schedule db - part f - section 1 - TIAA-CREF

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STATEMENT AS OF SEPTEMBER 30, 2009 OF THE TEACHERS INSURANCE and ANNUITY ASSOCIATION of AMERICA G. Low Income Housing Tax Credits (“LIHTC”) NOTES TO FINANCIAL STATEMENTS (1) Number of remaining years for unexpired tax credits: 2 years. Required holding period: 15 years (2024). (2) The Company has no LIHTC property that is currently subject to any regulatory reviews. (3) The Company has no investment in low income housing tax credit properties that exceed 10% of admitted assets. (4) As of September 30, 2009, the Company recognized $12,176,106 of other-than-temporary impairment loss. (5) The Company had no write downs or reclassifications due to the forfeiture or ineligibility of tax credits during the 3rd quarter 2009. 6. Joint Ventures, Partnerships and Limited Liability Companies B. As of September 30, 2009, the Company recognized $890,478,324 of other-than-temporary impairments on its investments in joint ventures, partnerships and limited liability companies. 7. Investment Income No Material Change. 8. Derivative Instruments Foreign Currency Swaps C. Foreign currency swaps for which hedge accounting is applied have a carrying value of $(181,172,251) at September 30, 2009, and represent the notional amount at the spot exchange rate. Foreign currency swaps that no longer qualify as effective hedges are carried at fair value from the date they ceased to be effective according the accounting guidance. Foreign currency swaps for which hedge accounting is not applied are carried at fair value. The changes in the carrying value of foreign currency swap contracts are recognized at the end of the period as unrealized gains or losses. D. At September 30, 2009 and December 31, 2008, the net unrealized gains (losses) from derivative instruments that do not qualify for hedge accounting were as follows: 7.2 9/30/2009 12/31/2008 Net unrealized (losses) / gains from interest rate swap contracts $ (29,299,183 ) $ 32,505,568 Net unrealized (losses) / gains from foreign currency swaps $ (291,020,634 ) $ 537,080,820 Net unrealized (losses) / gains from foreign currency forward contracts $ (16,234,752 ) $ 30,225,501 Net unrealized (losses) / gains from credit default swap contracts $ (67,153,352 ) $ 21,551,908 Credit Default Swaps E. TIAA will record impairment on a derivative position if an existing condition or set of circumstances indicates there is limited ability to recover an unrealized loss. At September 30, 2009, a realized loss impairment and contingent liability of $1,691,953 was recorded on derivative positions. Life to date impairments on derivative positions totaled $98,072,827, based on an impaired notional amount of $382,521,580, from a total notional amount of $12,166,938,924 in derivative transactions held by the Company. F. The Company currently has International Swaps and Derivatives Association (“ISDA”) agreements in place with each counterpart to a derivative transaction. In addition to the ISDA agreement, Credit Support Annexes (“CSA’s”), which are bilateral collateral agreements, have been put in place with six derivative counterparts. The CSA’s allow TIAA exposure to a counterpart to be capped at a defined threshold of $ 0, with any ongoing mark to market movements above that threshold to be collateralized by the posting of cash or other highly liquid U.S. government securities. As of September 30, 2009, the Company held cash collateral of $12,000,000 from its counterparts. TIAA must also post collateral to the extent its net mark to market position with a given counterpart is out of the money in favor of the counterpart above the threshold of $ 0. As of September 30, 2009, the Company pledged cash collateral of $95,630,000 to its counterparts. 9. Federal Income Tax No Material Change. 10. Information Concerning Parent, Subsidiaries and Affiliates B. On March 17, 2009, the Company made a $70 million capital contribution to its subsidiary TIAA-CREF Life Insurance Company (“TIAA-CREF Life”).
STATEMENT AS OF SEPTEMBER 30, 2009 OF THE TEACHERS INSURANCE and ANNUITY ASSOCIATION of AMERICA NOTES TO FINANCIAL STATEMENTS D. As of September 30, 2009 and December 31, 2008, the net amount due to subsidiaries and affiliates was $81,356,925 and $13,140,520 respectively. The net amounts due are generally settled on a daily basis except for TIAA Realty, Inc. and ND Properties, Inc., Teachers Advisors, Inc., TIAA-CREF Tuition Financing, Inc., Teachers Personal Investors Services, Inc., TIAA-CREF Individual and Institutional Services, and TIAA-CREF Enterprises, Inc. which are settled quarterly. J. During 3 rd quarter 2009, the Company recognized $156,951,240 in other-than-temporary impairments for investments in subsidiaries, controlled and affiliated companies. 11. Debt See Note 20 C. 12. Retirement Plans, Deferred Compensation, Post Employment Benefits and Compensated Absences and other Post Retirement Benefit Plans No Material Change. 13. Capital and Surplus, Shareholders’ Dividend Restrictions and Quasi-Reorganization No Material Change. 14. Contingencies A. Contingent Commitments 15. Leases At September 30, 2009, outstanding forward commitments for future long-term bond investments were $1,208,772,095. Of this, $550,278,539 is scheduled for disbursement in 2009 and $658,493,556 in later years. The funding of bond commitments is contingent upon the continued favorable financial performance of the potential borrowers. At September 30, 2009, outstanding forward commitments for future mortgage loan investments were $234,554,561. Of this, $230,054,561 is scheduled for disbursement in 2009 and $4,500,000 in later years. The funding of mortgage loan commitments is contingent upon the underlying properties meeting specified requirements, including construction, leasing and occupancy. At September 30, 2009, outstanding obligations for future real estate investments were $4,013,207. Of which all are scheduled for disbursement in 2009. The funding of real estate investment obligations is contingent upon the properties meeting specified requirements, including construction, leasing and occupancy. At September 30, 2009, outstanding forward commitments for equity investments were $5,598,133,427. Of this, $515,442,323 is scheduled for disbursement in 2009 and $5,082,691,104 in later years. Included in the forward commitments for equity investments is the Company’s limited partnership in the two Hines European Development Fund Limited Partnerships (“HEDF Fund I & II”) whose primary focus is the development and redevelopment of real estate projects in Western Europe. Each of the limited partners made a specified commitment to the fund; the Company committed 130.0 million Euros which is approximately $189.8 million (in U.S. dollars) to Development Fund I and 100.0 million Euros which is approximately $146.0 million (in U.S. dollars) to Development Fund II as of December 31, 2008. The limited partners' commitments are pledged as collateral to facilitate the financing of the activities of the fund by third parties through equity lines of credit. The limited partners do not anticipate actually funding their commitments but remain committed to do so should it become necessary for the Fund to make cash capital calls. No Material Change. 16. Information about Financial Instruments with Off-Balance Sheet Risk and Financial Instruments with Concentrations of Credit Risk (1) The table below summarizes the face amount of the Company’s financial instruments with off balance sheet risk: Assets Liabilities 09/30/2009 12/31/2008 09/30/2009 12/31/2008 Swaps $ 6,607,422,894 $ 8,057,413,422 $ 5,462,505,169 $ 3,473,478,406 Forwards --- 90,331,161 97,010,861 149,637,017 Total $ 6,607,422,894 $ 8,147,744,583 $ 5,559,516,030 $ 3,623,115,423 (3) The Company is exposed to credit-related losses in the event of non-performance by counterparties to financial instruments. As of September 30, 2009, the amount of the Company’s exposure, determined by the positive mark-to-market counterparty valuations, was $189,850,174. (5) As of September 30, 2009, the average fair value of derivatives used for other than hedging purposes, which are the credit default swaps used in replication synthetic asset transactions, was $35,205,109 in liabilities. 7.3
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