Post on 27-Jul-2020
For Institutional Investor use only. Proprietary & Confidential. For Institutional Investor use only. Proprietary & Confidential.
Fourth Quarter 2019 Real Estate Performance Update
Santa Barbara County Employees’ Retirement System
May 27, 2020
Invesco US Income Fund I
CityScape Residences
Phoenix, AZ
Greenfield Acquisition Partners VII
Inn of Sedona
Sedona, AZ
For Institutional Investor use only. Proprietary & Confidential.
Table of Contents
3 Real Estate Market Update
17 Fourth Quarter 2019 Real Estate Performance
30 Portfolio Summary
32 Detailed Portfolio Summary for the Period Ending
December 31, 2019
For Institutional Investor use only. Proprietary & Confidential. 3
Real Estate Market Update
Prologis Targeted US Logistics Fund
South Bay Distribution Center
Rancho Dominguez, CA
Stockbridge Smart Markets Fund
Novella Apartments
Redondo Beach, CA
Walton Street Fund VII
World Trade Center
Long Beach, CA
For Institutional Investor use only. Proprietary & Confidential. 4
Market Overview
• NCREIF ODCE capital flows have continued to trend downward from its peak in 2015.
• Significant liquidity still remains for U.S. core / stabilized real estate.
$(5)
$-
$5
$10
$15
$20
$25
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$ B
illi
on
s
NFI-ODCE Capital Flows
Contributions Distributions & Redemptions Net Cash Flow
Source: NCREIF, as of 12/31/2019
For Institutional Investor use only. Proprietary & Confidential. 5
Market Overview
• Total real estate transaction volume increased approximately 5% in 2019 compared to 2018. Retail transactions decreased by
25.5% compared to 2018 while apartments, industrial and office were up approximately 17.5%, 17.7% and 3.8% respectively. The
drop in retail transactions in 2019 is partially due to large REIT transactions that occurred in 2018.
Source: Real Capital Analytics, as of 12/31/2019
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
$600.0
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$ Billions Office Industrial Retail Apartments
For Institutional Investor use only. Proprietary & Confidential. 6
Market Overview
• Despite central business district (CBD) office being the focus of many investors and ODCE Funds, recently suburban office has
provided greater levels of liquidity.
Source: Real Capital Analytics, as of 12/31/2019
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
$-
$20
$40
$60
$80
$100
$120
Bill
ions
U.S. Office Transaction Volume
CBD Transaction Volume Suburban Transaction Volume
CBD Cap Rate Suburban Cap Rate
For Institutional Investor use only. Proprietary & Confidential. 7
Market Overview
• Office capitalization rates in gateway markets like San Francisco, CA, Los Angeles, CA, New York, NY and Boston, MA are still
below 4.0% while much of the Midwest is above 5.5%.
Source: Green Street Advisors, as of 3/19/2020
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Market Overview
• However, office revenue growth is generally expected to decelerate in most U.S. markets in 2020 compared to 2019 growth rates.
Source: Green Street Advisors, as of 1/16/2020.
*Market-RevPAF growth combines changes in net effective rents and occupancies.
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Market Overview
• Capital expenditures can significantly impair office cash flows. Office owners must re-invest meaningful capital to fund leasing
costs and increasingly expensive maintenance repairs. The visualizations below show a typical office revenue distribution
(according to Green Street Advisors) and the significant capital expense needs of office compared to other property types.
Source: NCREIF, Green Street Advisors, as of 1/16/2020.
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Market Overview
• As a result of decreasing net cash flow in office investments, ORG opted to underweight office exposure relative to the ODCE
benchmark in favor of more cash-flowing assets. As of 4Q 2019, the SBCERS portfolio was 25% office while ODCE was 33%.
• SBCERS investment in Rubenstein Properties Fund III, L.P. has made several value-added investments in the office space. In
September 2016, the Fund purchased Junction, a vacant 188,000 square foot suburban office building in Reston, VA for $18.6
million. The Fund began a repositioning strategy for the office building complete with an expanded amenity package including a
fitness center, conference center, and a tenant lounge area with limited food service. A rendering of the tenant lounge area is
shown below.
• The Junction was sold to a prospective user in April 2019 and generated an 18% gross realized IRR and a 2.6x gross realized
equity multiple.
Source: Rubenstein Partners, Bognet Construction
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Market Overview - COVID-19 Impacts
Subsequent to the Period Ended 12/31/2019
In late 4Q 2019, a novel coronavirus emerged from the Hubei province in China. Subsequent to 4Q 2019, COVID-19 has since spread to nearly every country
in the world and was officially labeled a pandemic by the World Health Organization on March 11, 2020. Unfortunately, the highly contagious nature of the
disease, lack of vaccine, limited testing capabilities and relatively high death rates have led governments to take significant and often severe action to protect
their citizens and minimize strain on public health infrastructures. Measures that have been taken include restricting domestic and international travel, cancelling
sporting events, concerts and other large gatherings, closing restaurants, stores and other gathering places and stay-at-home / lockdown orders. COVID-19
and the measures taken to combat its spread will have severe and detrimental impacts to the global economy. While the duration of this pandemic and potential
“additional waves” are uncertain and difficult to estimate, as of late April 2020 the number daily infections worldwide appears to be declining from its peak in
early April 2020. Again, due to limited testing capabilities, these figures may not be entirely accurate and a “second wave” of the virus could have a far more
drastic effect, but a timeline of the COVID-19 outbreak as of April 22, 2020 is shown below.
Source: Investment Strategy Group, WHO, CDC, National Health Commission of People’s Republic of China, John Hopkins University, Worldometers, Goldman Sachs
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Market Overview - COVID-19 Impacts
Subsequent to the Period Ended 12/31/2019
COVID-19 and the resulting actions of local and national governments is likely to lead most economies into a recession in 2020. Where most economists differ
is to what extent and for what duration? Some economists initially predicted a “V” shaped recession with a sharp decline followed in quick session with a sharp
“bounce-back” but as the severity of the downturn becomes more clear, a sharp “bounce-back” becomes less likely. Record breaking increases in
unemployment will cause severe disruptions to the global economy.
Commercial real estate will continue to be impacted by COVID-19 as lockdown orders and deteriorating economic conditions force landlords to shift business
plans and focus on maintaining tenants and cash flow.
The real estate debt markets have largely been frozen due to the uncertainty surrounding COVID-19. For April 2020, the late payment rate on 2012-2020
vintage US CMBS loans that are 30 days or more late has increased from approximately 4.0% to 10%. (Trepp)
-
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Thousands
U.S. Weekly Unemployment Claims
U.S. Unemployment Claims Long Term Average
Source: U.S. Employment and Training Administration. Long Term Average since 1967
91.7%
81.2%86.8%
36.1%
89.7%
79.6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Apartment Industrial Office Retail Other Total
NCREIF April 2020 Rent Collection Rates
Source: NCREIF (Value Weight Index), Data as 4/15/2020
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Market Overview - COVID-19 Retail Impacts
Subsequent to the Period Ended 12/31/2019
Store closures and bankruptcies continue to plague the retail sector. Department stores in particular, which represent approximately 60% of mall anchor space,
have been closing at an accelerating rate. Malls will continue to be severely impacted with multiple anchor vacancies. Currently, ORG anticipates that there will
be fewer department stores in the future and malls will have to adapt to survive.
Mall vacancies have increased but the neighborhood and community shopping sector continue to remain resilient due to the necessity based tenants located in
those centers such as grocery stores and pharmacies.
Source: Green Street Advisors
6.5%
43.5%
76.9%
28.5%21.8%
27.5%
7.9%
March April
Source: WSJ
Weekly U.S. Grocery Store Sales Change From a Year Earlier
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Market Overview - COVID-19 Industrial Impacts
Subsequent to the Period Ended 12/31/2019
The U.S. industrial market continues its strong run as the integration between retail and industrial continues and e-commerce rises. As e-commerce continues
to grow and increase its market share, much of the value that was once placed on traditional retail has been transferred to industrial assets. In many ways,
COVID-19 has accelerated as e-commerce becomes the safer alternative to shopping while consumers are in lockdown.
Each $1 billion in additional online sales is estimated to translate into an incremental 1.25 million square feet of industrial warehouse demand (CBRE Research).
As shown in the chart below, E-commerce sales are projected to increase to 25% of overall sales by 2025.
Tenant quality remains a focus as there is certainly a concern that tenants with poor balance sheets or that rely on manufacturing supply chains such as
automobile or aircraft assemblage could be impaired and face difficulties meeting their rent obligations.
Source: 1U.S. Census Bureau, Bloomberg and IMS Worldwide Inc.
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Market Overview - COVID-19 Office Impacts
Subsequent to the Period Ended 12/31/2019
The office sector has held-up fairly well on relative basis as a result of the strength of cash flow from longer duration leases relative to hotels and multifamily
assets. However, there is some concern regarding poor tenant credit and weaker balance sheets among small office tenants and start-ups as well as tenants in
the legal and leisure and hospitality sectors. Many office tenants are asking their landlords for rent relief or rent deferrals and there is uncertainty how each
request will be met.
Office landlords that had underwritten short term lease-up strategies or capital intensive renovations may encounter distress as leasing will almost certainly be
impaired as potential tenants cannot physically tour properties with stay-at-home orders in place. Additionally, the future of office may change significantly as
tenants could look to reverse the trend of densification within office space due to concerns for future social distancing orders.
Source: Investment Strategy Group, Goldman Sachs MBD, Cushman & Wakefield, JLL, Hodges Ward Elliot, REIS, ny.labor.gov, KPMG, “A Bridge Past COVID-19,” 4/1/2020,
Rubenstein Partners
Occupied Office Square Foot per NYC Employee
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Market Overview - COVID-19 Multi-Family Impacts
Subsequent to the Period Ended 12/31/2019
The April multi-family rent collections were expected to be low due an unprecedented spike in unemployment claims, however, due to government stimulus,
unemployment benefits and other factors such as residents possibly tapping their savings, April rent collections were at a relatively healthy level. Naturally, as
the resident’s lease continues these resources could be exhausted which could impact rent collections. A key figure that ORG has highlighted will be the August
2020 rent collections as this will mark the approximate end of the four month CARES Act $600 per week benefit program for those unemployed as a result of
COVID-19.
As in-person tours are not possible due to lockdown orders, ORG expects a slowdown in multi-family leasing activity. Nevertheless, this could likely lead to
higher renewal rates as residents who can afford the rent would hesitate to pack-up and move during a pandemic and landlords would slow rental growth in
order to preserve occupancy.
Source: Green Street Advisors
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Fourth Quarter 2019 Real Estate Performance
Abacus Core Income Fund I
Alexander at The District Apartments
Atlanta, GA
Greenfield Acquisition Partners VI
413 Huron—Student Housing
Ann Arbor, MI
Patron Capital V
GSPP Cologne Office
Cologne, Germany
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SBCERS Investment Return Snapshot
As of December 31, 2019
Investment Returns—Time Weighted, Gross of Fees Investment Returns—Time Weighted, Net of Fees
ORG /BNY Mellon Return Comparison—Time Weighted, Net of Fees (Mellon Report 3/31/2020)
Note: SBCERS Benchmark is a real rate of return (adjusted for inflation) of 4.5%, net of investment management fees.
8.0%
8.7%
0% 5% 10% 15%
Private RE
ORG BNY Mellon
1.5%
2.3%
0% 1% 2% 3%
Private RE
ORG BNY Mellon
2.8
%
10.7
% 12.4
%
12.6
%
8.7
%
1.5
%
5.3
%
7.1
%
9.0
%
6.8
%
Q T R 1 YEAR 3 YEARS 5 YEARS S I NCEI NCEP T I O N
SBCERS NFI ODCE, Gross
2.3
%
8.7
%
10.3
%
10.6
%
7.1
%
1.3
%
4.4
%
6.1
%
8.0
%
5.8
%
1.2
%
6.9
%
6.7
%
6.5
%
6.6
%
Q T R 1 YEAR 3 YEARS 5 YEARS S I NCEI NCEP T I O N
SBCERS NFI ODCE, Net SBCERS Benchmark
Total Portfolio
Since Inception
Date: 1-1-2006
Gross IRR: 9.9%
Net IRR: 8.8%
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SBCERS Real Estate Attribution Analysis
Quarter Return data for December 31, 2019
Gross of Fees Total Return Attribution Net of Fees Total Return Attribution
• The attribution identifies the percent of each sector that contributes to the overall total return
• The Core sector, with 74% of the total portfolio, is the largest contributor to the total return of the portfolio.
1.7%
0.3%
0.2%
2.3%
0.00% 0.50% 1.00% 1.50% 2.00% 2.50%
Core
Opportunistic
Value Added
Overall
2.0%
0.5%
0.4%
2.8%
0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00%
Core
Opportunistic
Value Added
Overall
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SBCERS Property Type vs Index
Quarter Return data for December 31, 2019
Sector Returns—Time Weighted SBCERS—US Only Compared to Index
• Industrial sector returns are outperforming all other sectors. SBCERS portfolio is 34% industrial whereas the
ODCE Index is 20%.
• SBCERS retail portfolio is 9% whereas the ODCE index is 16%.
1.6
%
6.4
%
6.7
% 8.3
%
1.5
%
5.5
%
5.9
% 7.4
%
3.2
%
13.4
%
13.6
%
13.6
%
1.7
%
6.6
%
6.5
% 7.6
%
0.1
%
1.9
% 3.2
%
6.7
%
Q T R 1 YR 3 YRS 5 YRS
NPI Apartment Sub-Index Industrial Sub-Index
Office Sub-Index Retail Sub-Index
34%
16%
26%
20%
0.2%
4%
25%
9%
24%
34%
3% 1% 2% 2%0%
5%
10%
15%
20%
25%
30%
35%
40%
Office Retail Apartments Industrial Hotel Self Storage AssistedLiving
Other
NFI ODCE SBCERS
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SBCERS Portfolio Snapshot
As of December 31, 2019
• Of the $370.1 million committed to Private Real
Estate, 65.9% has been called through 12/31/2019.
• The equity multiple and the Since Inception Internal
Rate of Return (“IRR”) had no change from the prior
quarter.
• Both the Contributions and Distributions include the
impact of the dividend reinvestment programs in
many of the Core funds.
Note: All dollars are in millions.
Private Real Estate 12/31/2019 9/30/2019 Change
Funds
Number of Funds 35 33 2
Number of General Partner Relationships 20 18 2
Capital Committed $370.1 $335.1 $35.0
Unfunded Commitment $126.1 $97.8 $28.3
Total Private Real Estate
Quarterly Contributions $10.2 $9.7 $0.5
Quarterly Distributions ($21.9) ($11.3) ($10.6)
Total Market Value $289.5 $294.5 ($5.0)
Equity Multiple, Net of Fees 1.4x 1.4x (0.0x)
Portfolio Since Inception of IRR, Net of Fees 8.8% 8.8% 0.0%
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Progress Towards 2019 Strategic Plan Goals
2019 Recommendation 2019 Action Plans Progress
ORG will target to increase the
portfolio with new commitments of
$50 million
• Commit up to $20 million to Core investment strategies.
• ORG believes the core risk/return attributes have become less favorable than value added
opportunities.
• Commit up to $40 million in Value Added and/or Opportunistic funds that will capitalize on
distress or other unique market conditions and manager capabilities.
• $10 million commitment to ABR Chesapeake Investors VI LP , Value-Added Fund, in July 2019.
• $10 million commitment to Alcion Real Estate Partners Fund IV, L.P. , Opportunistic Fund, in July
2019.
• $10 million commitment to Citymark Capital U.S. Apartment Fund II L.P. , Value-Added Fund, in
December 2019.
• $10 million commitment to Abacus Multi-Family Partners V, L.P. , Value-Added Fund, in
December 2019.
• $15 million commitment to High Street Real Estate Fund VI, L.P., Value-Added Fund, in December
2019.
• As part of the new Value Added and/or Opportunistic funds, consider up to $20 million in
international opportunities.
ORG will continue to actively
manage the portfolio within the
guidelines of the Real Estate
Investment Policy.
• Considering redeeming out of selected open ended Core funds and reinvesting proceeds in new Core
Opportunities.
• Liquidated 90% of H/2 Credit Partners Ltd. for $13.8 million in November 2019 and remaining
balance was liquidated in April 2020. Original commitment was $10 million.
• Evaluate and consider ending the dividend reinvestment program in certain Core funds.
• ORG is evaluating the dividend reinvestment programs and has not elected to end any dividend
reinvestment programs at this time.
Present additional educational
seminar for the Trustees during
2019.
• Details of educational seminars will be agreed upon at a future date.
For Institutional Investor use only. Proprietary & Confidential. 23
Progress Towards Strategic Plan for 2019
Closing
Date Partnership Strategy Geographic Focus
Commitment
($ millions)
7/1/2019 ABR Chesapeake Investors VI LP Value-Added United States $10.0
7/31/2019 Alcion Real Estate Partners Fund IV, L.P. Opportunistic United States $10.0
9/30/2019 H/2 Credit Partners Ltd. Core United States ($10.0)
Dec. 2019 Citymark Capital U.S. Apartment Fund II, LP Value-Added United States $10.0
Dec. 2019 Abacus Multi-Family Partners V, L.P. Value-Added United States $10.0
Dec. 2019 High Street Real Estate Fund VI, L.P. Value-Added United States $15.0
Total $45.0
Commitment Activity - 2019 Commitments
Core
($10.0)Value Added
$45.0
Opportunistic
$10.0
-$10 -$5 $0 $5 $10 $15 $20 $25 $30 $35 $40 $45 $50 $55
Commitments in Millions
2019 Strategic Plan Progress
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Progress Towards 2020 Strategic Plan Goals
2020 Recommendation 2020 Action Plans Progress
ORG will target to increase the
portfolio with new commitments of
$60 million
• No additional commitments to Core investment strategies due to concerns of pricing and core
fundamentals.
• ORG will consider redeeming existing Core funds and reallocation towards new or existing Core
investment strategies.
• Commit up to $60 million in Value Added and/or Opportunistic funds that will capitalize on
distress or other unique market conditions and manager capabilities.
• As part of the new Value Added and/or Opportunistic funds, consider up to $15 million in
international opportunities.
ORG will continue to actively
manage the portfolio within the
guidelines of the Real Estate
Investment Policy.
• Considering redeeming out of selected open ended Core funds and reinvesting proceeds in new Core
Opportunities.
• Evaluate and consider ending the dividend reinvestment program in certain Core funds.
For Institutional Investor use only. Proprietary & Confidential. 25
Portfolio Summary
As of December 31, 2019
• The Private Real Estate Since Inception IRR has stayed consistent over the last four
quarters.
One Year
Ending
3/31/2019 6/30/2019 9/30/2019 12/31/2019 12/31/2019
Beginning Market Value $268.9 $273.1 $290.4 $294.5 $268.9
Contributions $6.4 $17.9 $9.7 $10.2 $44.2
Distributions ($6.4) ($7.7) ($11.3) ($21.9) ($47.2)
Net Income/Appreciation $4.2 $7.2 $5.7 $6.6 $23.6
Ending Market Value $273.1 $290.4 $294.5 $289.5 $289.5
Unfunded Commitments $99.1 $84.4 $97.8 $126.1 $126.1
Since Inception IRR - Net 8.7% 8.8% 8.8% 8.8% 8.8%
Private Real Estate
Quarter Ending
in $ Millions
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Annual Cash Flow Summary
Historical Market Value and Cash Flows Projected Market
Value
• Between 2012 and the 4th Quarter 2019, the capital calls have outpaced the distributions
by approximately $79.1 million.
($42.2)
($4.1) ($4.7) ($4.3)($18.8)
($28.0) ($54.4)($29.4)
($54.4)
($28.3) ($28.2) ($31.5) ($38.9) ($44.2) ($55.2)($46.8) ($38.0) ($35.2)
$4.4 $2.4 $4.1 $1.4 $2.9
$41.8
$8.2 $17.2 $13.5 $29.1 $22.3
$58.4
$34.2 $47.2
$19.5 $15.0 $15.5 $11.5
$42.7 $50.5 $43.7 $33.4
$57.3
$47.3 $102.5
$126.9
$187.8 $209.9
$237.6 $238.6
$268.9 $289.5
$346.3
$381.6 $407.9
$435.7
($300.0)
($200.0)
($100.0)
$0.0
$100.0
$200.0
$300.0
$400.0
$500.0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
($ i
n M
illio
ns)
Capital Calls Distributions Market Value Net Cash Flow
For Institutional Investor use only. Proprietary & Confidential. 27
Strategy Diversification
Strategy Diversification By Market Value
As of December 31, 2019
• The SBCERS Real Estate Investment policy
has an allocation range of 40-80% for the Core
strategy. The total Core investments is 74% as
of December 31, 2019.
• The remaining portion of the portfolio is
divided between Value Added and
Opportunistic investments. Both are within the
Policy ranges.
Core74%
Value Added13%
Opportunistic13%
81%
55%58% 62%
65%65% 63%
72% 74% 74%
60%
11%
14%
14%11% 10% 12%
19%
33%
24%14% 14%
13% 13%
12%12% 13%
25%
1%4%
10% 10%12% 12%
16% 14% 13%15%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 ORG'sTarget
PortfolioCore Public Securities Value Added Opportunistic
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Property Type Diversification
• Consistent with the SBCERS Real Estate
Investment Policy, Office, Retail, Industrial and
Apartments property types are within their
range.
• Investing in several types of real estate
minimizes the risk by diversification.
Property Type Diversification By Market Value
As of December 31, 2019
38% 25% 30% 31%25%
22%20%
23%26% 25% 24%
17%
16%
14% 13%
14%
14%
13%11%
10%9%
15%
26%
29% 23%21%
24%27%
26%28%
29% 34% 25%
12%
15%18%
16% 20% 21%25%
25%
24%
24%
22%
6%4%
7%7%
7% 6%
5%4%
3%
5%
3%
3% 4%4%
4% 5%4%
4%2%
4%2%1%
1% 1%1%
1% 1%1%
7% 6%8%
6% 5% 4% 4% 3% 2% 2%4%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 ORG'sTarget
Portfolio
Office Retail Industrial Apartments Hotel Assisted Living Self Storage Other
Industrial34%
Office25%
Retail9%
Hotel3%
Self Storage
1%
Assisted Living
2%
Apartments24%
Other2%
For Institutional Investor use only. Proprietary & Confidential. 29
Geographic Diversification
Geographic Diversification By Market Value
As of December 31, 2019
• The portfolio is well diversified across the
United States with additional diversification in
Europe.
• Unspecified U.S. indicates the manager is
unable to easily identify the region such as
investments in debt mortgage tranches.
18%16% 12% 14%
12%
8% 9%
17%13%
18% 18%
16%
8%
8%8% 11%
12% 10%
11%
10%
10% 11%
4%
6%
3%
6%8%
8%7%
8%
8%
7%7%
4%
1%
1%
2%
1%
2%2%
2%
2%
2% 1%
8%
14%
20%
13%
14%14%
14%
15%
15%
15% 15%
6%
9%12%
11%
13%
12%13%
11%
10%
10% 11%2% 5%3% 6%
5%
5% 6%
9%
8%
7% 5%
39%
27%
22%24%
21%24%
22%
24%
27%
27%
22%
3%
13%
18%15% 13%
11%13%
2%
1%
1%
5%
1% 1% 1% 2%4% 4%
1%6%
3%5%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
4Q10 4Q11 4Q12 4Q13 4Q14 4Q15 4Q16 4Q17 4Q18 4Q19 ORG's
Target
PortfolioNortheast Mideast E.N. Central W.N. Central Southeast
Southwest Mountain Pacific Unspecified US International
For Institutional Investor use only. Proprietary & Confidential. 30
Portfolio Summary
Abacus Multi-Family Fund IV
Millennium West End Apartments
St. Louis Park, MN
Rubenstein Properties Fund III
Parkwood Crossing Office Building
Indianapolis, IN
Stockbridge Value Fund II
Preston Park Financial Center
Plano, TX
For Institutional Investor use only. Proprietary & Confidential. 31
Portfolio Summary by Investments As of December 31, 2019
* Euro to US Dollar exchange rate as of 12/31/2019: 1.1227 nm: Not Meaningful + GBP to US Dollar exchange rate as of 12/31/2019: 1.3269
Vintage
Year
Investment
StrategyPrivate Real Estate Investments
Capital
Committed
Total
Contributions
Total
Distributions
12/31/2019
Market ValueNet IRR
Net Equity
Multiple
2011 Core Prologis Targeted U.S. Logistics Fund, Inc. $15,000,000 $19,589,488 $7,549,722 $43,365,802 16.0% 2.6x
Value Added Greenfield Acquisition Partners VI, L.P. 7,500,000 10,039,013 12,580,660 183,042 10.1% 1.3x
Opportunistic Blackstone Real Estate Partners VII, L.P. 7,500,000 10,320,891 12,632,136 3,706,124 16.6% 1.7x
2012 Core Harrison Street Core Property, L.P. 10,000,000 15,084,562 5,173,765 18,398,667 9.0% 1.6x
Stockbridge Smart Markets Fund, L.P. 20,000,000 29,172,454 9,172,454 40,896,707 10.3% 1.7x
Value Added Miller Global Real Estate Fund VII, LLC 7,500,000 9,820,985 11,711,305 351,151 14.5% 1.3x
Opportunistic Walton Street Fund VII, L.P. 10,000,000 9,141,673 9,759,361 3,062,599 11.5% 1.5x
2013 Core Invesco U.S. Income Fund, L.P. 20,000,000 28,364,265 8,802,439 36,467,928 11.7% 1.7x
Mesa West Core Lending Fund, L.P. 10,000,000 14,288,791 4,479,537 14,293,010 6.7% 1.3x
Mesa West Real Estate Income Fund III, L.P. 10,000,000 7,575,674 9,341,129 501,734 8.9% 1.3x
Value Added Greenfield Acquisition Partners VII, L.P. 10,000,000 11,301,493 9,939,550 7,262,839 13.7% 1.5x
Opportunistic Lubert-Adler Fund VII, L.P. 12,500,000 11,922,096 5,811,120 10,400,932 6.5% 1.3x
2014 Core Abacus Core Income Fund I, L.P. 10,000,000 8,913,368 2,548,734 10,855,699 10.4% 1.6x
Prologis Targeted Europe Logistics Fund * 5,000,000 5,333,279 1,429,726 7,062,065 10.1% 1.6x
Value Added Abacus Multi-Family Partners III, L.P. 7,500,000 8,119,851 11,950,260 458,445 26.1% 1.8x
Stockbridge Value Fund II, L.P. 7,500,000 6,978,568 7,747,054 2,740,268 14.0% 1.4x
Opportunistic Moorfield Real Estate Fund III, L.P. + 4,685,400 4,115,433 1,679,158 3,071,547 22.3% 1.6x
2015 Core Mesa West Real Estate Income Fund IV, L.P. 10,000,000 5,550,971 492,872 5,617,192 7.2% 1.1x
Opportunistic Patron Capital, L.P. V * 5,457,000 3,315,770 1,189,006 2,807,995 13.4% 1.3x
2016 Value Added Lubert-Adler Fund VII-B, L.P. 10,000,000 6,750,000 233,464 7,818,689 11.4% 1.2x
Opportunistic Rubenstein Properties III, L.P. 5,000,000 4,165,501 0 4,173,219 0.1% 1.0x
2017 Core Blackstone Property Partners 30,000,000 31,109,547 1,109,547 33,704,769 8.0% 1.1x
Value Added Abacus Multi-Family Partners IV, L.P. 15,000,000 7,176,504 1,262,355 6,978,294 17.6% 1.2x
Miller Global Real Estate Fund VIII, LLC 5,000,000 4,084,575 3,204,722 1,820,817 6.1% 1.1x
Stockbridge Value Fund III, L.P. 10,000,000 6,379,147 138,719 6,245,264 0.1% 1.0x
Opportunistic Walton Street Fund VIII, L.P. 10,000,000 8,022,484 2,886,574 6,554,310 11.6% 1.2x
2018 Core Walton Street Real Estate Debt Fund II, L.P. 10,000,000 500,000 27,957 505,680 14.3% 1.1x
Value Added Longpoint Realty Fund I, L.P. 15,500,000 7,750,000 1,271,485 7,421,101 24.4% 1.1x
Opportunistic Blackstone Real Estate Partners IX, L.P. 4,500,000 778,143 17,273 759,398 n/a n/a
2019 Value Added ABR Chesapeake Investors VI LP 10,000,000 500,000 0 500,000 n/a n/a
Citymark Capital U.S. Apartment Fund II, L.P. 10,000,000 0 0 0 n/a n/a
High Street Real Estate Fund VI, L.P. 15,000,000 0 0 0 n/a n/a
Opportunistic Alcion Real Estate Partners Fund IV, L.P. 10,000,000 0 0 0 n/a n/a
$350,142,400 $296,164,527 $144,142,084 $287,985,288
2009 Opportunistic Rockw ood Capital Real Estate Partners VIII, L.P. $10,000,000 $8,113,417 $15,044,705 $31,230 19.0% 1.9x
2010 Core H/2 Credit Partners, L.P. 10,000,000 10,000,000 0 1,530,458 5.0% 1.5x
$20,000,000 $18,113,417 $15,044,705 $1,561,688
$370,142,400 $314,277,944 $159,186,788 $289,546,975 8.8% 1.4xGrand Total
Private Real Estate Active Funds Total
Active Funds
Inactive Funds
Private Real Estate Inactive Funds Total
For Institutional Investor use only. Proprietary & Confidential. 32
Detailed Portfolio Summary for the Period Ending December 31, 2019
Blackstone Real Estate Partners VII
The Cosmopolitan
Las Vegas, NV
Abacus Multi-Family Fund IV
Sage Palmer Ranch
Sarasota, FL
Greenfield Acquisition Partners VII
TriWest Plaza
Dallas, TX
For Institutional Investor use only. Proprietary & Confidential. 33
Santa Barbara County Employees’ Retirement System
Executive Summary
Investment Returns—Time Weighted, Gross of Fees Investment Returns—Time Weighted, Net of Fees
ORG Portfolio Management Contact:
Edward Schwartz Phone: 216-910-9080
Partner
3733 Park East Dr.
Suite 210
Cleveland, OH 44122
E-Mail: eschwartz@orgpm.com
Market Value
Portfolio Market Value $289,546,975 8.7%
Private $289,546,975
Public $0
Current Unfunded Commitments $126,062,964
$415,609,939 12.5%
$3,319,160,292
Total Allocation to Real Estate $331,916,029 10.0%
Total Loan-to-Value Ratio 41.9%
Financial Highlights
at December 31, 2019
Total Market Value and
Unfunded Commitments
Total Fund Market Value
Percent of
Fund
Note: SBCERS Benchmark is a real rate of return (adjusted for inflation) of 4.5%,
net of investment management fees.
2.8
%
10.7
% 12.4
%
12.6
%
8.7
%
1.5
%
5.3
%
7.1
%
9.0
%
6.8
%
Q T R 1 YEAR 3 YEARS 5 YEARS S I NCEI NCEP T I O N
SBCERS NFI ODCE, Gross
2.3
%
8.7
%
10.3
%
10.6
%
7.1
%
1.3
%
4.4
%
6.1
%
8.0
%
5.8
%
1.2
%
6.9
%
6.7
%
6.5
%
6.6
%
Q T R 1 YEAR 3 YEARS 5 YEARS S I NCEI NCEP T I O N
SBCERS NFI ODCE, Net SBCERS Benchmark
Gross IRR: 9.9%
Net IRR: 8.8%
Total Portfolio
Since Inception
Date: 1-1-2006
For Institutional Investor use only. Proprietary & Confidential. 34
Property Type Diversification by Market Values
Geographic Diversification by Market Values
Compliance
Level
Reference Page
Portfolio Diversification ✓ Page 56
Property Type Diversification ✓ Page 57
Geographic Diversification ✓ Page 58
Investment Manager
Diversification ✓ Page 59
Vintage Year Diversification ✓ Page 60
Total Portfolio Leverage ✓ Page 61
Investment Size Limitation ✓ Page 62
Investment Policy Compliance
Investment Portfolio Commentary
• The portfolio continues to perform well with performance
exceeding the benchmarks while maintaining low risks.
• Property type and location diversification remain consistent with
policy.
NOTE: Unspecified U.S. indicates the manager is unable to easily
identify the region such as investments in debt tranches.
Santa Barbara County Employees’ Retirement System
Executive Summary
Industrial34%
Office25%
Retail9%
Hotel3%
Self Storage
1%
Assisted Living
2%
Apartments24%
Other2%
*OTHER:
Mixed Use: 0.2% Residential: 1.3% Mortgages: 0.1% Common Stock: 0.3%
For Institutional Investor use only. Proprietary & Confidential. 35
Portfolio Summary, Gross of Fees For the Period Ended 12/31/2019
Market Value
Percent
of Real
Estate
Invested
Amount
Remaining
Capital to be
Called
Leverage
Ratio Qtr. 1 Year 3 Years 5 Years
Since
Incept.
Core Funds
Abacus Core I $10,855,699 $8,807,059 $1,192,941 46.5% -2.9% 6.7% 9.5% 12.5% 12.5%
Blackstone Property Partners 33,704,769 30,000,000 0 47.0% 3.1% 9.3% 9.5%
H/2 Credit Partners 1,530,458 1,530,458 8,469,542 7.1%
Harrison St. Core Property 18,398,667 10,000,000 0 26.6% 2.6% 7.9% 9.1% 9.6% 9.7%
Invesco US Income 36,467,928 20,000,000 0 34.4% 2.3% 8.9% 11.5% 13.2% 12.4%
Mesa West Core Lending 14,293,010 10,000,000 0 58.5% 1.6% 7.4% 7.6% 7.8% 8.0%
Mesa West Fund III 501,734 8,000,000 2,000,000 100.0% 0.3% 4.2% 10.7% 11.3% 11.6%
Mesa West Fund IV 5,617,192 5,500,000 4,500,000 59.4% 2.9% 12.4% 14.5%
Prologis Europe Logistics + 7,062,065 5,000,000 0 19.7% 8.2% 13.9% 19.2% 13.6% 12.6%
Prologis US Logistics 43,365,802 15,000,000 0 16.2% 4.9% 19.5% 20.7% 19.2% 18.4%
Stockbridge Smart Mkts. 40,896,707 20,000,000 0 22.6% 1.9% 8.1% 8.1% 9.6% 11.3%
Walton St. Debt II 505,680 472,068 9,527,932 59.5% 3.3% 9.3%
Total Core $213,199,711 73.6% $134,309,585 $25,690,415 35.9% 2.6% 10.1% 11.4% 11.9% 7.3%
Value Added Funds
ABR Chesapeake VI 500,000 500,000 9,500,000 55.7%
Abacus Multi-Family III 458,445 6,979,636 520,364 32.2% -2.6% 18.5% 29.2% 37.9%
Abacus Multi-Family IV 6,978,294 6,731,839 8,268,161 55.9% -1.4% 23.8% 64.6%
Abacus Multi-Family V*** 0 0 10,000,000
Citymark Capital U.S Apartment II*** 0 0 10,000,000
Greenfield Acq. Prtnrs. VI 183,042 7,194,872 305,128 87.0% -37.4% -51.3% -30.1% -16.4% -4.1%
Greenfield Acq. Prtnrs. VII 7,262,839 8,556,885 1,443,115 38.0% 9.0% 21.9% 18.4% 18.8% 19.0%
High Street VI*** 0 0 15,000,000
Longpoint I 7,421,101 7,280,990 8,219,010 44.0% 3.4% 38.7%
Miller Global VII 351,151 6,006,795 1,493,205 76.3% -7.1% -26.3% 3.1% 9.9% 13.0%
Miller Global VIII 1,820,817 3,854,641 1,145,359 48.7% 5.8% 7.5% 9.3%
Rubenstein III 4,173,219 4,132,743 867,257 61.6% 2.2% 1.1% 7.5%
Stockbridge Value II 2,740,268 6,882,216 617,784 53.0% 3.9% 14.7% 18.6% 19.0%
Stockbridge Value III 6,245,264 6,376,056 3,623,944 60.7% 0.9% 9.5% 3.4%
Total Value Added $38,134,440 13.2% $64,496,673 $71,003,327 52.0% 2.8% 17.0% 19.2% 19.6% 14.5%
Opportunistic Funds
Alcion IV*** 0 0 10,000,000
Blackstone RE Fund VII 3,706,124 6,450,329 1,049,671 58.8% 1.1% 11.9% 11.2% 10.9% 18.0%
Blackstone RE Fund IX 759,398 766,100 3,733,900 76.2% -0.4% -0.4%
Lubert-Adler VII 10,400,932 11,410,223 1,089,777 66.2% 1.1% 2.9% 9.3% 8.3% 6.2%
Lubert-Adler VII-B 7,818,689 6,750,000 3,250,000 62.4% 8.2% 19.9% 13.4%
Moorfield III * 3,071,547 4,685,400 0 42.0% 3.8% 2.9% 22.7% 21.5%
Patron V* 2,807,995 3,257,907 2,199,093 46.0% 7.1% 11.2% 29.2% 22.0%
Rockw ood Fund VIII 31,230 13.3%
Walton St. VII 3,062,599 6,817,308 3,182,692 56.1% 0.9% 0.0% 4.6% 8.5% 14.1%
Walton St. VIII 6,554,310 5,135,911 4,864,089 59.8% 3.2% 10.7% 15.8%
Total Opportunistic 38,212,824 13.2% 45,273,178 29,369,222 59.5% 3.4% 8.4% 12.1% 12.4% 18.1%
Total Portfolio Investments $289,546,975 100.0% $244,079,436 $126,062,964 41.9% 2.8% 10.7% 12.4% 12.6% 8.7%
NCREIF ODCE - Gross of Fees 1.5% 5.3% 7.1% 9.0% 6.8%
EPRA/NAREIT All Equity REIT Total Return 0.1% 28.7% 10.2% 8.8% 7.5%
+-Euro exchange rate as of 12-31-2019 - 1.1227 See Glossary for Index Definitions
***No capital called as of 12/31/2019.
Time Weighted Returns - Gross of Fees
Portfolio Investments
*-GBP exchange rate as of 12-31-2019 - 1.3269
For Institutional Investor use only. Proprietary & Confidential. 36
Portfolio Summary, Net of Fees For the Period Ended 12/31/2019
Market Value
Manager
Projected
Net IRR
Current
Value
Net IRR
Manager
Projected
Net Equity
Multiple
Current
Value Net
Equity
Multiple Qtr. 1 Year 3 Years 5 Years
Since
Incept.
Core Funds
Abacus Core I $10,855,699 8.9% 10.4% 1.7x 1.6x -2.1% 6.1% 8.3% 10.4% 10.4%
Blackstone Property Partners 33,704,769 * 8.0% * 1.1x 2.3% 7.6% 8.0%
H/2 Credit Partners Ltd. 1,530,458 * 5.0% * 1.5x 5.4%
Harrison St. Core Property 18,398,667 * 9.0% * 1.6x 2.4% 7.1% 8.2% 8.8% 8.9%
Invesco US Income 36,467,928 * 11.7% * 1.7x 2.1% 7.8% 10.4% 12.0% 11.3%
Mesa West Core Lending 14,293,010 * 6.7% * 1.3x 1.4% 6.5% 6.8% 6.9% 7.1%
Mesa West Fund III 501,734 9.0% 8.9% 1.3x 1.3x 0.3% 3.5% 8.4% 9.0% 6.5%
Mesa West Fund IV 5,617,192 14.0% 7.2% 1.1x 1.1x 2.1% 8.2% 7.8%
Prologis Europe Logistics + 7,062,065 * 10.1% * 1.6x 7.2% 11.0% 16.0% 10.7% 9.6%
Prologis US Logistics 43,365,802 * 16.0% * 2.6x 4.3% 16.8% 17.7% 16.6% 16.0%
Stockbridge Smart Mkts. 40,896,707 * 10.3% * 1.7x 1.7% 7.4% 7.5% 9.0% 10.6%
Walton St. Debt II 505,680 9.0% 14.3% 1.3x 1.1x 2.5% 7.0%
Total Core $213,199,711 * 7.3% * 1.4x 2.3% 8.6% 9.9% 10.4% 6.2%
Value Added Funds
ABR Chesapeake VI 500,000 12.0% n/a 1.7x n/a
Abacus Multi-Family III 458,445 27.1% 26.1% 1.7x 1.8x -2.5% 12.8% 21.4% 3.0%
Abacus Multi-Family IV 6,978,294 12.8% 17.6% 1.6x 1.2x -1.7% 15.0% 32.9%
Abacus Multi-Family V# 0
Citymark Capital U.S Apartment II# 0
Greenfield Acq. Ptrnrs. VI 183,042 10.5% 10.1% 1.4x 1.3x -32.0% -47.2% -27.6% -15.3% -4.8%
Greenfield Acq. Ptrnrs. VII 7,262,839 14.1% 13.7% 2.0x 1.5x 6.9% 16.5% 14.1% 14.3% 13.9%
High Street VI# 0
Longpoint I 7,421,101 15.0% 24.4% 2.0x 1.1x 1.9% 26.5%
Miller Global VII 351,151 14.9% 14.5% 1.4x 1.3x -5.4% -20.6% -7.5% -0.3% 3.3%
Miller Global VIII 1,820,817 8.7% 6.1% 1.3x 1.1x 5.0% 4.0% 3.4%
Rubenstein III 4,173,219 10.0% 0.1% 1.7x 1.0x 1.8% -1.0% -0.6%
Stockbridge Value II 2,740,268 14.6% 14.0% 1.5x 1.4x 3.0% 11.5% 14.8% 13.7%
Stockbridge Value III 6,245,264 19.9% 0.1% 0.9x 1.0x 0.2% 5.7% -1.9%
Total Value Added 38,134,440 14.9% 1.4x 1.9% 11.4% 13.0% 13.6% 9.2%
Opportunistic
Alcion IV# 0
Blackstone VII 3,706,124 16.3% 16.6% 1.8x 1.7x 0.8% 10.7% 10.0% 9.7% 16.0%
Blackstone IX 759,398 0.0% n/a 1.7x n/a -0.4% -0.4%
Lubert-Adler VII 10,400,932 9.5% 6.5% 1.6x 1.3x 0.9% 2.0% 8.4% 5.9% -1.0%
Lubert-Adler VII-B 7,818,689 18.0% 11.4% 1.9x 1.2x 5.3% 14.4% 11.0%
Moorfield III ** 3,071,547 19.0% 22.3% 1.6x 1.6x 3.7% 2.5% 21.8% 20.3%
Patron V 2,807,995 13.0% 13.4% 1.4x 1.3x 7.1% 7.1% 19.9% 6.2%
Rockw ood Fund VIII 31,230 19.1% 19.0% 1.6x 1.9x 7.2%
Walton St. VII 3,062,599 12.0% 11.5% 1.5x 1.5x 0.3% -2.2% 2.6% 6.6% 12.1%
Walton St. VIII 6,554,310 14.0% 11.6% 1.5x 1.2x 2.8% 9.0% 13.4%
Total Opportunistic 38,212,824 13.9% 1.5x 2.7% 6.3% 10.3% 10.4% 12.5%
Total Portfolio Investments $289,546,975 8.8% 1.4x 2.3% 8.7% 10.3% 10.6% 7.1%
Total Net of ORG Fees 2.3% 8.6% 10.3% 10.5%
SBCERS Benchmark 1.2% 6.9% 6.7% 6.5% 6.6%
NCREIF ODCE Index - Net of Fees 1.3% 4.4% 6.1% 8.0% 5.8%
NOTES: nm-Not meaningful # - No capital calls as of 12-31-2019
**-GBP exchange rate as of 12-31-2019 -1.3269 +-Euro exchange rate as of 12-31-2019 -1.1227 See Glossary for Index Definitions
* - Open ended funds do not provide IRR or Equity Multiple data
Time Weighted Returns - Net of Fees
Portfolio Investments
For Institutional Investor use only. Proprietary & Confidential. 37
Distribution Yield—Core Funds Only
Qtr. 1 Year
Core Funds
Abacus Core I 0.8% 3.7%
Blackstone Property Partners 0.4% 1.8%
Harrison Street Core 1.3% 5.0%
Invesco US Income 1.3% 5.3%
Mesa West Core Lending 1.3% 6.4%
Mesa West Fund III 26.5% 29.5%
Mesa West Fund IV 1.4% 5.8%
Prologis US Logistics 0.7% 3.5%
Prologis Europe Logistics 0.9% 4.3%
Stockbridge Smart Markets 1.0% 4.2%
Walton Street Debt II 0.0% 0.0%
Total Core 1.0% 3.9%
Total Open End Funds/Investments 1.0% 3.9%
Portfolio Investments Distribution Yield
SBCERS Current Portfolio-Based on Market Value
Portfolio Summary, Distribution Yield For the Period Ended 12/31/2019
For Institutional Investor use only. Proprietary & Confidential. 38
Portfolio Cash Flows Summary For the Period Ended 12/31/2019
Return of Return ofPeriod Capital Operating Capital Capital Net InvestmentsEnding Contributions Contributions (Temporary) (Permanent) Income Distributions Appreciation Market Value
2006 $42,184,771 $0 $0 $0 $1,871,724 ($4,417,748) $3,075,051 $42,713,798
2007 4,086,337 2,225,620 (2,427,596) 3,890,806 50,488,965
2008 4,734,386 2,108,439 (4,093,031) (9,489,764) 43,748,995
2009 4,356,984 2,053,150 (1,374,884) (15,384,842) 33,399,403
2010 18,773,803 (521,748) 2,391,605 (2,390,499) 5,636,060 57,288,624
2011 27,931,807 23,311 (1,037,506) (39,781,153) 1,225,424 (959,538) 2,588,270 47,279,239
2012 54,276,203 97,253 (4,209,254) (2,133,163) 2,600,909 (1,890,510) 6,506,565 102,527,242
2013 29,194,174 197,389 (3,151,978) (8,665,590) 3,994,179 (5,367,606) 8,183,268 126,911,078
2014 53,741,963 643,052 (1,805,721) (3,890,052) 5,795,686 (7,793,644) 14,208,696 187,811,058
2015 28,155,052 579,733 (4,542,776) (10,821,692) 8,708,663 (14,087,633) 14,084,085 209,869,392
2016 27,583,760 678,820 (2,823,237) (7,271,366) 10,270,678 (12,284,756) 11,531,295 237,554,586
2017 30,399,695 1,152,660 (2,466,319) (44,032,113) 10,977,757 (12,392,728) 17,493,838 238,614,136
2018 37,862,416 1,058,539 (4,059,778) (16,052,046) 9,513,447 (14,114,886) 16,119,688 268,941,517
Q1 2019 6,081,859 318,028 (262,639) (2,749,008) 1,482,039 (3,420,224) 2,674,123 273,065,695
Q2 2019 17,693,487 236,131 (1,165,846) (2,875,953) 2,025,175 (3,670,441) 5,125,272 290,433,520
Q3 2019 8,582,840 1,128,909 (332,248) (3,082,148) 2,187,746 (7,856,267) 3,487,290 294,549,642
Q4 2019 9,900,390 319,303 (1,302,823) (11,007,445) 2,015,909 (9,548,299) 4,620,298 289,546,975
Total for
2019 42,258,576 2,002,372 (3,063,556) (19,714,554) 7,710,870 (24,495,232) 15,906,983 289,546,975
Total Cash
Flows $405,539,927 $6,433,129 ($27,160,124) ($152,883,476) $71,448,150 ($108,090,292) $94,349,999 $289,546,975
Portfolio Cash Flows
*Note: Totals prior to 2015 include CBRE Value 5. Starting in Q1 2015 the liquidated fund was removed.
For Institutional Investor use only. Proprietary & Confidential. 39
Investments Cash Flows Summary For the Period Ended 12/31/2019
Quarterly Investment Cash Flows
Return of Return ofBeginning Capital Operating Capital Capital Net Ending
Investment Market Value Contributions Contributions (Temporary) (Permanent) Income Distributions Appreciation Market Value
Core Funds
Abacus Core I $11,175,073 $0 $0 $0 $0 $110,724 ($87,059) ($343,039) $10,855,699
Blackstone Property Partners 32,941,636 146,785 - - - 35,333 (146,785) 727,800 33,704,769
H/2 Credit Partners 15,304,581 - - - (8,469,542) - (5,304,581) - 1,530,458
Harrison St. Core Prop. 17,990,417 178,383 34,497 - - 197,818 (232,101) 229,653 18,398,667
Invesco US Income 35,722,205 382,986 92,319 - - 387,659 (459,543) 342,302 36,467,928
Mesa West Core Lending 14,053,945 230,593 - - - 199,292 (190,746) (74) 14,293,010
Mesa West Fund III 826,868 - - (194,034) - 1,662 (132,898) 136 501,734
Mesa West Fund IV 4,595,893 1,000,000 - - - 102,833 (76,041) (5,493) 5,617,192
Prologis Europe Logistics 6,621,770 28,940 - - - 73,645 (65,105) 402,815 7,062,065
Prologis US Logistics 41,877,808 - - - - 434,578 (299,136) 1,352,553 43,365,802
Stockbridge Smart Mkts. 40,200,115 412,750 - - - 412,750 (412,750) 283,842 40,896,707
Walton St. Debt II 494,845 - - - (1,377) 12,237 (25) - 505,680
Total Core $221,805,156 $2,380,437 $126,816 ($194,034) ($8,470,919) $1,968,531 ($7,406,771) $2,990,495 $213,199,711
Value Added Funds
ABR Chesapeake VI 0 500,000 - - - (21,398) - 21,398 500,000
Abacus Multi-Family III 1,013,450 - 134,259 - - (55,632) (671,296) 37,664 458,445
Abacus Multi-Family IV 5,488,564 1,668,325 - - - (40,932) (62,928) (74,735) 6,978,294
Greenfield Acq. Prtnrs. VI 366,083 - - - (41,689) (13,008) (41,370) (86,974) 183,042
Greenfield Acq. Prtnrs. VII 6,867,084 - - - (37,344) (6,044) (41,098) 480,241 7,262,839
Longpoint Realty I 5,802,349 1,550,000 - - - 32,493 (55,282) 91,541 7,421,101
Miller Global VII 377,256 - - - - (6,488) (6,022) (13,595) 351,151
Miller Global VIII 2,818,584 84,375 - - (962,815) (32,514) (261,308) 174,495 1,820,817
Rubenstein III 4,097,924 - - - - (23,829) - 99,124 4,173,219
Stockbridge Value II 4,286,231 - - - (1,004,231) 47,012 (647,110) 58,366 2,740,268
Stockbridge Value III 3,754,863 2,500,000 - - - 15,877 (16,769) (8,707) 6,245,264
Total Value Added $34,872,388 $6,302,700 $134,259 $0 ($2,046,079) ($104,463) ($1,803,183) $778,818 $38,134,440
Opportunistic
Blackstone RE Fund VII 4,130,708 - 10,681 - (206,198) 24,715 (262,723) 8,942 3,706,124
Blackstone RE Fund IX 306,881 463,356 - (12,043) - (25,877) (5,230) 32,310 759,398
Lubert-Adler VII 10,309,003 - - - - (6,055) - 97,984 10,400,932
Lubert-Adler VII-B 7,423,090 - - - - 56,989 - 338,611 7,818,689
Moorfield III 2,961,278 - - - - 77,613 - 32,656 3,071,547
Patron V 2,299,880 357,850 - - (20,908) (33,436) - 204,610 2,807,995
Rockwood Fund VIII 33,636 - - - - (297) - (2,109) 31,230
Walton Street VII 3,366,899 - 20,798 - (263,342) 36,776 (70,392) (28,140) 3,062,599
Walton Street VIII 7,040,724 396,047 26,749 (1,096,746) - 21,414 - 166,122 6,554,310
Total Opportunistic $37,872,098 $1,217,253 $58,228 ($1,108,789) ($490,448) $151,841 ($338,345) $850,986 $38,212,824
Total Portfolio $294,549,642 $9,900,390 $319,303 ($1,302,823) ($11,007,445) $2,015,909 ($9,548,299) $4,620,298 $289,546,975
For Institutional Investor use only. Proprietary & Confidential. 40
Management Fee Savings
One Time
Savings
Annual
Savings Comments
Core Funds
Abacus Core I $25,000 $0 Three month fee break.
Blackstone Property Partners
H/2 Credit Partners
Harrison Street Core 30,000 30% reduction in fees over life of investment.
Invesco US Income 40,000 20% reduction in fees over life of investment.
Mesa West Core Lending 30,000 Founding investor fee of 0.75% on investeed capital for
initial 2 years and 0.80% on invested capital thereafter.
Standard fee is 1.10% on invested capital.
Mesa West Fund III 15,000 Reduced management fees by 0.15% over life of
investment. Savings of $15,000 per year during investmet
period and up to $10,000 per year afterwards.
Mesa West Fund IV 15,000 Reduced management fees by 0.15% over life of
investment. Savings of $15,000 per year during investmet
period and up to $10,000 per year afterwards.
Prologis US Logistics
Prologis Europe Logistics
Stockbridge Smart Markets 80,000 40% reduction in fees over life of investment.
Walton Street Debt II 306,025 No fees on commitment equals a savings of $270,000 and
.25 basis point discount for 3 years equals a savings of
$36,096.
Total Core $331,025 $210,000
Value Added Funds
ABR Chesapeake VI
69,300 Fee reduction of 0.37% of committed capital and invested
capital.
Abacus Multi-Family III
Abacus Multi-Family IV
Abacus Multi-Family V
37,500 First close investors will pay no management fees for the
first 3 months.
Greenfield Acquisition Partners VI 18,750 Founding investor fee reduction for first year of 0.25% of
committed capital.
Greenfield Acquisition Partners VII 18,750 Founding investor fee reduction for first year of 0.25% of
committed capital.
High Street VI
Longpoint Realty Fund I 77,500 Fee reduction of 0.50% of committed capital and invested
capital.
Miller Global VII
Miller Global VIII
Rubenstein III
Stockbridge Value II
Stockbridge Value III 35,000 Reduced management fees annually by 0.35% over life of
investment.
Total Value Added $144,300 $112,500
ORG Selected Investments
Management Fee Savings For the Period Ended 12/31/2019
For Institutional Investor use only. Proprietary & Confidential. 41
Management Fee Savings—Continued
One Time
Savings
Annual
Savings Comments
Opportunistic Funds
Alcion IV
Blackstone RE Fund VII 17,500 Three month fee break.
Blackstone RE Fund IX 50,000 Four month fee break.
Lubert-Adler VII 56,250 Reduced management fees by 0.25% during 3 year
commitment period.
Lubert-Adler VII-B 225,000 No fees on commitment for 18 months.
Moorfield III 37,500 50% reduction in fees over life of investment.
Patron V 96,200 Founding investor fee break and will not pay fees for the
first year (€87,500 with an exchange rate of 1.0994 as of
5/31/2015)
Walton Street VII 40,000 One time fee savings.
Walton Street VIII
Total Opportunistic $484,950 $37,500
Total Portfolio $960,275 $360,000
ORG Selected Investments
Management Fee Savings For the Period Ended 12/31/2019
For Institutional Investor use only. Proprietary & Confidential. 42
Market Overview
For the Period Ended 12/31/2019
During the fourth quarter of 2019, U.S. Real GDP grew by 2.1% which was on
par with the third quarter 2.1% GDP growth.
Core real estate returns continue to be increasingly income dependent as
seen with the NFI-ODCE where the 1.51% gross return for the fourth quarter
was comprised of 1.04% income return and 0.47% appreciation return. The
total 5.34% one year gross return, marking the lowest one year gross return
since ODCE returned –6.0% in the second quarter of 2010.
During the fourth quarter, NFI-ODCE investor net cash flows from
contributions, distributions, and redemptions was approximately $2.5 million.
This was the first quarter of positive net cash flow after four consecutive
quarters of negative net investor cash flows. Distributions and redemptions
for the quarter were $4.92 billion, which represents a $751.6 million decrease
from last quarter.
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
1Q11 1Q12 1Q13 1Q14 1Q15 1Q16 1Q17 1Q18 1Q19
U.S. Real GDP: Percent Change From Preceding Quarter
Source: U.S. Bureau of Economic Analysis
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
1Q15 4Q15 3Q16 2Q17 1Q18 4Q18 3Q19
NFI-ODCE Quarterly Returns
Gross Income Return Gross Appreciation ReturnSource: NCREIF
-16.0%
-12.0%
-8.0%
-4.0%
0.0%
4.0%
8.0%
-$3,000
-$2,000
-$1,000
$0
$1,000
$2,000
$3,000
$4,000
OD
CE
Quart
erly G
ross T
ota
l R
etu
rn
Net O
DC
E C
apital F
low
s ($ in
mill
ions)
Net ODCE Flows vs. ODCE Performance
Net Cash Flow Gross Total ReturnSource: NCREIF
For Institutional Investor use only. Proprietary & Confidential. 43
Market Overview
For the Period Ended 12/31/2019
As of year-end, the debt markets continue to remain more accommodative to industrial and apartment assets. According to the Mortgage Bankers Association,
commercial and multifamily mortgage bankers closed a record $600.6 billion of loans in 2019. Commercial bank portfolios were the leading capital source for
originated loans in 2019 with $179.8 billion of originations. The government sponsored enterprises (GSEs - Fannie Mae and Freddie Mac) had the second
highest volume at $139.1 billion, followed by commercial mortgage-backed securities issuers, life insurance companies and pension funds, and REITS,
mortgage REITS and investment funds.
2007 2019
5.2%1
4.2%2
10.3%1
1.1%2
4.0% 1.9%
Overall 5.0% 4.3%
Office 4.7% 4.1%
Industrial 5.8% 4.4%
Retail 5.8% 4.6%
Apartments 4.4% 4.2%
190 basis points 230 basis points
LTV: Commercial Loans5
70-75% 62%
DSCR: Debt Service Coverage Ratio5
1.3x 1.9x
$510 Billion $600 Billion
Office 89% 90%
Industrial 93% 97%
Retail 94% 93%
Apartments 92% 94%12007 Net ODCE Returns - 1 year ending 12/31/2007
22019 Net ODCE Returns - 1 year ending 12/31/2019
3Data Provided by Board of Governors of the Federal Reserve System
4Data Provided by NCREIF as of 12/31/2007 and 12/31/2019
5Data Provided by Real Capital Analytics, MSREI Strategy, as of 12/31/2019
6Data Provided by Mortgage Bankers Association, as of 12/31/2019
Debt Originations6
Occupancy7
Income Return
Appreciation Return
10 Year Treasury Rate3
Cap Rates4
Cap Rate Spread over Treasuries
For Institutional Investor use only. Proprietary & Confidential. 44
Market Overview - Multi-Family
For the Period Ended 12/31/2019
Apartment demand has continued as the unemployment rate for December 2019 was 3.5% as compared to 3.9% at the same point in 2018. The labor force
participation rate was 63.2% increasing slightly from 63.0% over the same twelve-month period. (U.S. Bureau of Labor Statistics) The increases in employment
levels are generally accretive to the apartments sector as it increases the number of people who can afford apartments. While job growth saw an increase, the
U.S. homeownership rate stayed relatively flat at 64.9% from 64.6% in December 2018. (U.S. Census Bureau) While this level is below the historical average of
65.6%, the homeownership rate has increased significantly since the low point of 63.7% in 2015. All else being the same, increasing levels of homeownership
decreases multifamily demand and poses a threat to the sector. As a result, ORG focuses on multifamily assets with price points that are significantly more
attractive than comparable housing alternatives.
Rental growth for the fourth quarter was –0.1% which was lower than the 0.7% figure reported for 3Q 2019 but slightly higher than the –0.2% figure reported for
4Q 2018. This was the fourth consecutive fourth quarter to generate negative rent growth. (CoStar)
A significant demand driver for multifamily this cycle has been the large amount of student loans that are delaying many Americans from purchasing homes.
The amount of student loans outstanding was $480 billion as of 4Q 2005. As of 4Q 2019, the figure is now $1.64 trillion. (Board of Directors of the Federal Re-
serve System) ORG believes student loan debt will continue to delay homeownership and support multifamily demand into the near-term future. U.S.
homeownership has been below the long term average since the Great Recession in 2008/2009.
60%
61%
62%
63%
64%
65%
66%
67%
68%
69%
70%
U.S. Homeownership
U.S. Howeownership Rate Long Term Average
Source: U.S. Census Bureau
For Institutional Investor use only. Proprietary & Confidential. 45
Market Overview - Multi-Family
For the Period Ended 12/31/2019
5.0%
5.5%
6.0%
6.5%
7.0%
7.5%
8.0%
$950
$1,050
$1,150
$1,250
$1,350
$1,450
Vacan
cy
Multi-
Fam
ily M
ark
et R
ent ($
/Unit)
Vacancy and Market Rent
Market Rent Vacancy 15-Year Historical VacancySource: Costar
0
50
100
150
200
250
300
350
400
1Q
04
4Q
04
3Q
05
2Q
06
1Q
07
4Q
07
3Q
08
2Q
09
1Q
10
4Q
10
3Q
11
2Q
12
1Q
13
4Q
13
3Q
14
2Q
15
1Q
16
4Q
16
3Q
17
2Q
18
1Q
19
4Q
19
Units (in
Thousands)
Multi-Family Supply and Demand
12 Mo. Supply 12 Mo. Demand 15-Year Average DemandSource: Costar
$-
$50
$100
$150
$200
$250
Bill
ion
s
U.S. Multi-Family Transaction Volumes
Garden Style Transaction Volume Mid/Highrise Transaction Volume
Source: Real Capital Analytics
For Institutional Investor use only. Proprietary & Confidential. 46
Market Overview - Industrial
For the Period Ended 12/31/2019
The U.S. industrial market continues its strong run as the integration between retail and industrial continues and e-commerce rises. As e-commerce continues
to grow and increase its market share, much of the value that was once placed on traditional retail has been transferred to industrial assets. In order to stay
competitive retailers must continue to adapt and modernize their supply chains in accordance. E-commerce retail sales as a percentage of total retail sales
continues to climb as the figure reached 11.4% during 4Q 2019. (U.S. Census Bureau)
Third quarter transaction activity for industrial increased to $36.4 billion representing a 12% increase from 4Q 2018, according to Real Capital Analytics.
ORG is monitoring the ongoing tension between the U.S. and many of its trading partners in the so-called “Trade War” as 2019 U.S. imported goods decreased
1.7% to $2.52 trillion (U.S. Census Bureau). A global trade war could significantly impair industrial real estate, especially distribution centers located near large
ports. The chart below of a sample supply chain provided by Green Street Advisors highlights industrial real estate ’s key roles in both e-commerce as well as
in-store retail and its reliance on both global and domestic trade.
For Institutional Investor use only. Proprietary & Confidential. 47
Market Overview - Industrial
For the Period Ended 12/31/2019
4.0%
5.0%
6.0%
7.0%
8.0%
9.0%
10.0%
11.0%
$5.00
$6.00
$7.00
$8.00
$9.00
Vacancy
Inustr
ial M
ark
et R
ent ($
/SF
)
Vacancy and Market Rent
Market Rent Vacancy 15-Year Average VacancySource: Costar
-300
-200
-100
0
100
200
300
400
1Q04 3Q05 1Q07 3Q08 1Q10 3Q11 1Q13 3Q14 1Q16 3Q17 1Q19
Million SF Industrial Supply and Demand
12 Mo. Supply 12 Mo. Demand 15-Year Average Demand
Source: Costar
$-
$20
$40
$60
$80
$100
$120
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Bill
ion
s
U.S. Industrial Transaction Volumes
Flex Industrial Transaction Volume Warehouse Transaction Volume
Source: Real Capital Analytics
For Institutional Investor use only. Proprietary & Confidential. 48
Market Overview - Office
For the Period Ended 12/31/2019
The office market continues to show strength but there has been signs that indicate the momentum is starting to shift. For example, leasing over the past couple
of years has been driven by large technology companies and the emergence of coworking as a significant source of demand. Since the beginning of 2017, 22%
of net absorption was attributable to either coworking or the 15 largest tech firms. Coworking in particular has seen more than a third of the exposure in the
gateway markets. The coworking net absorption continues to increase but still remains under 2% of the overall office occupancy (CoStar). ORG continues to
monitor the impact of coworking and minimize client exposure due to the inherent risks of mismatched asset and liability terms and durations.
The U.S. Unemployment rate hit a low of 3.5% as of December 2019. This is the lowest reported figure since December of 1969 and highlights significant
demand for office space. (U.S. Bureau of Labor Statistics) Vacancy rates continue to remain at record lows with the current vacancy rate at 9.8% compared to
the 13-year historical average 11.2%. Market rents continue to increase and ended the quarter at $34.23 per square foot compared to the 13-year historical av-
erage of $28.50 per square foot. (CoStar)
The national office transaction volume continues to decrease since the previous high at $43.3 million in the fourth quarter of 2015. The current quarter
transaction volume was $41.7 billion, marking a decreased of 2% compared to the same quarter a year ago. Suburban transactions continue to outpace urban
with an approximately 64% / 36% split during the fourth quarter. (Real Capital Analytics)
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
Jan
-48
Aug
-51
Mar-
55
Oct-
58
May-6
2
De
c-6
5
Jul-
69
Feb-7
3
Sep
-76
Apr-
80
No
v-8
3
Jun
-87
Jan
-91
Aug
-94
Mar-
98
Oct-
01
May-0
5
De
c-0
8
Jul-
12
Feb-1
6
Sep
-19
U.S. Unemployment
Unemployment Rate Historical Average
Source: U.S. Bureau of Labor Statistics
For Institutional Investor use only. Proprietary & Confidential. 49
Market Overview - Office
For the Period Ended 12/31/2019
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
$22.00
$26.00
$30.00
$34.00
$38.00
1Q06 3Q07 1Q09 3Q10 1Q12 3Q13 1Q15 3Q16 1Q18 3Q19
Vacancy
Offic
e M
ark
et R
ent ($
/SF
)
Vacancy and Market Rent
Market Rent Vacancy 13-Year Average VacancySource: Costar
-60
-40
-20
0
20
40
60
80
100
120
140
1Q06 3Q07 1Q09 3Q10 1Q12 3Q13 1Q15 3Q16 1Q18 3Q19
Million SF Office Supply and Demand
12 Mo. Supply 12 Mo. Demand 13-Year Average Demand
Source: Costar
$-
$50
$100
$150
$200
$250
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Bill
ion
s
U.S. Office Transaction Volumes
CBD Transaction Volume Suburban Transaction Volume
Source: Real Capital Analytics
For Institutional Investor use only. Proprietary & Confidential. 50
Market Overview - Retail
For the Period Ended 12/31/2019
Fourth quarter U.S. retail sales increased by 0.4% compared to the third quarter and 3.8% compared 4Q 2018. (U.S. Census Bureau)
Retail store closures and bankruptcies continue to plague the sector. During the quarter, Destination Maternity, the world ’s largest retailer for maternity wear
filed for bankruptcies, adding so a list of 2019 retail bankruptcies that includes Forever 21 and Barneys New York. (CNBC) Department stores sales volume con-
tinue their decline with 4Q 2019 posting a –5.1% year-over-year decrease. (U.S. Census Bureau) ORG has taken many calculated steps to limit client exposure
to retail that competes directly with e-commerce and as a result has avoided malls.
Despite deteriorating fundamentals, CoStar reports that retail vacancies remained at 4.5% during the fourth quarter.
0%
2%
4%
6%
8%
10%
12%
$-
$30
$60
$90
$120
$150
$180
Quart
erly E
-Com
merc
e S
ale
s
($B
illio
ns)
Quarterly E-Commerce Sales
E-Commerce Sales E-Commerce as a % of Total Retail Sales
Source: U.S. Census Bureau
$-
$10
$20
$30
$40
$50
$60
$70
Bill
ion
s
Quarterly Department Store Sales
Source: U.S. Census Bureau
-42.3% Decrease since 1Q 2000
For Institutional Investor use only. Proprietary & Confidential. 51
Market Overview - Retail
For the Period Ended 12/31/2019
4.0%
5.0%
6.0%
7.0%
8.0%
$17.00
$18.00
$19.00
$20.00
$21.00
$22.00
1Q06 3Q07 1Q09 3Q10 1Q12 3Q13 1Q15 3Q16 1Q18 3Q19
Vacancy
Reta
il M
ark
et R
ent ($
/SF
)
Vacancy and Market Rent
Market Rent Vacancy 13-Year Average VacancySource: Costar
0
50
100
150
200
250
1Q06 3Q07 1Q09 3Q10 1Q12 3Q13 1Q15 3Q16 1Q18 3Q19
Million SF Retail Supply and Demand
12 Mo. Supply 12 Mo. Demand 13-Year Average Demand
Source: Costar
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
$200
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Bill
ion
s
U.S. Retail Transaction Volumes
Shop Transaction Volume Center Transaction Volume
Source: Real Capital Analytics
For Institutional Investor use only. Proprietary & Confidential. 52
Property Type Diversification—Compared to Indexes
Portfolio Composition by Market Values For the Period Ended 12/31/2019
SBCERS Current Portfolio
• The portfolio is well diversified by property type.
• Compared to the NCREIF - ODCE, SBCERS’ portfolio is overweighed in the
Industrial sector and underweighted in Office and Retail sectors.
• ORG expects to maintain overweight to industrial and underweight to retail and
office due to sector outlooks.
• ORG is considering increasing apartment exposure due to relative attractions of
the sector.
Residential: 1.3% Mixed Use: 0.2%
Mortgages: 0.1% Common Stock: 0.3%
Other Diversification—2% Comments
SBCERS—US Only Compared to Indexes
Industrial34%
Office25%
Retail9%
Hotel3%
Self Storage
1%
Assisted Living
2%
Apartments24%
Other2%
34%
16%
26%
20%
0.2%
4%
25%
9%
24%
34%
3% 1% 2% 2%0%
5%
10%
15%
20%
25%
30%
35%
40%
Office Retail Apartments Industrial Hotel Self Storage AssistedLiving
Other
NFI ODCE SBCERS
For Institutional Investor use only. Proprietary & Confidential. 53
Investments Property Type Diversification by Percent For the Period Ended 12/31/2019
Property Type Diversification (%)
Investment Apartments Industrial Office Retail Hotel Other
Core Funds
Abacus Core I 100% 0% 0% 0% 0% 0%
Blackstone Property Partners 27% 26% 38% 9% 0% 0%
Harrison St. Core Property 22% 0% 39% 0% 0% 39%
Invesco US Income 29% 24% 31% 16% 0% 0%
Mesa West Core Lending 32% 0% 63% 3% 2% 0%
Mesa West Fund III 100% 0% 0% 0% 0% 0%
Mesa West Fund IV 32% 8% 52% 6% 2% 0%
Prologis US Logistics 0% 100% 0% 0% 0% 0%
Prologis Europe Logistics 0% 100% 0% 0% 0% 0%
Stockbridge Smart Mkts. 20% 36% 26% 18% 0% 0%
Walton Street Debt II 30% 41% 20% 0% 9% 0%
Total Core 23% 40% 25% 8% 0% 4%
Value Added Funds
ABR Chesapeake VI 0% 100% 0% 0% 0% 0%
Abacus III 100% 0% 0% 0% 0% 0%
Abacus IV 100% 0% 0% 0% 0% 0%
Greenfield Acq. Ptrns. VI 0% 0% 100% 0% 0% 0%
Greenfield Acq. Ptrns. VII 4% 36% 14% 0% 5% 41%
Longpoint Realty I 0% 69% 0% 31% 0% 0%
Miller Global VII 0% 0% 100% 0% 0% 0%
Miller Global VIII 0% 0% 79% 0% 21% 0%
Rubenstein III 0% 0% 99% 0% 0% 1%
Stockbridge Value II 18% 41% 29% 12% 0% 0%
Stockbridge Value III 35% 41% 15% 9% 0% 0%
Total Value Added 26% 31% 24% 9% 2% 8%
Opportunistic Funds
Blackstone RE Fund VII 0% 2% 33% 6% 46% 13%
Blackstone RE Fund IX 0% 79% 5% 0% 12% 4%
Lubert-Adler VII 27% 0% 31% 15% 25% 2%
Lubert-Adler VII-B 35% 0% 8% 33% 11% 13%
Moorfield III 84% 8% 0% 0% 0% 8%
Patron V 0% 0% 16% 7% 13% 64%
Rockwood Fund VIII 0% 0% 0% 100% 0% 0%
Walton Street VII 0% 3% 47% 19% 19% 12%
Walton Street VIII 16% 5% 32% 8% 31% 8%
Total Opportunistic 24% 4% 24% 15% 22% 11%
Total Portfolio 24% 34% 25% 9% 3% 5%
NFI ODCE 26% 20% 34% 16% 0% 4%
For Institutional Investor use only. Proprietary & Confidential. 54
Geographic Diversification—Compared to Indexes
• The portfolio is well diversified by geographic location.
• The International category should increase as capital is called. Uncalled capital
for Patron V is $2.2 million.
Europe: 0.7% Multiple Countries: 1.5%
India: 0.2% United Kingdom: 0.8%
International Diversification—3%
Portfolio Composition by Market Values For the Period Ended 12/31/2019
SBCERS—Current Portfolio SBCERS—US Only to Compare to Indexes
Comments
22%
9%
7%
1%
10%9%
6%
36%
18%
10%
7%
2%
16%
11%
7%
28%
0%
5%
10%
15%
20%
25%
30%
35%
40%
Northeast Mideast EN Central WN Central Southeast Southwest Mountain Pacific
NFI ODCE SBCERSUnspecified US: 1%
For Institutional Investor use only. Proprietary & Confidential. 55
Investments Property Type Diversification by Percent For the Period Ended 12/31/2019
Geographic Diversification (%)
East North West North UnspecifiedInvestment Northeast Mideast Central Central Southeast Southwest Mountain Pacific U.S. International
Core Funds
Abacus Core I 0% 0% 17% 0% 27% 0% 48% 8% 0% 0%
Blackstone Property Partners 28% 2% 1% 0% 5% 4% 2% 45% 0% 13%
Harrison St. Core 28% 11% 11% 9% 8% 11% 8% 14% 0% 0%
Invesco US Income 8% 12% 2% 0% 18% 20% 15% 25% 0% 0%
Mesa West Core Lending 37% 24% 8% 0% 1% 2% 0% 28% 0% 0%
Mesa West Fund III 100% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Mesa West Fund IV 12% 13% 5% 6% 7% 18% 13% 26% 0% 0%
Prologis Targeted Europe 100% 0% 0% 0% 0% 0% 0% 0% 0% 0%
Prologis US Logistics 13% 4% 12% 0% 10% 12% 4% 45% 0% 0%
Stockbridge Smart Mkts. 4% 22% 4% 0% 20% 10% 0% 40% 0% 0%
Walton Street Debt II 10% 0% 0% 0% 11% 39% 20% 20% 0% 0%
Total Core 18% 10% 6% 1% 12% 10% 8% 33% 0% 2%
Value Added Funds
ABR Chesapeake VI 0% 0% 0% 0% 100% 0% 0% 0% 0% 0%
Abacus III 0% 0% 0% 1% 1% 80% 1% 17% 0% 0%
Abacus IV 9% 11% 5% 11% 12% 15% 4% 33% 0% 0%
Greenfield Acq. Ptrns. VI 65% 20% 15% 0% 0% 0% 0% 0% 0% 0%
Greenfield Acq. Ptrns. VII 10% 7% 0% 0% 42% 6% 17% 8% 10% 0%
Longpoint Realty I 29% 18% 0% 0% 37% 16% 0% 0% 0% 0%
Miller Global VII 0% 0% 0% 0% 0% 0% 46% 54% 0% 0%
Miller Global VIII 0% 0% 0% 0% 0% 27% 21% 52% 0% 0%
Rubenstein III 38% 8% 30% 0% 24% 0% 0% 0% 0% 0%
Stockbridge Value II 0% 13% 7% 8% 30% 8% 13% 21% 0% 0%
Stockbridge Value III 6% 0% 25% 0% 22% 25% 0% 22% 0% 0%
Total Value Added 14% 9% 9% 3% 26% 14% 7% 16% 2% 0%
Opportunistic Funds
Blackstone RE Fund VII 7% 2% 7% 0% 3% 3% 30% 18% 0% 30%
Blackstone RE Fund IX 13% 6% 5% 3% 14% 14% 13% 26% 0% 6%
Lubert-Adler VII 48% 5% 9% 4% 20% 2% 7% 5% 0% 0%
Lubert-Adler VII-B 2% 7% 9% 6% 54% 6% 0% 3% 13% 0%
Moorfield III 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%
Patron V 0% 0% 0% 0% 0% 0% 0% 0% 0% 100%
Walton Street VII 24% 14% 4% 16% 16% 3% 2% 18% 3% 0%
Walton Street VIII 0% 15% 9% 14% 21% 23% 6% 12% 0% 0%
Total Opportunistic 17% 7% 8% 6% 23% 7% 7% 8% 3% 14%
Total Portfolio 18% 10% 7% 2% 15% 10% 7% 27% 1% 3%
NFI ODCE 22% 9% 7% 1% 10% 9% 6% 36% 0% 0%
For Institutional Investor use only. Proprietary & Confidential. 56
Portfolio Diversification
SBCERS Investment Life Cycle Diversification SBCERS Investment Structure Diversification
Comments
• The portfolio’s stability is shown by 84% being invested in operating or stabilized properties.
• The structure of the portfolio is well diversified with Wholly Owned and Joint Ventures comprising 97%
of the portfolio.
Portfolio Composition by Market Values For the Period Ended 12/31/2019
72%
25%
1% 1% 1%
0%
20%
40%
60%
80%
100%
Wh
olly
Ow
ne
d
Join
t V
en
ture
s
Bo
nd
s
Sr.
De
bt
Su
bo
rdin
ate
dD
eb
t
Me
zza
nin
e D
eb
t
Pa
rtic
ipa
ting
Mo
rtg
ag
es
CM
BS
Pu
blic
RE
Se
curi
ty
Pri
vate
RE
OC
84%
2%7%
1%6%
0%
20%
40%
60%
80%
100%
Op
era
ting
or
Sta
bili
zed
Ren
ova
tion
Con
vers
ion
Exp
ansi
on
Initi
al L
eas
ing
Pre
-de
velo
pm
ent
Dev
elo
pm
ent
Fo
rwar
dP
urc
hase
For Institutional Investor use only. Proprietary & Confidential. 57
Portfolio Diversification–Compared to Policy Target
SBCERS Current Portfolio—Based on Market Value
Compliance with
Policy:
Policy Target Compliance For the Period Ended 12/31/2019
Comments
• The portfolio is in compliance with its sector diversification and property type targets.
• All property types are within their range except for Retail. ORG has deliberately and systematically reduced the retail exposure in
order to hedge against the decline that is currently plaguing the sector. As a result, SBCERS has no regional mall exposure and the
retail that SBCERS owns is limited to primarily grocery anchored shopping centers and urban lifestyle centers. ORG believes that
these retail assets provide SBCERS with defensive income and are more isolated to volatility in the retail sector than regional malls
or high street retail .
Property Type Diversification–Compared to Policy Target
SBCERS Current Portfolio—Based on Market Value
74%
13% 13%
92%
8% 0%0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Core Value Added Opportunistic RE Funds CommingledMortgages
PublicSecurities
Target Investment Range Current Investments
Investment Vehicle Sector Diversification
25%
9%
24%
34%
8%
0%
10%
20%
30%
40%
50%
Office Retail Apts. Industrial Other
Target Investment Range Current Investments
For Institutional Investor use only. Proprietary & Confidential. 58
Geographic Diversification–Compared to Policy Target of 85% in U.S. Markets
SBCERS Current Portfolio–Based on Market Value—U.S. 97%
Portfolio Composition by Market Values For the Period Ended 12/31/2019
Compliance with
Policy:
Comments
• The portfolio is in compliance with the property location limits.
• ORG anticipates that there should be an increase in the international component with future capital calls. Uncalled
capital for Patron V is $2.2 million.
For Institutional Investor use only. Proprietary & Confidential. 59
Investment Manager Diversification–Compared to Policy Target of 20% Committed to One Manager
SBCERS Current Portfolio–Based on Current Commitments
Portfolio Composition by Commitments For the Period Ended 12/31/2019
Compliance with
Policy:
Comments
• No investment manager exceeds the limit of
20% of the total commitment to real estate.
Investment ManagersCapital
Committed
Commitment
Percentage
Abacus Capital Group $42,500,000 12%
Alex Brow n Realty $10,000,000 3%
Alcion Ventures $10,000,000 3%
Blackstone Group 42,000,000 11%
Citymark Capital 10,000,000 3%
Greenfield Partners 17,500,000 5%
H/2 Capital Partners 10,000,000 3%
Harrison Street Real Estate 10,000,000 3%
High Street Equity Advisors 15,000,000 4%
Invesco Real Estate 20,000,000 5%
Longpoint Realty Partners 15,500,000 4%
Lubert-Adler Group 22,500,000 6%
Mesa West Capital 30,000,000 9%
Miller Global Properties 12,500,000 3%
Moorfield Group 4,685,400 1%
Patron Capital Advisors 5,457,000 1%
Prologis 20,000,000 5%
Rubenstein Properties 5,000,000 1%
Stockbridge Core Value Advisors 37,500,000 9%
Walton Street Capital 30,000,000 9%
$370,142,400 100%
Abacus Capital Group12%
Alex Brown Realty3%
Alcion Ventures3%
Blackstone Group11%
Citymark Capital3%
Greenfield Partners5%
H/2 Capital Partners3%
Harrison Street Real Estate
3%High Street Equity
Advisors4%
Invesco Real Estate5%
Longpoint Realty Partners
4%
Lubert-Adler Group6%
Mesa West Capital9%
Miller Global Properties
3%
Moorfield Group1%
Patron Capital Advisors
1%
Prologis 5%
Rubenstein Properties
1%
Stockbridge Core Value Advisors
9%
Walton Street Capital9%
For Institutional Investor use only. Proprietary & Confidential. 60
Vintage Year Diversification—Compared to Policy Target of 25% Maximum Commitment Per Year
SBCERS Current Portfolio–Based on Current Real Estate Allocation
Portfolio Composition by Commitments For the Period Ended 12/31/2019
Compliance with
Policy:
Comments
• Vintage Year represents the year SBCERS made its commitment to the investment based upon 12/31 portfolio real estate allocation.
• The over commitment in 2012 and 2013 resulted from the reinvestment of proceeds from the RREEF II liquidation in 2011.
• In 2019, $55.0 million in new commitments were made or 16.6% of the current real estate allocation.
Target 25%
14.7%
23.0%
30.7%
28.0%
22.6%
8.0% 7.7%
18.4%
15.5%16.6%
0.0%
5.0%
10.0%
15.0%
20.0%
25.0%
30.0%
35.0%
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
For Institutional Investor use only. Proprietary & Confidential. 61
Leverage Ratio–Compared to Policy Target of 65% Aggregate Leverage
Leverage
Ratio
Policy
Maximum
Core Funds
Abacus Core I 46.5%
Blackstone Property Partners 47.0%
Harrison Street Core 26.6%
Invesco US Income 34.4%
Mesa West Core Lending 58.5%
Mesa West Fund III 100.0%
Mesa West Fund IV 59.4%
Prologis Targeted Europe I 19.7%
Prologis US Logistics 16.2%
Stockbridge Smart Markets 22.6%
Walton Street Debt II 59.5%
Total Core 35.9% 50.0%
Value Added Funds
ABR Chesapeake VI 55.7%
Abacus III 32.2%
Abacus IV 55.9%
Greenfield Acquisition Partners VI 87.0%
Greenfield Acquisition Partners VII 38.0%
Longpoint Realty I 44.0%
Miller Global VII 76.3%
Miller Global VIII 48.7%
Rubenstein III 61.6%
Stockbridge Value II 53.0%
Stockbridge Value III 60.7%
Total Value Added 52.0% 65.0%
Opportunistic Funds
Blackstone RE Fund VII 58.8%
Blackstone RE Fund IX 76.2%
Lubert-Adler VII 66.2%
Lubert-Adler VII-B 62.4%
Moorfield III 42.0%
Patron V 46.0%
Walton Street VII 56.1%
Walton Street VIII 59.8%
Total Opportunistic 59.5% 75.0% +
Total Portfolio 41.9% 65.0%
Portfolio Investments
SBCERS Current Portfolio Leverage vs. Industry Standards
Comments
• The Portfolio is within the Leverage Policy’s Maximum levels for all
categories as well as the overall portfolio.
Portfolio Composition by Market Values For the Period Ended 12/31/2019
Compliance with
Policy:
SBCERS Current Portfolio-Based on Market Value
35.9
%
52.0
% 59.5
%
41.9
%50.0
%
65.0
% 75.0
%
65.0
%
C O R E V A L U E A D D E D O P P O R T U N I S T I C T O T A L
SBCERS Industry Benchmark
For Institutional Investor use only. Proprietary & Confidential. 62
Investment Size Limitation—Compared to Policy Target of 15% Total Real Estate Allocation
SBCERS Current Portfolio–Based on Current Commitments
Portfolio Composition by Commitments For the Period Ended 12/31/2019
Compliance with
Policy:
• Investment size represents an investment to
an individual commingled fund or separate
account.
• No portfolio investment exceeds 15% of the
total real estate allocation.
Comments
Abacus Capital Group12%
Alex Brown Realty3%
Alcion Ventures3%
Blackstone Group11%
Citymark Capital3%
Greenfield Partners5%
H/2 Capital Partners3%
Harrison Street Real Estate
3%High Street Equity
Advisors4%
Invesco Real Estate5%
Longpoint Realty Partners
4%
Lubert-Adler Group6%
Mesa West Capital9%
Miller Global Properties
3%
Moorfield Group1%
Patron Capital Advisors
1%
Prologis 5%
Rubenstein Properties
1%
Stockbridge Core Value Advisors
9%
Walton Street Capital9%
Private Real Estate InvestmentsCapital
Committed
Commitment
Percentage
Abacus Core Income Fund I, L.P. $10,000,000 3%
Abacus Multi-Family Partners III, L.P. 7,500,000 2%
Abacus Multi-Family Partners IV, L.P. 15,000,000 4%
Abacus Multi-Family Partners V, L.P. 10,000,000 3%
ABR Chesapeake Investors VI, LP 10,000,000 3%
Alcion Real Estate Partners Fund IV, L.P. 10,000,000 3%
Blackstone Property Partners 30,000,000 8%
Blackstone Real Estate Partners VII, L.P. 7,500,000 2%
Blackstone Real Estate Partners IX, L.P. 4,500,000 1%
Citymark Capital U.S. Apartment Fund II, L.P. 10,000,000 3%
Greenfield Acquisition Partners VI, L.P. 7,500,000 2%
Greenfield Acquisition Partners VII, L.P. 10,000,000 3%
H/2 Credit Partners, L.P. 10,000,000 3%
Harrison Street Core Property, L.P. 10,000,000 3%
High Street Real Estate Fund VI, L.P. 15,000,000 4%
Invesco U.S. Income Fund, L.P. 20,000,000 5%
Longpoint Realty Fund I, L.P. 15,500,000 4%
Lubert-Adler Fund VII, L.P. 12,500,000 3%
Lubert-Adler Fund VII-B, L.P. 10,000,000 3%
Mesa West Core Lending Fund, L.P. 10,000,000 3%
Mesa West Real Estate Income Fund III, L.P. 10,000,000 3%
Mesa West Real Estate Income Fund IV, L.P. 10,000,000 3%
Miller Global Real Estate Fund VII, LLC 7,500,000 2%
Miller Global Real Estate Fund VIII, LLC 5,000,000 1%
Moorfield Real Estate Fund III, L.P. 4,685,400 1%
Patron Capital, L.P. V 5,457,000 1%
Prologis Targeted Europe Logistics Fund 5,000,000 1%
Prologis Targeted U.S. Logistics Fund, Inc. 15,000,000 4%
Rubenstein Properties III, L.P. 5,000,000 1%
Stockbridge Smart Markets Fund, L.P. 20,000,000 4%
Stockbridge Value Fund II, L.P. 7,500,000 2%
Stockbridge Value Fund III, L.P. 10,000,000 3%
Walton Street Debt II, L.P. 10,000,000 3%
Walton Street Fund VII, L.P. 10,000,000 3%
Walton Street Fund VIII, L.P. 10,000,000 3%
$370,142,400 100%
For Institutional Investor use only. Proprietary & Confidential. 63
Real Estate Fund/Manager Monitoring
Fund Name
Certification
Checked
(Yes/No)
Significant
Events
(Yes/No)
Strategy
Change in
Investment
Last Meeting
by RE
Consultant
Comments
ABR Chesapeake Investors VI,
LP Yes No No 3/26/2020 COVID-19 Fund Update Call.
Abacus Core Income
Fund I, L.P. Yes No No 1/14/2020 Update meeting.
Abacus Multi-Family
Partners III, L.P. Yes No No 1/14/2020 Update meeting.
Abacus Multi-Family
Partners IV, L.P. Yes No No 1/14/2020 Update meeting.
Blackstone Property Partners Yes No No 4/23/2020 COVID-19 Fund Update Call.
Blackstone Real Estate
Partners VII, L.P. Yes No No 4/23/2020 COVID-19 Fund Update Call.
Greenfield Acquisition
Partners VI, L.P. Yes Yes No 4/30/2020 COVID-19 Fund Update Call.
Greenfield Acquisition
Partners VII, L.P. Yes Yes No 4/30/2020 COVID-19 Fund Update Call.
Harrison Street Core
Property, L.P. Yes No No 4/16/2020 COVID-19 Fund Update and 1Q 2020 Quarterly Update Webinar.
Invesco U.S. Income
Fund, L.P. Yes No No 3/25/2020 COVID-19 Fund Update Call.
For Institutional Investor use only. Proprietary & Confidential. 64
Fund Name
Certification
Checked
(Yes/No)
Significant
Events
(Yes/No)
Strategy
Change in
Investment
Last Meeting
by RE
Consultant
Comments
Longpoint Realty Fund I, L.P Yes No No 4/21/2020 COVID-19 Fund Update Video Call.
Lubert-Adler Fund VII, L.P. Yes No No 4/3/2020 COVID-19 Fund Update Call.
Lubert-Adler Fund VII-B, L.P. Yes No No 4/3/2020 COVID-19 Fund Update Call.
Mesa West Core
Lending Fund, L.P. Yes No No 4/14/2020 COVID-19 Fund Update Call.
Mesa West Real Estate
Income Fund III, L.P. Yes No No 4/14/2020 COVID-19 Fund Update Call.
Mesa West Real Estate
Income Fund IV, L.P. Yes No No 4/14/2020 COVID-19 Fund Update Call.
Miller Global Real
Estate Fund VII, L.P. Yes No No 4/7/2020 Annual Meeting (Video Conference).
Miller Global Real
Estate Fund VIII, L.P. Yes No No 4/7/2020 Annual Meeting (Video Conference).
Moorfield Real
Estate Fund III, L.P. Yes No No 5/1/2019 Update meeting.
Patron Capital, L.P. V Yes No No 3/26/2020 COVID-19 Fund Update Call.
Prologis European Logistics
Fund Yes No No 9/5/2019 Update meeting.
Real Estate Fund/Manager Monitoring
For Institutional Investor use only. Proprietary & Confidential. 65
Real Estate Fund/Manager Monitoring
Fund Name
Certification
Checked
(Yes/No)
Significant
Events
(Yes/No)
Strategy
Change in
Investment
Last Meeting
by RE
Consultant
Comments
Prologis Targeted
U.S. Logistics Fund, Inc. Yes No No 11/18/2019 Update meeting.
Rubenstein Properties Fund
III, LP Yes No No 3/27/2020 COVID-19 Fund Update Call.
Stockbridge Smart
Markets Fund, L.P. Yes No No 4/24/2020 COVID-19 Fund Update and 1Q 2020 Quarterly Update Webinar.
Stockbridge Value Fund II,
L.P. Yes No No 3/19/2020 COVID-19 Fund Update Call.
Stockbridge Value Fund III,
L.P. Yes No No 3/19/2020 COVID-19 Fund Update Call.
Walton Street Fund VII, L.P. Yes No No 4/2/2020 COVID-19 Fund Update Call.
Walton Street Fund VIII, L.P. Yes No No 4/2/2020 COVID-19 Fund Update Call.
For Institutional Investor use only. Proprietary & Confidential.