TIAA-CREF Funds

A template for commercial real estate?

raywax — Sun, 22 Nov 2009 14:40:57 GMT

At least for malls? The full title of this WSJ article is General Growth Clinches Mortgage Pact; here is the Link to it.

Here are some excerpts.

General Growth, which owns and manages more than 200 U.S. malls, filed for Chapter 11 protection after failing to refinance portions of its $27 billion debt as they came due. Simon, of Indianapolis, is the largest U.S. mall owner by number of properties, with more than 300.

General Growth intends to use the restructuring pact it outlined Thursday as a template for negotiating deals with the rest of its creditors, its attorneys said. They requested a confirmation hearing for the initial pact be set for Dec. 14.

The deal would extend the due dates on the mortgages by an average of 4½ to 5 years, with none of the debt coming due until 2014. In return, General Growth would provide those lenders with "significant concessions" such as additional amortization payments on the loans, more reserves for the loans and additional bankruptcy protections for the lenders,

The interest rates on the loans will remain the same and the company needn't pay part of the loans' principal immediately—concessions that observers of the case had expected creditors to demand.

The lenders involved in the deal are servicers overseeing securitized mortgages and life-insurance companies including Prudential Financial Inc.

HHHmmm! I wonder what TIAA will do now.

Ray

November update of General Account

uphaus — Thu, 19 Nov 2009 11:29:05 GMT

Looks pretty good to me. http://www.tiaa-cref.org/support/news/articles/gen0908_184.html

Bob U.

Question about TIPS

jkjustice — Tue, 17 Nov 2009 17:47:46 GMT

Why are TIPS so expensive right now?

I assumed that only frightened people would pay this much for TIPS. Are there so many frightened people? If there are, what has frightened them?

I find these prices simply baffling. What am I missing?

John

TIAA Traditional Annuity, Inherited and potential purchase, question

ptnewyork — Wed, 11 Nov 2009 21:29:26 GMT

Hi - I inherited a TIAA Traditional Annuity which currently is paying out 3%, guaranteed for the duration of it, which expires 3/2013. I spoke to TIAA Creff today to find out if what I had was a stable income fund, but turns out it is this Traditional Annuity. And, since I am already in their system (my mother worked at a college)... I can also get a Traditional Annuity (which is not available to the retail holder). A large % of it appears to be made up of bond holdings. I asked that the average duration of the bonds are, but they couldn't tell me, and also wondered if conditions on the ground change, do they have flexibility to change durations, cash %s, etc. They didn't know.

It does have some appeal. It would be guaranteed at 3%. I currently have two fixed term fixed rate immediate annuities from Met Life, but this is different. There is no fixed term, it can continue in perpetuity (until 70.5 when you have to take an MDR).

I imagine other posters here have this type of annuity. Any caveats? or additional things I should know about it? They said there fees are very competitive and built into the yield. Is there another annuity that i should also look into? I have considered many options for SEP money I hold elsewhere, and want to take few risks with it.

Thanks! Patty (PS I also inherited a CREFF variable annuity, which has domestic and international exposure.. I've kept both of these as is although the payout now is less since the downturn).

Commercial real estate looks too tough to save

raywax — Thu, 19 Nov 2009 00:54:51 GMT

The subject is not the title of an article; it is the last sentence of a WSJ article this evening on commercial real estate. The actual title of the article is A sector too tough to save and it can be accessed via this Link.

Ray

REA Q3 Quarterly Analysis

raywax — Wed, 18 Nov 2009 16:00:34 GMT

It has been released this morning as an 8-k document. Here is the link to the Quarterly Analysis for the quarter.

Here is the info on the timing of the change in appraisals.

Property appraisals within the Account have historically been more frequent than those of most other NCREIF Open-end contributors. Until recently, each property within the Account was appraised quarterly by MAI Appraisers - once by external independent appraisers and three times internally by our MAI appraisal staff. Effective Q2 2009, external third-party appraisals have been performed for each property on a quarterly basis. As such, the Account values each property at least quarterly, and reflects changes in valuation throughout the quarter as they become available.

The report is all about comparisons to the NCREIF data. Let me see if I can paste the data.

PERFORMANCE FOR THE PERIOD ENDING SEPTEMBER 30, 2009

	TOTAL RETURNS						ANNUAL AVERAGE RETURNS
												SINCE
	3 MONTHS		YTD		1 YEAR		3 YEAR		5 YEAR		10 YEAR	INCEPTION²
TIAA Real Estate Account¹	-7.64	%	-23.79	%	-33.83	%	-8.75	%	0.02	%	3.86%	4.18	%
TIAA REA-with NCREIF-Calculated Property Returns³	-0.95	%	-0.62	%	0.85	%	9.01	%	10.36	%	9.97%	9.94	%
REA Composite Index⁴	1.11	%	1.30	%	0.69	%	8.24	%	9.61	%	9.28%	9.50	%

It seems to have worked.

Ray

The Perils of Chasing High Yields

raywax — Wed, 18 Nov 2009 14:25:31 GMT

The subject is an article in this morning's WSJ; here is the Link. It has sections on the following topics: Riskier Choices, Rate Surge, Money Markets, Building a Ladder and Stock Yields. It has suggstions on choices one might want to avoid and those with least risk.

Ray

An ETF substitute for a hedge fund?

raywax — Wed, 18 Nov 2009 01:01:03 GMT

The subject relates to a WSJ article this evening that bears the title of Betting Smart With ETFs; here is the Link.

Here are two (three paragraphs) excerpts.

Take the IQ ARB Merger Arbitrage ETF (ticker: MNA), which began trading Tuesday. Rather than hiring traders to sift through deals and choose which to bet on, the ETF relies on a fixed rule book. The main requirement is hardly selective: An acquirer must have offered a premium to a target company's market price.

Could that simplicity pay? The ETF's manager says its formula would have generated an 18.7% return before fees had it been active in the nine months through September. Merger arbitrage funds as a whole were up less than 10% in that time, according to Hedge Fund Research.

Later this.

The attraction: Fees are just 0.75% a year compared with the hefty 2% management fee and 20% incentive fee charged by many hedge funds. The hedgies had better hope MNA's simplistic formula doesn't deliver anything close when it comes to sustained returns.

This is not my cup of tea but it is interesting.

Ray

Restructuring securitized commercial RE mortgages

raywax — Wed, 18 Nov 2009 00:52:18 GMT

I found the following two exceprts in a WSJ article this evening. If you are interested in them here is the Link to the Journal article.

General Growth, the country's second-largest mall operator after Simon by number of properties, is close to a deal with lenders to restructure its $11.5 billion in securitized mortgages with the intent of filing a reorganization plan by February, people familiar with the talks say.

General Growth might clinch a pact within a week to restructure its securitized mortgages, according to people familiar with the matter. The proposal the mall owner has discussed with servicers overseeing those mortgages calls for extensions of their due dates ranging from three to nine years, with an average of 4.5 to five years, according to people familiar with the talks. General Growth is aiming to ensure that it faces no payment deadlines for the next three years as capital markets recover.

This would be good for commercial real estate if it materializes as it may well set a pattern for handling other problems revolving around the need to refinance mortgages coming due in the next several years.

Ray

REA 10-Q dated 9/30/09

raywax — Fri, 13 Nov 2009 22:33:15 GMT

Here is the Link to it; I have not had time to read it.

Ray

Central Banks To Be Net Buyers of Gold

raywax — Mon, 16 Nov 2009 12:57:50 GMT

The subject is a CNBC article this morning; here is the Link.

Ray

Mutual Fund Performance: Real Estate Funds

raywax — Sat, 14 Nov 2009 03:30:37 GMT

Here is the Link that takes you to the listing of the top 10 and the bottom 10 Real Estate Funds. You may be surprised where the REA ranks!

I may be wrong; it may not be the REA that makes the list. It could be the Insitutional Class of Real Estate Securities.

Ray

Two useful WSJ articles on investing

raywax — Sat, 14 Nov 2009 14:16:52 GMT

One is entitled Have You Learned Your Lessons and it has a quiz (with correct answers) that is worth reading; here is the LINK to the quiz, the important part of the article.

The other is the Jason Zweig column entitled Ignoring the Yes-Man in Your Head; here is the Link to it.

Ray

CREF VAriable Annuity funds

atlast60 — Wed, 11 Nov 2009 01:55:45 GMT

I'm new to morningstar.com and the portfolio analysis. Is there any way to receive an x-ray analysis of CREF variable annuity funds? They don't seem to have ticker symbols for fund recognition, i.e. CREF Stock, CREF Growth, CREF Global Equities, etc.

Tks.

An interesting (and timely) investing nugget

raywax — Wed, 11 Nov 2009 19:36:42 GMT

It is the Ahead of The Tape column in this morning's Journal; the article's title is If Stocks Are Bound to Bonds, Gains Abount. This is not for buy and hold investors but if you are a momentum invstor in your equity allocaion it may interest you. Here is the Link. And here are a few excerpts.

Stocks and bonds once belonged to different universes, but have been in close partnership for years -- which right now may promise more gains for stocks.

Later.

The dual improvement isn't entirely surprising. The VIX and corporate-bond spreads have moved in tandem for the past nine years,

They didn't just correlate during the recent credit crisis, when many stock investors got an uncomfortable crash courses in credit arcana. They also moved together in friendlier directions during the 2002-06 credit bubble.

Now they both are improving again -- and credit seems to have further to go.

But in the long run, there is no free lunch in the markets and that is what the final sentence in the article is about.

"We will pay for it," says Bianco Research strategist Howard Simons. "But right now, it's fun -- everything you buy goes up." This will not come as news to a momentum investor!

Ray

Another Perspective

jkjustice — Wed, 11 Nov 2009 18:02:09 GMT

The past decade for CREF Stock looks rather grim if you go to the performance page at the T-C site. The average annual returns through October 31 are 1.81% for five years and a mere .27% for ten years. You would think that we haven't had any opportunities to make money in the 21st century.

In fact we've had some nicely profitable periods. For the past seven years ending October 31, Stock has grown at a 5.98% annual rate. That's a rate that most of us would happily take for the next seven years.

The picture painted by the T-C performance page is not false, but it is not quite fair to the facts.

John

A Guide To Annuities

raywax — Wed, 11 Nov 2009 19:21:22 GMT

The subject is a three page Special Advertising Section in todays WSJ. It consists of three separate articles. Apparently Special Advertising Sections do not appear on the WSJ web page as it is not shown in the page by page listing under "In Today's Paper" at the Journal's web site. If you want to read any of the three articles you will either have to buy a copy of the Journal or go read it at your local library.

Here are the title's of the three articles.

Will You Have Enough?

Fixed or Variable Annuity: Consider Your Investment Objectives.

10 Questions to Ask When Buying an Annuity. (For some reason numbers don't take underlining).

Ray

Fire and Ice

jkjustice — Tue, 10 Nov 2009 16:10:43 GMT

Sometimes it's hard being married to an asset-allocation policy.

My AA policy wants me to contribute to ILB and TREA. But ILB is on fire and will decline, while TREA is a block of ice in free fall.

It's enough to make a guy want to be unfaithful, but who is pretty enough run away with? Stocks are not cheap, and Trad offers only 3%.

I guess I'll just stick with my old ball and chain.

John

Are ETFs Causing an Emerging-Markets Bubble?

raywax — Sat, 07 Nov 2009 16:33:32 GMT

The subject is the title of this mornings Jason Zweig column in the WSJ; here is the Link. ETFS, and even more so emerging markets (EM), are not a frequent subject discussed here and I am not saying that is bad. But one has to be hiding under a rock not to understand that they some/many have experieced exceedling rapid growth and ETFs are a major way many investors play this sector. I have not done any research into the extent to which T-C funds/VAs have investments in EMs but certainly the Stock Account does and I would think the International Index and probably the managed International Funds/VAs do. So to that extent the subject is relevant here. Thus my post.

My only excerpt is the last paragraph of the article. Initally I was going to post only the last sentence but I thought it best to post the entire paragraph as it summarizes the article well. Here is the excerpt (I added the bold print to the last sentence).

So what does all this mean for investors? ETFs probably haven't caused a bubble, and they might even help a bit to prevent one from forming. But many will remain superconcentrated bets on very risky markets. If you invest in an ETF with most of its assets in a few stocks and think you have made a diversified bet, the real bubble is the one between your own ears.

For the record I do have a substantial share of our equity investments (equity is about 1/3 of our total investments) in EMs but our EM investments are in a diversified large-cap index fund. This is not a recommendation but merely a statement in favor of transparency.

Ray

This could be bad for commercial real estate

raywax — Sat, 07 Nov 2009 15:22:27 GMT

It is a Bloomberg article entitled Tishman Stuyvesant Town $3 Billion Loan Moved to Service and it can be accessed via this Link. I guess to be fair there could be an outcome that might not be too bad but the news itself is not a positive, though the potential default has been well known.

Ray

Economists Seek to Fix a Defect

raywax — Mon, 09 Nov 2009 13:28:39 GMT

The subject is only part of the title of a New York Times article this morning that is not likely to interest anyone other than those interested in measurements of ecnomic activity. However, the latter does affect government policy particularly in difficult economic periods as we are experiencing. In any case if you want to read the article and see what the data problem is, and why it will be difficult to fix, here is the Link.

Here is one excerpt.

The statistical distortions can be significant. At worst, the gross domestic product would have risen at only a 3.3 percent annual rate in the third quarter instead of the 3.5 percent actually reported, according to some experts at the conference. The same gap applies to productivity. And the spread is growing as imports do.

That may help to explain why the recovery from the 2001 recession was a jobless one for many months and why the recovery from this recession is likely to generate few jobs for many months.

In addition, more detailed import data would help to explain wage inequality, by linking some low wages more accurately to particular industries exposed to import competition.

On another front, many argue that labor productivity is rising faster than the pay of workers who made the greater productivity possible. That argument would be watered down if more accurate data showed that productivity had been overstated.

Ray

OT - Fall of the Berlin Wall & the German Economy

raywax — Sat, 07 Nov 2009 15:30:27 GMT

Here is the link to a chart from the Bloomberg site; it is a Chart of the Day chart so I am not going to copy and paste it but you can access it via this Link. Many here will remember the night that occured and the subsequent debate on the effect it would have on the unified German economy; this is what the chart shows. There is an article and video at the site you can also read/view.

Ray

Trying to understand annuities

Callalily — Wed, 04 Nov 2009 05:31:24 GMT

I sold all my TIAA and CREF variable annuities and am now completely in mutual funds. However, I hear a lot about TIAA Traditional (I'm assuming this is a fixed annuity?). What exactly is it and what is its advantage? Also, how are products like CREF Stock, CREF Equity Index, etc. different from mutual funds? Are there advantages to owning these instead of mutual funds?

US Commercial Real Estate to Bottom in 2010

raywax — Thu, 05 Nov 2009 11:05:26 GMT

It is a CNBC article this morning. Here is the Link.

Here is one excerpt.

For developers of new projects, the advice is blunt: Write off 2010, as well as 2011 and probably 2012.

Worth reading.

Ray

Status of REA ...

xdickben — Thu, 05 Nov 2009 02:59:08 GMT

As best I can determine, the following is a rough snapshot of the status of REA.

equity.......$9 billion

loans........$4 billion

value........$13 billion

42% ............ loan to equity ratio (old measure ... leverage system)

31% ............ loan to value ratio (new measure now to be used)

$4 billion .......... Limit on Loans (new)

$1 billion .......... Liquidity units to eventually be redeemed

$1 billion .......... Loans maturing during next 3 or 4 years

Operations:

$0.5 billion ........ yearly income from operation ($1 billion in .... $0.5 billion out)

Last quarter:

$1 billion ............. depreciation of properties

$0.5 billion .......... participant withdrawals

$0.25 billion ........ liquidity units purchased by TIAA

It will be interesting to see how these numbers will change in the new 10Q report. ALmost all will have significant meaning.

Some observations:

It appears to me that commercial property values would have to be the driving force for the unit value to increase significantly, and that changes in that unit value would lag those commercial property increases by a couple of months at least.

Under old investment "guidelines" the equity would have had to increase by $4 billion to get to the 30% loan to equity ratio (which would OK increase in $4 billion of loans).

Under new investment "guidelines" equity would only have to increase by $0.4 billion to get to the 30% loan to value ratio (however now this would not OK increases in $4 billion of loans).

Thus, my take is that the new guidelines were adopted so that it would be easier to refinance existing loans, rather than make new ones. But they might try to sell some properties with high loan to equity ratios in order to get some room inside that $4 billion loan limit (this would not change their net asset value).

Would welcome any additional observations or suggestions about other numbers to watch for in the new report.

Dick