, Brookings Institute, Carnegie Institution of Washington, Carnegie Corporation, Yale New Haven Hospital, Howard Hughes Medical Institute, Courtauld Institute of Art, Wesleyan
University, and Hopkins School; Member, University of Cambridge Investment Board.

Ronald L. Thompson,57Former Chairman and Chief Executive Officer, Midwest Stamping and Manufacturing Company. Director, Interstate Bakeries Corporation and Washington University in St. Louis.

Marta Tienda,56Maurice
P. During 22 Professor of Demographic Studies, Princeton University. Director,
Office of Population Research, Princeton University, 1998-2002. Director, Corporation
of Brown University, the Princeton Healthcare System, Sloan Foundation, Jacobs
Foundation and RAND Corporation.

Paul R. Tregurtha,71Chairman and Chief Executive Officer, Mormac Marine Group, Inc. and Moran Transportation Company, Inc.; Vice Chairman, Interlake Steamship Company and Lakes Shipping Company; Formerly, Chairman, Meridian Aggregates, L.P. Director,
FPL Group, Inc.

Rosalie J. Wolf,65Managing Partner, Botanica Capital Partners LLC. Formerly, Managing Director, Offit Hall Capital Management LLC and its predecessor company, Laurel Management Company LLC; 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.,63Chairman,
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

73

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LifeLong Learning, Inc., 1999-2002. Advisory Board, Yale School of Management; Chair, Business-Higher Education Forum; Director, The Conference Board; Member, Business Roundtable and Financial Services Roundtable.

Other Officers

Georganne C. Proctor,50Executive Vice President and Chief Financial Officer, TIAA and CREF.

Scott C. Evans,47Executive Vice President and Head of Asset Management, TIAA and CREF.

Gary Chinery,57Vice President and Treasurer, TIAA and CREF.

E. Laverne Jones,58Vice President and Corporate Secretary, TIAA and CREF.

Portfolio Management Team

Margaret A. Brandwein,60Managing
DirectorTIAA Real Estate Account.

Thomas Garbutt,48Managing
DirectorHead of Global Real Estate Equities, TIAA.

Philip J. McAndrews,48Managing
DirectorHead of Real Estate Portfolio Management, TIAA.

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.

74

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|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, 2006, the Account
expensed $3,905,051 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.

For the year ended December 31, 2006, the Account expensed $26,899,307 for investment advisory services and $6,931,833 for mortality and expense risks provided/borne by TIAA. For the same
period, the Account expensed $45,712,473 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,
2006 and 2005 and review of financial statements included in the registrants quarterly reports were $665,000 and $989,300, respectively. Ernst & Youngs fees for professional services rendered for the audit of the
registrants annual financial statements (including Sarbanes-Oxley-related activities) for the year ended December 31, 2004 and review of financial statements included in the registrants quarterly reports were $1,804,200.

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Tax
Fees. PwC had no tax fees for the years ended December 31, 2006 and 2005. Ernst & Young had no tax fees for the year ended December 31, 2004.

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.

76

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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  | )  | Distribution and Administrative Services Agreement, dated
September 29, 1995, by and between TIAA and TIAA-CREF Individual & Institutional
Services, Inc.,1as
amended effective as of May 1, 20052,
and as amended effective April 28, 2006.3
|   
|(3  | )  | (A)                                                                                                                                                                                                                                           | Restated Charter of TIAA4                                                                                                                                                                                                        
|    |    | (B)                                                                                                                                                                                                                                           | Bylaws of TIAA (as amended)5                                                                                                                                                                                                     
|(4  | )  | (A)                                                                                                                                                                                                                                           | Forms of RA, GRA, GSRA, SRA, IRA Real Estate Account Contract
Endorsements1,
Keogh Contract2,
Retirement Select and Retirement Select Plus Contracts and Endorsements6and
Retirement Choice and Retirement Choice Plus Contracts2
|    |    | (B)                                                                                                                                                                                                                                           | Forms of Income-Paying Contracts1                                                                                                                                                                                                
|(10 | )  | (A)                                                                                                                                                                                                                                           | Independent Fiduciary Agreement, dated February 22, 2006,
by and among TIAA, the Registrant, and The Real Estate Research Corporation7                                                                                           
|    |    | (B)                                                                                                                                                                                                                                           | Custodial Services Agreement, dated as of June 1, 1995, by
and between TIAA and Morgan Guaranty Trust Company of New York on behalf of the
Registrant (Agreement assigned to The Bank of New York, January, 1996)1               
|(14 | )* |                                                                                                                                                                                                                                               | Code of Ethics of TIAA                                                                                                                                                                                                           
|(31 | )* |                                                                                                                                                                                                                                               | Rule 13a-15(e)/15d-15(e) Certifications                                                                                                                                                                                          
|(32 | )* |                                                                                                                                                                                                                                               | Section 1350 Certifications                                                                                                                                                                                                      

|1-  | Previously filed and incorporated herein by
        reference to the Registrants Post-Effective Amendment No. 2 to
        the Registration Statement on Form S-1, filed April 30, 1996 (File No.
    33-92990).                           
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2-  | Previously filed and incorporated herein by
        reference to the Registrants Post-Effective Amendment No. 1 to
    the Registration Statement on Form S-1 filed May 2, 2005 (File No. 333-121493).                                     
|3-  | Previously filed and incorporated herein by
        reference to Exhibit 1 to the Registrants Pre-Effective Amendment
        No. 1 to the Registration Statement on Form S-1 filed May 1, 2006 (File
    No. 333-132580).                 
|4-  | Previously filed and incorporated herein by
        reference to the Registrants Pre-Effective Amendment No. 1 to the
        Registration Statement on Form S-1 filed December 21, 2004 (File No.
    333-121493).                        
|5-  | Previously filed and incorporated herein by
        reference to the Registrants Quarterly Report on Form 10-Q for
        the period ended September 30, 2006 and filed with the Commission on
    November 14, 2006 (File No. 033-92990).
|6-  | Previously filed and incorporated herein by
        reference to the Registrants Pre-Effective Amendment No. 1 to the
    Registration Statement on Form S-1 filed April 29, 2004 (File No. 333-113602).                                   
|7-  | Previously filed and incorporated herein by
        reference to the Registrants Annual Report on Form 10-K for the
        period ended December 31, 2005, filed with the Commission on March 15,
    2006 (File No. 033-92990).          
|* - | Filed herewith                                                                                                                                                                                                                              



77

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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 15th day of March, 2007.

| | TIAA REAL ESTATE ACCOUNT              
| | --------------------------------------
|
| | By: TEACHERS INSURANCE
    AND ANNUITY
| | ASSOCIATION OF AMERICA                
|
| | By:                                   
| |                                       
| |                                       
| |                                       

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           |  | 3/15/07
|Herbert M. Allison, Jr.     |  | Officer (Principal Executive Officer) and Trustee |  |        
|                           
|/s/ Georganne C. Proctor    |  | Executive Vice President and Chief Financial      |  | 3/15/07
|Georganne C. Proctor        |  | Officer (Principal Financial and Accounting       |  |        
|                            |  | Officer)                                          |  |        

78

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|Signature of Trustee        |  | Title   |  | Date   
|--------------------------- |  | ------- |  | -------
|                           
|/s/ Elizabeth E. Bailey     |  | Trustee |  | 3/15/07
|Elizabeth E. Bailey         |  |         |  |        
|                           
|                           
|/s/ Robert C. Clark         |  | Trustee |  | 3/15/07
|Robert C. Clark             |  |         |  |        
|                           
|                           
|/s/ Edward M. Hundert, M.D. |  | Trustee |  | 3/15/07
|Edward M. Hundert, M.D.     |  |         |  |        
|                           
|                           
|/s/ Marjorie Fine Knowles   |  | Trustee |  | 3/15/07
|Marjorie Fine Knowles       |  |         |  |        
|                           
|                           
|/s/ Donald K. Peterson      |  | Trustee |  | 3/15/07
|Donald K. Peterson          |  |         |  |        
|                           
|                           
|/s/ Sidney A. Ribeau        |  | Trustee |  | 3/15/07
|Sidney A. Ribeau            |  |         |  |        
|                           
|                           
|/s/ Dorothy K. Robinson     |  | Trustee |  | 3/15/07
|Dorothy K. Robinson         |  |         |  |        
|                           
|                           
|                            |  | Trustee |  |        
|David L. Shedlarz           |  |         |  |        
|                           
|                           
|/s/ Leonard S. Simon        |  | Trustee |  | 3/15/07
|Leonard S. Simon            |  |         |  |        
|                           
|                           
|/s/ David F. Swensen        |  | Trustee |  | 3/15/07
|David F. Swensen            |  |         |  |        
|                           
|                           
|/s/ Ronald L. Thompson      |  | Trustee |  | 3/15/07
|Ronald L. Thompson          |  |         |  |        
|                           
|                           
|/s/ Marta Tienda            |  | Trustee |  | 3/15/07
|Marta Tienda                |  |         |  |        
|                           
|                           
|/s/ Paul R. Tregurtha       |  | Trustee |  | 3/15/07
|Paul R. Tregurtha           |  |         |  |        
|                           
|                           
|/s/ Rosalie J. Wolf         |  | Trustee |  | 3/15/07
|Rosalie J. Wolf             |  |         |  |        

79

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SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILEDPURSUANT TO SECTION 15(D) OF THE ACT BY REGISTRANTS WHICH HAVE NOTREGISTERED 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.

80

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