TIAA-CREF Environmental Initiative Update for Asset Managers October 2 and 7, 2008

2 Review of the Environmental Initiative Benefits –Financial –Environmental –Enhance corporate image Goals –Reduce environmental footprint –Demonstrate market leadership –Create market differentiation –Reduce energy intensity 10% by 2010 Opportunities –Reduce expenses through no- and low-cost solutions –Increased NOI and enhanced asset value

3 Initial Approach All properties –Office investments– Multi-family –TIAA-occupied– New construction Energy management first –Responds to growing demand for green and increased awareness of environmental concerns –Leads to increased tenant retention and attraction –Hedges against rising costs of energy –Increases property values Water efficiency and waste management are underway

4 Environmental Initiative Activities Portfolio-Wide Evaluation Analyze Data Make Recommendations Implement Solutions & Track Results Gain Recognition Continual Reassessment

5 Activities to Date Established a baseline from which to measure progress Conducted training for property managers & engineers Identified trends and opportunities Conducting property assessments and making recommendations for office and multifamily properties Began implementing property improvements Obtaining ENERGY STAR labels for qualifying office buildings Earned recognition as an ENERGY STAR Partner of the Year award winner and ENERGY STAR Leader

6 Ongoing/Upcoming Activities Quarterly reporting to asset managers Maintain benchmarking data and track changes “Change the World, Start with ENERGY STAR” – CFL campaign for office tenant employees, multifamily residents, and TIAA-CREF employees Replace incandescent lights with CFLs in apartment homes in MFH properties Regular property manager, engineer, and tenant communications via WebEx and direct contact –Encouraging building staff to expand tenant communications about sustainable practices

7 Ongoing/Upcoming Activities (continued) Implement first set of standard operating procedures Data collection on: –Energy purchasing in deregulated markets –Overtime air charges to facilitate an equitable and consistent approach Continue pursuing ENERGY STAR labels Evaluate feasibility of LEED-EB certification Develop property marketing materials Engage with industry groups Translate savings into dollars and carbon emissions reductions Upgrade common areas in MFH communities, focusing on low-cost solutions

8 Your Role in the Environmental Initiative We need your help to reach the10% energy reduction goal Utilize property visits and talk with property managers/chief engineers Observe: –Best practices –Opportunities for improvement –Red flags and “greenwashing” Nick is the liaison/translator between the involved groups Communicate with us and leverage: –Property management roundtables –JDM accessibility

9 Often Overlooked Opportunities Don’t condition space unnecessarily –After hours –Leasing situations –Construction situations/TI’s Engage gas and electric service providers for unlisted rebates/incentives

10 Acquisitions During due diligence, request ENERGY STAR rating or energy data in order to get a rating Collect data for preliminary LEED assessments Look for energy saving opportunities For new acquisitions, request last 12 months of utility data to begin benchmarking

11 Disposition Checklist  Up-to-date ENERGY STAR rating  ENERGY STAR label, if achievable  LEED assessment  Environmental assessment Environmental savings example: -The average ENERGY STAR rating for office buildings is 50, so a building rated 70 is 20 points better than average -Compared to an average building, a hypothetical 300,000 square foot building rated 70 saves: -1,500,000 kWh of electricity per year -$165,000 in energy costs per year -2.5 million pounds of carbon emissions

12 Regional Trends In the Northwest – running out of capacity In California – skyrocketing energy rates In the Southwest and other areas – dwindling water supplies

13 National Trend: Increasing Water Rates National Average Rate Increases over Select Two-Year Periods

14 National Trend: Demand for Green Buildings CoStar Data on Occupancy of ENERGY STAR Buildings

15 National Trend: Demand for Green Buildings CoStar Data on Direct Rental Rates for ENERGY STAR Buildings

16 National Trend: Demand for Green Buildings RREEF Data on LEED Certified Buildings Vacancy Rates in Office Space Office Space Rents per SF All LEED Buildings LEED Class A All Class A (LEED + non-LEED)

17 National Trend: Increasing Waste Production Per Capita Averages (in lbs) - U.S. Waste While recycling rates are higher, Americans still send substantially more to landfills today than we did 25 years ago. Waste hauling charges are increasing due to higher fuel costs. Waste Generated Recycled % Recycled Sent to Landfill % %3.46

18 National Trend: Utilities Offering Incentives for Reducing Demand Rebates available for… –Lighting retrofits & controls, HVAC upgrades, other customized energy efficiency measures, renewable energy, irrigation systems, water heaters, appliances –Commercial buildings and multifamily communities –Retrofits and new construction Financial and technical assistance with recommissioning studies, energy audits, building tune-ups, demand response programs Incentives come from utilities, local water districts, municipalities, state and federal governments, etc.

19 National Trend: The New “Green Lease” What is a green lease? –Communicates green operational practices, equipment standards, and goals –Creates financial incentives for investments in environmental upgrades or technologies –Details tenant’s responsibilities for limiting energy & water consumption and participating in recycling program –Sets minimum green standards for tenant improvement projects –Requires that maintenance and repairs must follow the building's green strategies Engineers are increasingly reviewing leases to ensure energy efficiency and other technical requirements are sound BOMA Green Lease template available

20 Additional Trends Expedited building permits for green buildings Increasing tenant demand for sustainable buildings and green leases –IBM –Toyota –Bank of America –Many more