UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

**FORM N-Q**

**QUARTERLY SCHEDULE OF PORTFOLIO HOLDINGS OF REGISTERED**

**MANAGEMENT INVESTMENT COMPANY**

**_______________________________**

Investment Company Act file number  811-21172

DWS RREEF Real Estate Fund, Inc.

(Exact name of registrant as specified in charter)

 

345 Park Avenue

New York, NY  10154

(Address of principal executive offices)             (Zip code)

 

Paul Schubert

345 Park Avenue

New York, NY  10154-0004

(Name and address of agent for service)

Registrant's telephone number, including area code:  (212) 454-7190

Date of fiscal year end:  12/31

Date of reporting period: 9/30/09

 

ITEM 1.  SCHEDULE OF INVESTMENTS

 

| Consolidated Investment Portfolio | **as of September 30, 2009  (Unaudited)** |
|-----------------------------------|-------------------------------------------|

 

 

**DWS RREEF Real Estate Fund, Inc.**

 

|   | **Shares** |   | **Value ($)** |  
 

**Common Stocks 111.1%**

 
**Real Estate Investment Trusts (“REITs”) 111.1%**

 
**Apartments 16.0%**

 
AvalonBay Communities, Inc. 

 

46,300 

 

3,367,399 

 
BRE Properties, Inc.  

 

90,850 

 

2,843,605 

 
Equity Residential 

 

114,950 

 

3,528,965 

 
 

**9,739,969**

 
**Diversified 17.6%**

 
Digital Realty Trust, Inc. 

 

17,750 

 

811,353 

 
Duke Realty Corp.  

 

318,400 

 

3,823,984 

 
Starwood Property Trust, Inc.

 

175,900 

 

3,561,975 

 
Washington Real Estate Investment Trust 

 

89,350 

 

2,573,280 

 
 

**10,770,592**

 
 

 

 

**Health Care 19.1%**

 
Cogdell Spencer, Inc.   

 

224,550 

 

1,077,840 

 
HCP, Inc.

 

115,400 

 

3,316,596 

 
Health Care REIT, Inc. 

 

47,500 

 

1,976,950 

 
LTC Properties, Inc.   

 

40,450 

 

972,418 

 
Medical Properties Trust, Inc.   

 

267,490 

 

2,089,097 

 
Senior Housing Properties Trust   

 

116,450 

 

2,225,359 

 
 

**11,658,260**

 
**Hotels 5.8%**

 
Canyon Ranch Holdings LLC (Units) (a) 

 

230,400 

 

483,840 

 
Hospitality Properties Trust 

 

150,950 

 

3,074,852 

 
 

**3,558,692**

 
**Industrial 11.5%**

 
AMB Property Corp.  

 

84,100 

 

1,930,095 

 
Liberty Property Trust  

 

27,034 

 

879,416 

 
ProLogis  

 

352,100 

 

4,197,032 

 
 

**7,006,543**

 
**Office 14.5%**

 
BioMed Realty Trust, Inc. 

 

121,500 

 

1,676,700 

 
Government Properties Income Trust*  

 

33,300 

 

799,533 

 
HRPT Properties Trust

 

507,521 

 

3,816,558 

 
Kilroy Realty Corp. 

 

93,150 

 

2,583,981 

 
 

**8,876,772**

 
**Regional Malls 7.3%**

 
Simon Property Group, Inc. 

 

64,349 

 

**4,467,751**

 
**Shopping Centers 14.0%**

 
Inland Real Estate Corp. 

 

340,250 

 

2,980,590 

 
Ramco-Gershenson Properties Trust

 

48,250 

 

430,390 

 
Regency Centers Corp.   

 

77,300 

 

2,863,965 

 
Weingarten Realty Investors 

 

113,650 

 

2,263,908 

 
 

**8,538,853**

 
**Storage 5.3%**

 
Sovran Self Storage, Inc.  

 

106,538 

 

**3,241,951**

 
**Total Common Stocks** (Cost $62,446,192)

 

**67,859,383**

 
 

**Preferred Stocks 26.8%**

 
**Real Estate Investment Trusts 26.8%**

 
**Apartments 7.0%**

 
Associated Estates Realty Corp., Series II, 8.7%  

 

183,450 

 

**4,285,392**

 
**Diversified 1.4%**

 
NorthStar Realty Finance Corp., Series B, 8.25%  

 

68,000 

 

**853,400**

 
**Health Care 0.9%**

 
LTC Properties, Inc., Series F, 8.0%  

 

24,300 

 

**568,620**

 
**Shopping Centers 17.5%**

 
Cedar Shopping Centers, Inc., Series A, 8.875%  

 

117,850 

 

2,392,355 

 
Kimco Realty Corp., Series G, 7.75%  

 

51,200 

 

1,246,720 

 
Saul Centers, Inc., Series B, 9.0%  

 

141,200 

 

3,405,744 

 
Urstadt Biddle Properties, Inc., Series C, 8.5%  

 

36,700 

 

3,624,125 

 
 

**10,668,944**

 
**Total Preferred Stocks** (Cost $17,889,866)

 

**16,376,356**

 
 

 

 

 

**Cash Equivalents 0.4%**

 
Cash Management QP Trust, 0.18% (b)(Cost $219,369)

 

 

219,369

 

**219,369**

 
 

**% of****Net Assets**

 

**Value ($)**

 
**Total Consolidated Investment Portfolio** (Cost $80,555,427) †

138.3

 

**84,455,108**

 
**Other Assets and Liabilities, Net**

(2.3)

 

**(1,384,497)**

 
**Preferred Stock, at Liquidation Value**

(36.0)

 

**(22,000,000)**

 
**Net Assets Applicable to Common Shareholders**

100.0

 

**61,070,611**

 
*For information on the Fund's policies regarding the valuation of investments and other significant accounting policies, please refer to the Fund's most recent semi-annual or annual financial statements.*

 
***

*Non-income producing security.*

 
*†*

*The cost for federal income tax purposes was $83,067,758.  At September 30, 2009, net unrealized appreciation for all securities based on tax cost was $1,387,350.  This consisted of aggregate gross unrealized appreciation for all securities in which there was an excess of value over tax cost of $14,168,622 and aggregate gross unrealized depreciation for all securities in which there was an excess of tax cost over value of $12,781,272.*

 
*(a)*

*The Fund may purchase securities that are subject to legal or contractual restrictions on resale ("restricted securities").  Restricted securities are securities which have not been registered with the Securities and Exchange Commission under the Securities Act of 1933.  The Fund may be unable to sell a restricted security and it may be more difficult to determine a market value for a restricted security.  Moreover, if adverse market conditions were to develop during the period between the Fund's decision to sell a restricted security and the point at which the Fund is permitted or able to sell such security, the Fund might obtain a price less favorable than the price that prevailed when it decided to sell.  This investment practice, therefore, could have the effect of increasing the level of illiquidity of the Fund.  The future value of these securities is uncertain and there may be changes in the estimated value of thesesecurities.*

 

 
**Schedule of****Restricted Securities**

 

**Acquisition Date**

 

**Acquisition Cost**

 

**Value ($)**

 

**Value as %****of Net Assets**

 
Canyon Ranch Holdings LLC

 

January 2005

 

5,760,000

 

483,840

 

0.8

 
*(b)*

*Affiliated fund managed by Deutsche Investment Management Americas Inc.  The rate shown is the annualized seven-day yield at period end.*

 
*At September 30, 2009, open interest rate swap contracts were as follows:*

 
**Effective/****Expiration****Dates**

 

**Notional****Amount ($)**

 

**Cash Flows****Paid by****the Fund**

 

**Cash Flows****Received by****the Fund**

 

**Unrealized****Depreciation ($)**

 
 

 
1/29/20081/29/2018

 

22,000,0001

 

Fixed — 4.27%

USD – Floating                      LIBOR BBA

**(1,673,091)**

 
*Counterparty:*

 
*1*

*UBS Securities LLC*

 
*BBA: British Bankers' Association*

 
*LIBOR: London InterBank Offered Rate*

 
 

***Investment in Subsidiary***

 

*The Fund invests a portion of its assets in a wholly owned subsidiary organized as a corporation under the laws of the State of Delaware (the "Subsidiary"). As of September 30, 2009, the Fund’s Subsidiary only holds limited liability company units of Canyon Ranch Holdings LLC.  As of September 30, 2009, the Fund held $483,840**in the Subsidiary, representing 0.8% of the Fund's net assets. The Fund’s Investment Portfolio has been consolidated and includes the accounts of the Fund and the Subsidiary.*

 

***Fair Value Measurements***

 

*Various inputs are used in determining the value of the Fund's investments. These inputs are summarized in three broad levels. Level 1 includes quoted prices in active markets for identical securities. Level 2 includes other significant observable inputs (including quoted prices for similar securities, interest rates, prepayment speeds, and credit risk). Level 3 includes significant unobservable inputs (including the Fund's own assumptions in determining the fair value of investments). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.*

 

*The following is a summary of the inputs used as of September 30, 2009 in valuing the Fund's investments:*

 

 

 

**Level 1**

**Level 2**

**Level 3**

**Total**

 
**Assets**

 

 

 

 

 
Common Stock and/or Other Equity Investments

 

 

 

 

 
 

Apartments

$      14,025,361

$                       —

$                —

$       14,025,361

 
 

Diversified

11,623,992

—

—

11,623,992

 
 

Health Care

12,226,880

—

—

12,226,880

 
 

Hotels

3,074,852

—

483,840

3,558,692

 
 

Industrial

7,006,543

—

—

7,006,543

 
 

Office

8,876,772

—

—

8,876,772

 
 

Regional Malls

4,467,751

—

—

4,467,751

 
 

Shopping Centers

19,207,797

—

—

19,207,797

 
 

Storage

3,241,951

—

—

3,241,951

 
Short-Term Investments

—

219,369

—

219,369

 
**Total**

**$      83,751,899**

**$              219,369**

**$       483,840**

**$       84,455,108**

 
 

 

 

 

 

 
**Liabilities**

 

 

 

 

 
Derivatives(c)

$                    —

$        (1,673,091)

$                —

$   (1,673,091)

 
**Total**

**$**—

**$        (1,673,091)**

**$**—

**$   (1,673,091)**

 
 
*(c)*

*Derivatives include unrealized appreciation (depreciation) on open interest rate swap contracts.*

 

*The following is a reconciliation of the Fund’s Level 3 investments for which significant unobservable inputs were used in determining values:*

 

**Common Stock and/or Other Equity Investments**

**Level 3 Reconciliation**

 

**Balance as of December 31, 2008**

$                        550,420

Realized gains (loss)

(12,025,973)

Change in unrealized appreciation (depreciation)

12,398,607

Amortization premium/discount

-

Net purchase (sales)

(439,214)

Net transfers in (out) of Level 3

-

**Balance as of September 30, 2009**

**$                        483,840**

**Net change in unrealized appreciation (depreciation) from investments still held at September 30, 2009**

**$                  (5,276,160)**

 

 

***Derivatives***

 

*The following table presents, by major type of derivative contract, the unrealized appreciation (depreciation) of the Fund's derivative instruments as of September 30, 2009 categorized by the primary underlying risk exposure.* 

 

 

 

**Primary Underlying Risk Disclosure**

**Swaps**

Interest Rate Contracts

$                 (1,673,091)

 

 

 

**ITEM 2.**

**CONTROLS AND PROCEDURES**

 

 

 

(a)          The Chief Executive and Financial Officers concluded that the Registrant’s Disclosure Controls and Procedures are effective based on the evaluation of the Disclosure Controls and Procedures as of a date within 90 days of the filing date of this report.

 

 

 

 

 

 

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

 

 

**ITEM 3.**

**EXHIBITS**

 

 

 

Certification pursuant to Rule 30a-2(a) under the Investment Company Act of 1940 (17 CFR 270.30a-2(a)) is filed and attached hereto as Exhibit 99.CERT.

 

 

**SIGNATURES**

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Registrant:

DWS RREEF Real Estate Fund, Inc.

 

 

By:

/s/Michael G. Clark

Michael G. Clark

President

 

 

Date:

November 19, 2009

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Registrant:

DWS RREEF Real Estate Fund, Inc.

 

 

By:

/s/Michael G. Clark

Michael G. Clark

President

 

 

Date:

November 19, 2009

 

 

 

 

 

 

By:

/s/Paul Schubert

Paul Schubert

Chief Financial Officer and Treasurer

 

 

Date:

November 19, 2009

  |
|--------|------------|--------|---------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|