TIAA-CREF Real Estate: Anyone Buying These Days?

[cinghiale]

I'm looking to rebalance my TIAA-CREF account this month. Over the last 12 months, the Equity Index fund has soared, the Bond fund has moved up slightly, and the Real Estate fund has stunk out loud. Classic rebalancing thinking would say that it is time to sell high (Equities) and buy low (Real Estate). I know that TIAA-CREF Real Estate does *not* function the way most REITs do, and there have been some good discussions in this forum about picking and choosing when to enter and exit this fund. For those in TIAA-CREF, who have made these decisions in the past, and/or who have some insights, what say ye? Time to rebalance and move some additional funds into the RE fund? Any additonal variables that I am not considering?

[MarcMyWord]

Although you refer to the TIAA Real Estate "fund," I assume you actually mean the direct property ownership TIAA Real Estate Account variable annuity which has fallen considerably from its once–lofty share value (as opposed to TIAA's real estate stock–owning mutual fund, which has been doing quite well, i.e., has not "stunk out loud").

There's a long conversation in progress, on Morningstar's TIAA–CREF forum, about whether this is a good time to re–enter the Real Estate Account. (The thread does takes some unrelated detours into the Goldman Sachs legal affair before returning to TIAA Real Estate Account.)

http://socialize.morningstar.com/NewSoc ... px#2804930

Marc

[cinghiale]

Thanks for the clarification. In this case, you are right in assuming that I am referring to the account, not the mutual fund.

[DickBenson]

Before making a significant investment, I would recommend looking over the SEC 10K report on REA for 2009.

http://www.tiaa-cref.org/ucm/groups/con ... 007828.pdf

In particular, you might try to get a feel for the impact of upcoming maturities of leases and mortgage loans..... and of course future appraisals of their properties.

Dick

[PGR]

Yes.

Of my 'Real-Estate' allocation about 2/3rds are in the TIAA Real Estate annuity (no symbol) and about 1/3rd in the TIAA-CREF REIT (TRRSX?). But I wonder if it wouldn't be just as good if not better to stick with 100% in the annuity.

[The Wizard]

Before making a significant investment, I would recommend looking over the SEC 10K report on REA for 2009.

http://www.tiaa-cref.org/ucm/groups/con ... 007828.pdf

That's 99 pages.

It's hard for the unschooled amateur to read through something like that and red-flag or green-flag various sections based on knowledgeable criteria.

[montesquieu]

It's in Grok's recommended portfolio:

viewtopic.php?t=48846&mrr=1263666667

[raywax]

That's 99 pages.

It's hard for the unschooled amateur to read through something and red-flag or green-flag various section based on knowledgeable criteria.

That may be the case but IF you do not understand the "fund" and the current market for CRE (commercial real estate) then you best not invest in it right now. The M* discussion will show you that not everyone in that forum (myself included) believes it is time to jump (back or simply) into the TREA.

Ray

[kdmusic]

5 percent of my portfolio is REIT -- half TREA and half Vanguard Reit. I just rebalanced the Reit portion -- sold some vg, bought some trea. Mindlessly, without reading reports -- for what it's worth. also sold small value, bought large value, bought tips, etc etc. just doing what my ips says to do. If VT were to weigh in here, I might listen.

kdm

[greenspam]

i sold 100% of the real estate acct while it was bubble-icious, and have made no new purchases since.

i do think now is about time to start nibbling, meaning that i don't plan to make any large exchange from another asset class to the real estate acct just yet, but,

i will start buying the real estate acct again via automatic bi-weekly contributions from my paycheck.

[novastepp]

Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

[livesoft]

Bought some at the beginning of June. I have a TPA out of TIAA traditional going and the proceeds go into TREA automatically. So that's the when and why. No thinking at all about it as this was set up a few years ago.

[peter71]

Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

Hi Nova,

Funny that a Fight Club enthusiast would ask! Might I suggest . . .

"First rule of loading up on TIAA Real Estate: never talk about loading up on TIAA Real Estate."

At least that's what I've decided as the restrictions on investing in it mount.

Best,
Pete

[avalpert]

Well, it is up ~24% since this question was posed here, around twice the return of VTI over the same period.

I did let my holdings in this drift downward during 08/09 and it went a bit below my re-balancing band. But I brought it back up to my 5% allocation target at the beginning of 2010 and am quite comfortable with that.

[novastepp]

Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

Hi Nova,

Funny that a Fight Club enthusiast would ask! Might I suggest . . .

"First rule of loading up on TIAA Real Estate: never talk about loading up on TIAA Real Estate."

At least that's what I've decided as the restrictions on investing in it mount.

Best,
Pete

Hahah. touche'. I was just bumping this dusty thread for curiousity's sake.

[Aptenodytes]

Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

I have a Real Estate category in my AA, at 7% of the total. Of that about half is in this TIAA account and the other half in the Vanguard REIT. I've owned the TIAA account since about 1995.

At present I'm not having to buy more of it because it is rising faster than the rest of my portfolio. I do not plan to adjust the AA.

[Aptenodytes]

Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

I have a Real Estate category in my AA, at 7% of the total. Of that about half is in this TIAA account and the other half in the Vanguard REIT. I've owned the TIAA account since about 1995.

At present I'm not having to buy more of it because it is rising faster than the rest of my portfolio. I do not plan to adjust the AA.

[sscritic]

I bought some June 2, 2010 and some more exactly one year ago on June 29, 2010. Nothing since. It's about 5% of my total net worth.

[novastepp]

Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.

[Valuethinker]

Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.

There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor

[Alex Frakt]

We've gone into great depth on previous threads. I'd start with these two - note that post dates as you read through them

viewtopic.php?t=44675
viewtopic.php?t=31038

A search that will get all of them is: http://www.google.com/search?num=50&hl= ... ads.org&q="TIAA+Real+Estate"

[novastepp]

Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.

There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor

The TIAA Real Estate Account doesn't track REITs it is actually an account that invests directly in real estate.

My plan does not have transfer restrictions either, but thanks for the input!

[novastepp]

We've gone into great depth on previous threads. I'd start with these two - note that post dates as you read through them

viewtopic.php?t=44675
viewtopic.php?t=31038

A search that will get all of them is: http://www.google.com/search?num=50&hl= ... ads.org&q="TIAA+Real+Estate"

I actually read one of those just yesterday, haha. I also have posted an ongoing thread at the M* Forum that has given me much to consider about this fund as well.

Thanks for the links. I decided to bump this thread since it kind of asked teh question I was interested in, whether or not a lot of folks around here were in the fund at the moment.

Thanks again.

[grok87]

We've gone into great depth on previous threads. I'd start with these two - note that post dates as you read through them

viewtopic.php?t=44675
viewtopic.php?t=31038

A search that will get all of them is: http://www.google.com/search?num=50&hl= ... ads.org&q="TIAA+Real+Estate"

I actually read one of those just yesterday, haha. I also have posted an ongoing thread at the M* Forum that has given me much to consider about this fund as well.

Thanks for the links. I decided to bump this thread since it kind of asked teh question I was interested in, whether or not a lot of folks around here were in the fund at the moment.

Thanks again.

I'm in, but not adding as I would have to roll over money to add to it and that's not convenient right now.

[House Blend]

My plan does not have transfer restrictions either, but thanks for the input!

Yes it does.

1. At most one transfer out per quarter.
2. If you want to transfer $X in, then $X + Current Balance must be < $150K.

(There are exceptions, but this is a good first approximation.)

[Valuethinker]

Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.

There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor

The TIAA Real Estate Account doesn't track REITs it is actually an account that invests directly in real estate.

My plan does not have transfer restrictions either, but thanks for the input!

You have misinterpreted what I wrote. My point is subtler than that and arises from the way the TIAA NAV is calculated.

Do a search on 'valuethinker' on the TIAA Forum where other posters have aptly summarized and cited my views there and here.

[novastepp]

My plan does not have transfer restrictions either, but thanks for the input!

Yes it does.

1. At most one transfer out per quarter.
2. If you want to transfer $X in, then $X + Current Balance must be < $150K.

(There are exceptions, but this is a good first approximation.)

haha. You are correct.
I laugh because I have yet to invest in the account and have such a small new acculutaion balance that the transfer amount would be plently lower than the 150k mark. Thanks, House Blend

[novastepp]

Thanks for the replys. I am considering making the TIAA Real Estate Fund about 10% of my holdings in my 403b. But until I know more about real estate and its holdings specifically, I am holding off. Just curious if Bogleheads were buying in.

There is a TIAA forum on Morningstar with a lot of expertise.

We've discussed it here many times:

- blue chip and conservative portfolio with experienced managers and good investor communications
- tracks REIT indices but with a time lag (up and down)
- less price volatility than above (for same reasons)
- liquidity restrictions etc. which may be of a concern
- Swensen discusses in some detail (but he is on the advisory board)
- changes in policy re leverage and fees
- it's unique amongst retail investment vehicles available to US investor

The TIAA Real Estate Account doesn't track REITs it is actually an account that invests directly in real estate.

My plan does not have transfer restrictions either, but thanks for the input!

You have misinterpreted what I wrote. My point is subtler than that and arises from the way the TIAA NAV is calculated.

Do a search on 'valuethinker' on the TIAA Forum where other posters have aptly summarized and cited my views there and here.

Will do. Thanks, Vauethinker.

[jbk]

Anyone care to provide an update as to who is buying it now and why? Do you see now as a good time to start investing in this account?

I realize we are buy and hold investors, but I'd be interested in hearing any and all opinions as to the TIAA Real Estate Variable Annuity Account.

"Symbol" and analysis is here: http://quote.morningstar.com/fund/chart ... ture=en-us

We hold 10% of our portfolio here because it appears to be uncorrelated to either equities or bonds and is therefore an excellent diversifier.

Jay

[Martindo]

We have 12% of our total portfolio in TREA. Got out in '08 sometime and back in about a year ago.

The TREA seems like a remarkable opportunity, judging from its total history. I haven't tried to understand it, but treat it like a black-box with a very interesting NAV curse. (Of course I know it invests in direct ownership of high quality commercial properties, but I haven't tried to pick the machinery apart like the guys over at M*.)

[cinghiale]

TREA is offered through a 403 account at work, so I have made bi-weekly contributions into it since initiating this thread last year. I keep equal amounts of the Equity Index, Bond, and Real Estate accounts, which makes rebalancing easy. I must admit to a degree of satification with "staying the course" with this asset allocation in the 403. I have no plans to increase or decrease the percentages in this arrangement, as it has thus far kept the overall RE allocation at about 4%-5% of the total family portfolio.

[K-SawDude]

As a new investor, I've been pretty happy with TREA over the last couple of years. A couple of questions about its role in the portfolio, though:

(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem?

(2) Are others who have both TREA and a mortgage counting both of these elements as "Real Estate" portions of the portfolio? Or are they different entities?

[tibbitts]

As a new investor, I've been pretty happy with TREA over the last couple of years. A couple of questions about its role in the portfolio, though:

(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem?

(2) Are others who have both TREA and a mortgage counting both of these elements as "Real Estate" portions of the portfolio? Or are they different entities?

Everybody hates that the expense has doubled from .58 or whatever it was, and of course people who have held are still way underwater from the fund's loftier days.

I would treat TREA like you owned rental property that you bought (mostly) for cash, regardless if you have a mortgage or not. The difference is that it isn't like rental property you could actually buy, at least not what I see around here. Property values around here never seemed to change that much, up or down.

Paul

[novastepp]

As a new investor, I've been pretty happy with TREA over the last couple of years. A couple of questions about its role in the portfolio, though:

(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem?

(2) Are others who have both TREA and a mortgage counting both of these elements as "Real Estate" portions of the portfolio? Or are they different entities?

Over at Morningstar, they mention that the expense is higher compared to many index funds, but to remember that TREA is a class all its own. You are paying the expense to own that unique investment.

[Minimumpc]

I have over 90% of my retirement in the real estate fund since last october.
Very nervous about balancing. Just 5 years to retirement.

[JimInIllinois]

I have over 90% of my retirement in the real estate fund since last october.
Very nervous about balancing. Just 5 years to retirement.

I'm at around 25% and still buying with new money. I want the 70% of the real estate account that is actually real estate to be 20% of my portfolio, as long as it's going up. If it starts going down steadily I'll sell again.

I don't think I would want 90% of my portfolio in a single anything, but you said "retirement" so I'm going to assume you have other assets in taxable accounts in case there is some horrible accounting scandal at TIAA-CREF.

[nisiprius]

Believe it or not, I held this account from inception until 2007. I wish I could claim market-timing foresight, but 2007 merely happened to be the year I decided to consolidate institutions and rolled over almost everything in my TIAA-CREF account to Vanguard.

It always seemed to me that I ought to visit and inspect some of the properties, but even at the very end there were none that were close enough to overcome my laziness.

[Valuethinker]

I have over 90% of my retirement in the real estate fund since last october.
Very nervous about balancing. Just 5 years to retirement.

You should not have more than 25% of your wealth in this fund.

Simple portfolio diversification mandates this.

[rmark1]

'(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem? '

IIRC, TREA account expense ratio is a little different than a true mutual fund expense ratio, in that it includes property management costs.

[tibbitts]

'(1) How do Bogleheads generally feel about the very high expense ratio of TREA (over 1% for most investors, I think). Anyone think that's a problem? '

IIRC, TREA account expense ratio is a little different than a true mutual fund expense ratio, in that it includes property management costs.

I don't think it does include property management costs, in terms of mowing the lawn, cleaning the windows, etc. I think the expense ratio is paying for what are really investment management costs. Obviously with a REIT you have property management costs, too, and they aren't in the fund expense ratio either. With a REIT you pay the mutual fund management fee, plus the REIT company for investment management, plus the REIT company for property management. So TIAA is still different, yet somewhat similar. And the expense ratio is still almost twice what it was a few years ago. I don't recall the increase corresponding to any change in tax reporting requirements (as was discussed with the recent increase in ratios for some VG funds, for example), so I think it was a real increase.

Paul