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 expense needs. 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 chart illustrates the performance of a hypothetical $10,000 investment on June 30, 2005 and redeemed on June 30, 2015.
— TIAA Real Estate Account	$15,693

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

Steady economic growth supports commercial real estate market fundamentals

The Bureau of Labor Statistics reported stronger job growth in the second quarter as 664,000 jobs were added compared to 586,000 during first quarter 2015. All major employment sectors contributed to growth, including the government sector. Monthly average job gains rose to 221,000 per month which is sufficient to absorb new workers entering the labor force. As a result, the unemployment rate declined to 5.3% at the end of June from 5.5% in March.

Employment trends in financial and professional and business services support demand for office space. The professional and business services sector added 204,000 jobs during the second quarter versus 108,000 previously, while the financial sector added 37,000 jobs to the 41,000 added during first quarter. National office market conditions improved considerably during the second quarter as CB Richard Ellis Econometric Advisors (“CBRE-EA”) reported that the vacancy rate dropped to 13.5% from 13.9% previously. The national office vacancy rate is now at its lowest point since 2008 and has improved for 21 consecutive quarters. Vacancy improvements were widespread as vacancy rates declined in 50 of 62 markets tracked by CBRE-EA.

The national industrial availability rate dropped to 9.8% in the second quarter of 2015 from 10.1% previously, and now matches the pre-recession low from fourth quarter 2007. Despite the improvement in market conditions, new supply has remained modest, and demand has outpaced construction since the recovery began. Consequently, availability rates declined further in 37 of 56 markets tracked by CBRE-EA.

National apartment market conditions tightened during second quarter as the national vacancy rate declined to 4.3% versus 4.6% in second quarter 2014. (Seasonal leasing patterns in the apartment market require vacancy comparisons on a year-over-year basis). Effective rents have risen above previous peaks in most markets, prompting significant construction in some. However, on a national basis, demand has kept pace with construction due to healthy job growth and favorable demographic trends. CBRE-EA expects demand to continue to outpace supply in the near term, but moderation in rent growth should be expected as new supply is delivered.

Retail sales continued to modestly grow during the second quarter. Preliminary data from the U.S. Census Bureau indicate that retail sales excluding autos and auto parts increased 1.1% versus first quarter 2015. Sales growth of apparel and home furnishings was slightly stronger at 1.5% and 2.2%, respectively. However, consumers have largely been saving the windfall from lower gasoline prices. Consequently, retail market conditions improved modestly in the second quarter; the national availability rate inched down to 11.4% from 11.5% previously.