Portfolio Strategies

This variable annuity account seeks favorable long-term returns primarily through rental income and appreciation of real estate and real estate-related investments owned by the Account. The Account will also invest in non-real estate-related publicly traded securities and short-term higher quality liquid investments that are easily converted to cash to enable the Account to meet participant redemption requests, purchase or improve properties or cover other expenses. The Account intends to have between 75% and 85% of its net assets invested directly in real estate or real estate-related assets with the goal of producing favorable long-term returns. The Account’s principal strategy is to purchase direct ownership interests in income-producing real estate, primarily office, industrial, retail and multi-family residential properties. The Account may also make foreign real estate investments. Under the Account’s investment guidelines, investments in direct foreign real estate, together with foreign real estate-related securities and foreign non-real estate-related liquid investments may not comprise more than 25% of the Account’s net assets. The Account will invest the remaining portion of its assets (targeted between 15% and 25% of net assets) in publicly traded, liquid investments.

Learn More

For more information please contact:

800 842-2252

Weekdays 8 a.m. to 10 p.m. ET,

Saturdays 9 a.m. to 6 p.m. ET,

or visit tiaa-cref.org

Performance

The returns quoted represent past performance, which is no guarantee of future results. Returns and the principal value of your investment will fluctuate. Current performance may be higher or lower than that shown, and you may have a gain or a loss when you redeem your mutual fund shares. For current performance information, including performance to the most recent month-end, please visit tiaa-cref.org, or call 800 842-2252. Performance may reflect waivers or reimbursements of certain expenses. Absent these waivers or reimbursement arrangements, performance may be lower.

Hypothetical Growth of $10,000

The total returns are not adjusted to reflect sales charges, the effects of taxation or redemption fees, but are adjusted to reflect actual ongoing expenses, and assume reinvestment of dividends and capital gains, net of all recurring costs.

Market Recap

Economic conditions moderate while commercial real estate markets remain on track

The Bureau of Labor Statistics reported that 591,000 jobs were added during the first quarter of 2015 as compared to 973,000 during fourth quarter 2014. Harsh winter weather was partly to blame for the moderation in job growth as were cutbacks in the mining sector due to the drop in oil prices. Despite a modest 126,000 increase in March, job growth still averaged almost 200,000 per month during the quarter. Economists viewed the moderation in employment growth as temporary and expect healthy growth in the coming quarters. The unemployment rate ticked down to 5.5% in March from 5.6% at year-end 2014.

Job growth in office-using employment sectors such as finance and professional and business services helps drive demand for office space. The financial services sector added 34,000 jobs during the first quarter versus 42,000 previously, while the larger professional and business services sector added 102,000 compared to 208,000 in the prior quarter. As a result, the national office market continued its gradual improvement. CB Richard Ellis Econometric Advisors (“CBRE-EA”) reported that the national vacancy rate ticked down to 13.9% from 14.0% at year-end 2014, with vacancy rates declining in 41 of the 62 markets tracked. Although office market conditions have improved steadily over the last three years, the national vacancy rate is still above the 2007 low of 12.4%. However, construction remains modest and CBRE-EA expects stronger demand to boost rent growth in the near term.

Industrial market conditions remained healthy. CBRE-EA reported that the national availability rate declined to 10.1% from 10.3% previously. The improvement marked the 19th consecutive quarter the availability rate has declined, the longest streak since CBRE-EA began tracking data in 1989. Availability rates declined in 41 of 57 markets with availability rates in many markets reaching new lows and rents now surpassing previous cyclical peaks.

National apartment market conditions remained tight, with the national vacancy rate falling to 4.5% versus 4.9% in first quarter 2014. (Year-over-year comparisons are necessary due to seasonal leasing patterns in the apartment industry.) Improvements were broad-based, with 50 of 61 markets reporting a decline in vacancy. Rents in most markets now exceed previous cyclical peaks which has triggered new construction. However, demand has kept pace with supply in most markets, but with additional construction slated for delivery in 2015, a moderation in rent growth is expected.

Preliminary data from the U.S. Census Bureau indicate that retail sales excluding autos and auto parts declined 1.6% during first quarter 2015 as compared to fourth quarter 2014. However, sales increased 0.9% versus first quarter 2014. Retail sales are expected to benefit from lower oil and gas prices and the resulting increase in households’ discretionary spending power, but to date households have been saving rather than spending this windfall. As a result, retail market conditions were stagnant with the national availability rate remaining at 11.5% in the first quarter.