Presentation for: Water and Power Employees’ · 09/08/2017 · management services). Further,...
Transcript of Presentation for: Water and Power Employees’ · 09/08/2017 · management services). Further,...
Water and Power Employees’Retirement Plan
Presentation for:
August 9, 2017
Please see appendix for important disclaimers and other important information.In addition, please note that this presentation does not constitute (i) an offer to sell, or the solicitation of an offer to buy, any interests in any investment vehicle, or (ii) a solicitation for any investment advisory or asset management services ofHeitman or any of its affiliates. Any such offer or solicitation, if made, will only be made by means of a placement memorandum (in the case of an investment vehicle) or a proposed investment advisory agreement (in the case of advisory or assetmanagement services). Further, this presentation is subject to correction, completion and amendment without notice.
Table of Contents
2Table of Contents
Heitman Overview 3Investment Process and Discipline 7Market Overview 11Performance Review 17Portfolio Review & Characteristics 25Conclusion 33APPENDICES
35373941
Jerry EhlingerMANAGING DIRECTOR, PUBLIC REAL ESTATE EQUITY – NORTH AMERICAT: +1.312.425.0790 • [email protected]
John MancusoSENIOR VICE PRESIDENT, CLIENT SERVICE & MARKETING – NORTH AMERICAT: +1.312.912.6672 • [email protected]
Heitman is a Real Estate Specialist
3Heitman Overview
As of June 30, 20171. The remaining 50% is owned by a US subsidiary of Old Mutual, a publicly traded, London-based global financial services firm.
50 yearsinvesting on behalf of clients with anexclusive focus on real estate
$39 billionmanaged across three complementarybusiness units
39 partnersfrom across the Heitman platform own 50%of the company¹ and control all strategicand day-to-day operational decisions
CHICAGOLOS ANGELES
LONDONFRANKFURT
LUXEMBOURGMUNICH
WARSAWHONG KONGMELBOURNE
SEOULTOKYO
11Offices
351Employees
$34BPRIVATE EQUITY
$800MPRIVATE DEBT
$4.1BPUBLIC EQUITY
Client RelationshipsBuilt on Trust and Experience
4Heitman Overview
AUM of $38.5 billion as of June 30, 2017Heitman selected clients for inclusion in this list to indicate the scope of clients served using the following criteria:category, geographic location, size, investment style and name recognition.Only clients who have consented to their name appearing on this list have been included, however, their inclusion is notconstrued to be approval or disapproval of Heitman or its advisory services.1. Other clients include: Individual, Endowment/Foundation, Union/Taft-Hartley, Insurance, Fund of Funds, and
Sovereign Wealth Funds2. Corporate includes sub-advised and model-only portfolios
North America$23,904
72%North America
$27,899
10%Europe$3,798
18%Asia-Pacific
$6,828
TOTAL AUM BY DOMICILE
60%Public
$23,206
33%Corporate²
$12,571
7%Other¹$2,748
TOTAL AUM BY CLIENT TYPEREPRESENTATIVE CLIENT LIST
APG InvestmentsATP Real EstateBT Investment Solutions (Australia)California State Teachers’ Retirement SystemExelon CorporationGE Capital Real EstateHI Asset Management Co., LtdL-3 Communications CorporationMunich Ergo Asset Management GmbHNational Pension Service (South Korea)Navy Exchange Service Command Retirement TrustNew York State Common Retirement FundNomura Asset Management Co., Ltd.Ohio Public Employees Retirement SystemPennsylvania State Employees’ Retirement SystemProducer-Writers Guild of AmericaSompo Japan Nipponkoa Asset Management Co., Ltd.State Board of Administration of FloridaState of Wisconsin Investment BoardStichting Instituut GakSyntrus AchmeaSunsuper (Australia)Teacher Retirement System of TexasTeachers' Retirement System of the State of IllinoisThe Korean Teachers’ Credit UnionTokio Marine Asset Management Co., Ltd.
Industry experience and local expertise28 years managing real estate securities
• US since 1989• Global since 2007
On-the-ground, senior decision-makinginvestment teams in each region
27 professionals around the globe with officesin Chicago, Munich, London, Melbourne, andHong Kong
Award-winning investment strategies
• Institutional Investor US InvestmentManagement Award – REITs
• AsianInvestor Asset Management Award –Global REITs
• Lipper Fund Awards – US REITs¹
12%Global
Diversified,$493M
14%Global Focused,
$585M
35%Prime,
$1,427M
28%US Diversified,
$1,170M
2%US Focused,
$89M
9%US High
Yield,$385M
$4.1 BILLION IN AUM BY STRATEGY
Heitman Public Real Estate Equity
5Heitman Overview
As of June 30, 20171. From Thomson Reuters Lipper Awards, ©2017 Thomson Reuters. All rights reserved. Used by permission and protected by the Copyright Laws of the United States. The printing, copying, redistribution, or
retransmission of this Content without express written permission is prohibited.
Heitman’s Global Public Equity Team
6Heitman Overview
As of June 30, 20171. Jerry Ehlinger was with Heitman’s Public Securities group from 2000 to 2004; he rejoined in 2013 as Managing Director & Portfolio Manager of the North America team.2. John White began his relationship in 2007 as a Portfolio Manager at Challenger Financial Services Group, Heitman’s former strategic partner covering Asia-Pacific
Bill PogorelecDIRECTOR OF OPERATIONS
David RadziwonSR. TRADING ADMINISTRATOR
Colleen CallahanTRADING ADMINISTRATOR
Paul WilsonTRADING ADMINISTRATOR
Michael ServialRECONCILIATION ASSOCIATE
EUROPEMark Abramson
MANAGING DIRECTOR, PORTFOLIO MANAGER
ASIA-PACIFICJohn White²
MANAGING DIRECTOR, PORTFOLIO MANAGER
NORTH AMERICAJerry Ehlinger, CFA¹
MANAGING DIRECTOR, PORTFOLIO MANAGER
INVESTMENTTEAM
GLOBALINVESTMENTCOMMITTEE
227
2312
2610
Kathy SandstromSenior Managing Director
Years ExperienceFirm Tenure
21
21
Mike Moran, CFAGLOBAL INVESTMENT STRATEGY
Shruti WaghrayGLOBAL INVESTMENT ANALYSIS
Will LouxSENIOR ASSOCIATE
Tony VoASSOCIATE
Diane LehmannPORTFOLIO COORDINATOR
STRATEGY &ANALYTICS
OPERATIONS
1311
129
55
52
2424
2422
111
8<1
221
Jeff Yurk, CFAASSISTANT PORTFOLIO MANAGER
Charles Harbin, CFAASSISTANT PORTFOLIO MANAGER
Adam CristelliASSISTANT PORTFOLIO MANAGER
Mat SpencerANALYST
Gabriel HilmoeANALYST
Mark ZaharaHEAD TRADER
Vicky MadisonTRADER
1513
157
1010
62
131
1717
Karena FungASSISTANT PORTFOLIO MANAGER
Jeff Mak, CFAASSISTANT PORTFOLIO MANAGER
Masayuki OzakiSENIOR ANALYST
Philip HunterTRADER
Jacques PerdrixPORTFOLIO MANAGER, SVP
Andreas WelterPORTFOLIO MANAGER, SVP
Peter BurdettTRADER
135
158
102
194
156
164
131
51
111
Philosophy & Approach
As of June 30, 2017
7Investment Process & Discipline
$34.4 billionprivate portfolio
Experienced and localsecurities teams
Private realestate expertise
Public marketacumen
Sophisticatedportfolio
construction &risk management
Top quartileperformance
Over the long term,underlying real estate
and management’sability to affect value
drive share prices
Short-term pricinginefficiencies createalpha opportunities
Pillars of Portfolio Construction
8Investment Process & Discipline
FundamentalResearch
CompanyAnalysis
Active RiskManagement
MacroAnalysis
Summary of WPERP’s Investment GuidelinesPORTFOLIO GUIDELINES:
1. Global securities with minimum market capitalizations of $200mm at purchase, restricted to those listed on major local-countrystock exchanges. Investible markets are those within the FTSE EPRA/NAREIT Developed Index
2. Non-currency derivatives within the portfolio are not permissible without the expressed written consent of the Plan
3. Currency hedging maximum of 25% of the portfolio
4. Minimum of 50 issues quoted in at least 10 countries/regions. The maximum size of any single issue shall be the greater of 5%of the portfolio or 125% of the benchmark weight, except at no time shall any specific issue represent more than 10% of thelesser of cost or market value of the portfolio. No issue purchased in the portfolio if more than 10% of outstanding share of thatcompany are held by Heitman in the total of all accounts
5. Cash equivalent not to exceed 5% of the portfolio
6. Turnover not to exceed 150% in any twelve month period
PORTFOLIO CHARACTERISTICS:
1. Invested in broad array of countries within the FTSE EPRA/NAREIT Developed Index
2. Weighted average dividend yield on a quarterly basis to be within a +/- 0.5x range of the market as represented by the FTSEEPRA/NAREIT Developed Index
3. Market sensitivity (beta) to be no less than 0.80 and no greater than 1.20 of the market as represented by the FTSE EPRA/NAREITDeveloped Index on a 24-month rolling basis, using monthly holdings data
PERFORMANCE OBJECTIVES:
a market cycle of three-to-five years
COMPLIANCE:
9Investment Process & Discipline
PAGE INTENTIONALLY BLANK
10Investment Process & Discipline
Investment Themes & Outlook
11Market Overview
GLOBAL INVESTMENT OUTLOOK
Macro Economy
pace driven by structural headwinds
Capital Markets
continued access to equity and debt capital globally
the capital markets remain robust
Real Estate Markets
growth which drives demand for commercial real estate
of funding due to tighter regulations on banks
-2
-1
0
1
2
3
4
5
6
7
Jun-
06
Sep
-06
Dec
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Mar
-07
Jun-
07
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Dec
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Mar
-08
Jun-
08
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09
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-10
Jun-
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p-1
0D
ec-1
0M
ar-1
1Ju
n-11
Sep
-11
Dec
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Mar
-12
Jun-
12Se
p-1
2D
ec-1
2M
ar-1
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n-13
Sep
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-14
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p-1
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ec-1
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ar-1
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Sep
-15
Dec
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Mar
-16
Jun-
16Se
p-1
6D
ec-1
6M
ar-1
7Ju
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Spread L-T Avg.
DIVIDEND YIELD SPREAD TO GLOBAL BONDSFTSE EPRA/NAREIT DEVELOPED INDEX
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Jun-
07
Nov
-07
Apr
-08
Sep
-08
Feb-
09Ju
l-09
Dec
-09
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-10
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-10
Mar
-11
Aug
-11
Jan-
12Ju
n-12
Nov
-12
Apr
-13
Sep
-13
Feb-
14Ju
l-14
Dec
-14
May
-15
Oct
-15
Mar
-16
Aug
-16
Jan-
07Ju
n-17
PREMIUM/(DISCOUNT) TO NAVFTSE EPRA/NAREIT DEVELOPED INDEX
As of June 30, 2017Sources: Heitman Research, FTSEEPRA/NAREIT
NORTH AMERICA INVESTMENT OUTLOOK
Macro Economy
boost from pro-growth fiscal policies and reducedregulations
in oil while US trade policy poses additional risk
Capital Markets
investors
companies have successfully issued 30-year bonds
Real Estate Markets
trend growth as new supply remains in check
slowed given uncertainty
Investment Themes & Outlook
12Market Overview
PREMIUM/DISCOUNT TO NAV BY REGION –FTSE EPRA/NAREIT DEVELOPED INDEX
-3-2-1012345678
Jun-
06
Sep
-06
Dec
-06
Mar
-07
Jun-
07
Sep
-07
Dec
-07
Mar
-08
Jun-
08
Sep
-08
Dec
-08
Mar
-09
Jun-
09
Sep
-09
Dec
-09
Mar
-10
Jun-
10Se
p-1
0D
ec-1
0M
ar-1
1Ju
n-11
Sep
-11
Dec
-11
Mar
-12
Jun-
12Se
p-1
2D
ec-1
2M
ar-1
3Ju
n-13
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-13
Dec
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-14
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p-1
4D
ec-1
4M
ar-1
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Sep
-15
Dec
-15
Mar
-16
Jun-
16Se
p-1
6D
ec-1
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ar-1
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Spread L-T Avg.
FTSE EPRA/NAREIT NORTH AMERICADIVIDEND YIELD SPREAD TO BONDS
As of June 30, 2017Sources: Heitman Research, FTSEEPRA/NAREIT
-3
-2
-1
0
1
2
3
4
5
Jun-
06
Sep
-06
Dec
-06
Mar
-07
Jun-
07
Sep
-07
Dec
-07
Mar
-08
Jun-
08
Sep
-08
Dec
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Mar
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Jun-
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Sep
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Dec
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Mar
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p-1
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Mar
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p-1
2D
ec-1
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ar-1
3Ju
n-13
Sep
-13
Dec
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Mar
-14
Jun-
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p-1
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ec-1
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p-1
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Spread L-T Avg.
FTSE EPRA/NAREIT EUROPEDIVIDEND YIELD SPREAD TO BONDS
EUROPE INVESTMENT OUTLOOK
Macro Economy
lagged effects of QE support the economy
the Nordic and some peripheral regions (Spain/Ireland)providing better relative growth
Capital Markets
continue to cause near-term uncertainty
support capital markets
Real Estate Markets
and countries
Investment Themes & Outlook
13Market Overview
PREMIUM/DISCOUNT TO NAV BY REGION –FTSE EPRA/NAREIT DEVELOPED INDEX
As of June 30, 2017Sources: Heitman Research, FTSEEPRA/NAREIT
ASIA-PACIFIC INVESTMENT OUTLOOK
Macro Economy
performance in the short-term in Asia ex-Japan but will be apositive tailwind for Japan and Australia
currencies will positively contribute to growth later in 2017
Capital Markets
monetary conditions which will accelerate capital outflowsand reduce lending activity
Real Estate Markets
property markets; sluggish retail demand in Hong Kong andSingapore are balanced against a stronger Australian officesector
and Australia, otherwise expect stable values
Investment Themes & Outlook
14Market Overview
PREMIUM/(DISCOUNT) TO NAV BY REGION –FTSE EPRA/NAREIT DEVELOPED INDEX
0
1
2
3
4
5
6
7
Jun-
06
Sep
-06
Dec
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Mar
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Jun-
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Sep
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Spread L-T Avg
FTSE EPRA/NAREIT ASIA-PACIFICDIVIDEND YIELD SPREAD TO BONDS
As of June 30, 2017Sources: Heitman Research, FTSEEPRA/NAREIT
Interest Rates and US REITs
After initially lagging, US REITs tend to outperform following spikes in interest rates
15Market Overview
As of June 30, 2017Source: Bloomberg, Heitman US REITs = FTSE NAREIT Equity REITs Index, US Stocks = S&P 500 Index
Period Change of 10YTreasury Yield
Total Return US REITs US Stocks
Start End # ofDays
USREITs
USStocks
After30 Days
After90 Days
After180 Days
After30 Days
After90 Days
After180 Days
10/31/2001 3/14/2002 134 +118 bps 15.1% 9.4% 5.9% 4.2% 0.1% -4.3% -11.2% -20.5%6/13/2003 9/2/2003 81 +149 bps 7.9% 3.7% 3.7% 9.7% 20.4% 0.0% 5.2% 14.1%3/16/2004 5/13/2004 58 +117 bps -13.4% -1.0% 7.7% 15.0% 30.0% 2.8% -1.5% 7.1%
12/30/2008 6/10/2009 162 +189 bps -3.3% 6.8% -12.7% 17.9% 32.8% -6.2% 9.8% 18.7%10/7/2010 12/15/2010 69 +115 bps -0.8% 7.1% 6.2% 8.5% 12.0% 4.8% 4.3% 3.9%5/2/2013 9/5/2013 126 +137 bps -14.3% 4.4% 4.6% 3.1% 15.2% 1.4% 8.9% 14.4%7/8/2016 12/15/2016 160 +124 bps -8.6% 7.2% 3.7% 3.4% - 0.7% 6.0% -
Average Performance -2.5% 5.4% 2.7% 8.8% 18.4% -0.1% 3.1% 6.3%
(Dec 31st 2000 = 100)
1.0%1.5%2.0%2.5%3.0%3.5%4.0%4.5%5.0%5.5%6.0%6.5%
050
100150
200250300350400450500550600
Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Jan-15 Jan-16 Jan-17
US REIT(LHS) US Stock(LHS) US 10Y Treasury Yield(RHS)
Investing in REITs is Investing in Real Estate:Key Classification System Changes
WHAT?September 2016, stock-exchange listed real estatecompanies will be reclassified under GICS, moving fromunder the financials sector and elevated to a new 11thheadline real estate sector.
1. Based on GICS Classification and equity market capitalization of companies in the S&P Composite 1500 as of December 31, 2015
16Market Overview
Banks
Diversified Financials
Insurance
Global IndustryClassification Standard
(GICS)
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Telecom Services
Utilities
Real Estate
97% Equity REITs3% Real EstateManagement +DevelopmentCompanies¹
Enhance Asset Class Visibility
Diversify Ownership of Real Estate Equities
Promote Portfolio Diversification
WHY?Over the past 25 years, the market cap of the listed US REITindustry has grown from $9 billion to $900 billion. There arenow 26 REITs in the S&P 500, underscoring the sector’s growthand contribution to the investment universe of equity assets.
IMPLICATIONS?The creation of the new Real Estate sector in GICS will increasethe visibility of real estate investment as a distinct asset classwithin the universe of equity securities. This distinction andvisibility will empower investors, their advisors and investmentmanagers to allocate more appropriately to listed real estateequities, including listed equity REITs, in well constructeddiversified portfolios.
This shift towards REITs from both a retail and an institutionalinvestor point of view may also help:
LA Water and Power Employees’Retirement Plan Performance
17Performance Review
1. Returns are calculated and presented in US Dollars. Periods Ending 6/30/17.2. FTSE EPRA/NAREIT Developed IndexPlease read Performance Notes pages for important disclosure information
ENDING MARKET VALUE AS OF JUNE 30, 2017: $22,664,480
Portfolio Portfolio FTSE EPRA/NAREIT Spread Spread(Gross of Fee)1 (Net of Fee)1 Developed Index (Gross of F ee) (Net of F ee)
Month To Date 0.96% 0.91% 0.88% +0.08% +0.03%Quarter To Date 3.05% 2.89% 3.01% +0.04% -0.12%Year To Date 5.08% 4.75% 5.37% -0.29% -0.62%Rolling One Year 1.15% 0.52% 1.14% +0.01% -0.62%Rolling Three Years 4.98% 4.33% 4.56% +0.42% -0.23%Since Inception (10/31/13) 6.82% 6.15% 6.09% +0.73% +0.06%
0.96%
3.05%
5.08%
1.15%
4.98%
6.82%
0.91%
2.89%
4.75%
0.52%
4.33%
6.15%
0.88%
3.01%
5.37%
1.14%
4.56%
6.09%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Month To Date Quarter To Date Year To Date Rolling One Year Rolling Three Years Since Inception(10/31/13)
Gross of Fees¹
Net of Fees¹
Index²
Portfolio Portfolio FTSE EPRA/NAREIT Spread Spread(Gross of Fee)1 (Net of Fee)1 Developed Index (Gross of F ee) (Net of F ee)
Month To Date 0.97% 0.92% 0.88% +0.09% +0.04%Quarter To Date 3.06% 2.90% 3.01% +0.05% -0.11%Year To Date 5.09% 4.76% 5.37% -0.28% -0.61%Rolling One Year 1.17% 0.54% 1.14% +0.03% -0.60%Rolling Three Years 4.99% 4.33% 4.56% +0.43% -0.23%Since Inception (10/31/13) 6.82% 6.16% 6.09% +0.73% +0.07%
LA Water and Power Employees’Retiree Health Benefit Plan
1. Returns are calculated and presented in US Dollars. Periods Ending 6/30/17.2. FTSE EPRA/NAREIT Developed IndexPlease read Performance Notes pages for important disclosure information
0.97%
3.06%
5.09%
1.17%
4.99%
6.82%
0.92%
2.90%
4.76%
0.54%
4.33%
6.16%
0.88%
3.01%
5.37%
1.14%
4.56%
6.09%
0%
1%
2%
3%
4%
5%
6%
7%
8%
Month To Date Quarter To Date Year To Date Rolling One Year Rolling Three Years Since Inception(10/31/13)
Gross of Fees¹Net of Fees¹Index²
ENDING MARKET VALUE AS OF JUNE 30, 2017: $5,645,295
Performance Review 18
LA Water and Power Employees’Retiree Health Benefit Plan
Performance Review
LA Water and Power Employees’ Retirement Plan LA Water and Power Employees’ Retiree Health Benefit Plan6/30/2017 6/30/2017
1 Year 3 Years 1 Year 3 Years
l LA Water ERP 1.15 4.98 l LA Water ERHBP 1.17 4.99
1st Quartile 1st Quart ile
2nd Quart ile 2nd Quart ile
3rd Quart ile 3rd Quart ile
4th Quart ile 4th Quart ile
High 16.19 9.59 High 16.19 9.5925th Percentile 3.72 5.68 25th Percentile 3.72 5.68Median 1.57 4.69 Median 1.57 4.6975th Percentile -0.04 3.99 75th Percentile -0.04 3.99Low -3.15 -1.60 Low -3.15 -1.60Observations 56 53 Observations 56 53
Source: eVestment; Heitman Source: eVestment; HeitmanQuartile performance ranking calculated using the Global Diversified Developed Composite Quartile performance ranking calculated using the Global Diversified Developed Composite
Returns calculated and presented in USD and Gross of Fees for the Composite. As of 6/30/17 Returns calculated and presented in USD and Gross of Fees for the Composite. As of 6/30/17
COMPETITIVE PERFORMANCE IN USD COMPETITIVE PERFORMANCE IN USD
19
LA WATER AND POWER EMPLOYEES’RETIREMENT PLAN
LA WATER AND POWER EMPLOYEES’RETIREE HEALTH BENEFIT PLAN
LA Water and Power Employees’Retiree Health Benefit Plan
Performance Review
LA Water and Power Employees’ Retirement Plan LA Water and Power Employees’ Retiree Health Benefit Plan6/30/2017 6/30/2017
2016 2015 2014 2016 2015 2014l LA Water ERP 4.33 1.10 18.15 l LA Water ERHBP 4.33 1.13 18.13
1st Quart ile 1st Quart ile
2nd Quart ile 2nd Quart ile
3rd Quart ile 3rd Quart ile
4th Quart ile 4th Quart ile
High 14.33 6.13 25.04 High 14.33 6.13 25.0425th Percentile 4.96 2.58 18.33 25th Percentile 4.96 2.58 18.33Median 4.00 1.28 16.60 Median 4.00 1.28 16.6075th Percentile 1.73 -0.11 14.87 75th Percentile 1.73 -0.11 14.87Low -1.41 -21.97 11.28 Low -1.41 -21.97 11.28Observations 58 58 54 Observations 58 58 54
Source: eVestment; Heitman Source: eVestment; HeitmanQuartile performance ranking calculated using the Global Diversified Developed Composite Quartile performance ranking calculated using the Global Diversified Developed Composite
Returns calculated and presented in USD and Gross of Fees for the Composite. As of 6/30/17 Returns calculated and presented in USD and Gross of Fees for the Composite. As of 6/30/17
COMPETITIVE PERFORMANCE IN USD COMPETITIVE PERFORMANCE IN USD
20
LA WATER AND POWER EMPLOYEES’RETIREMENT PLAN
LA WATER AND POWER EMPLOYEES’RETIREE HEALTH BENEFIT PLAN
Retail22.9%
Office19.8%
Residential15.8%
Diversified16.0%
Industrial9.5%
Health Care7.6%
Self-Storage3.5%
Hotel/Resort &Entertainment
3.6%Specialty1.2%
SECTOR WEIGHTINGS
Global Diversified Developed Strategy
21Performance Review
PORTFOLIO CHARACTERISTICS
Heitman Index¹
Number of Securities 112 335
Top 10 Holdings 23.52% 19.96%
Active Share
Beta 0.99 1.00
Dividend Yield 3.47% 3.87%
NAV Prem/(Disc) -4.40% -2.29%
Earnings Growth 4.01% 3.46%
LTV 30.01% 31.09%
51.15%
As of June 30, 2017.The Portfolio Characteristicsshown aboveare supplemental information to the Global Diversified Developed Strategy Composite.1. FTSE EPRA/NAREIT Developed Index and the respectiveregional sleeves.
Japan, 10.67%
Hong Kong, 7.64%
Australia, 5.54%
Singapore, 2.38% US, 53.84%
Canada, 3.00%
Europe, 11.91%
UK, 5.02%
Asia-Pacific26%
North America57%
Europe17%
0%
10%
20%
30%
40%
50%
60%
70%
Asia-Pacific North America Europe
COUNTRY WEIGHTINGS
OVERWEIGHTS/UNDERWEIGHTSSecurity Sector Heitman Active Weight
CubeSmart Storage 2.02% +1.71%
HCP Health Care 2.47% +1.41%
GGP Retail 2.38% +1.36%
Equinix Office 1.35% +1.35%
National Retail Properties Retail 1.72% +1.31%
Realty Income Specialty 0.00% -1.06%
Simon Property Group Retail 2.36% -1.18%
Digital Realty Trust Office 0.00% -1.27%
Ventas Health Care 0.00% -1.73%
Public Storage Storage 0.00% -2.17%
Top
5Bo
ttom
5
Performance Attribution
Stock selection was strong in the North America
Positive North America performance was offset by negative performance in Japan and Australia
stocks
issues
22Performance Review
Returns are presented in US Dollars. 12 MonthsEnding 6/30/17.1. RepresentativeGlobalDiversified Developed Strategy.Please read Performance Notes pagesfor important disclosure information.Please read Attribution AnalysisPerformanceNotespagefor important disclosure information.
Global Diversified Developed
North America 57.39 -0.88 -0.91 -0.20 57.14 -2.65 -2.65 -1.22 -0.04 1.34 -0.31 0.99 -0.02 0.97
Cash 0.77 -0.29 -0.29 0.01 0.00 - - 0.00 -0.01 0.00 0.00 -0.01 0.05 0.04
Middle East 0.00 - - 0.00 0.15 33.29 20.78 0.04 -0.02 0.00 0.00 -0.02 -0.02 -0.04
Europe 15.53 8.06 7.25 1.21 15.70 9.15 8.25 1.29 0.03 -0.11 -0.02 -0.11 0.01 -0.10
Asia-Pacific 26.30 1.21 4.81 0.07 27.01 4.67 8.38 1.04 -0.09 -0.71 -0.18 -0.98 0.03 -0.96
Total 100.00 1.08 1.83 1.08 100.00 1.16 1 .96 1.16 -0.13 0.52 -0.52 -0.13 0.05 -0.08
AverageWeight
TotalReturn
TotalEffect
TotalReturn(Local)
ContributionTo Return
AllocationEffect
(Local)
SelectionEffect
(Local)
InteractionEffect
(Local)
TotalEffect
(Local)
TotalCurrency
EffectRegion & Country GroupingAverageWeight
TotalReturn
TotalReturn(Local)
ContributionTo Return
FTSE EPRA/NAREIT Developed Attribution AnalysisPortfolio¹
Top Ten Contributors/Detractors
23Performance Review
Portfolio data for Los Angeles Water and Power Employees’ Retirement PlanOne year ended 6/30/17
Top Ten Contributors
Simon Property Group 0.36
Kimco Realty 0.29
CareTrust REIT 0.29
Macerich 0.26
Equinix 0.23
Realty Income 0.21
Brixmor Property Group 0.18
Sunstone Hotel Investors 0.17
AvalonBay Communities 0.16
Pure Industrial Real Estate Trust 0.16
Bottom Ten Detractors
Store Capital -0.4
Retail Properties of America -0.34
Spirit Realty Capital -0.34
Pennsylvania REIT -0.29
Federal Realty Investment Trust -0.28
DDR -0.27
CubeSmart -0.19
Equity Residential -0.17
Taubman Centers -0.14
Japan Retail Fund Investment -0.13
PAGE INTENTIONALLY BLANK
Top Ten Holdings
25Portfolio Review & Characteristics
Security Region Sector Weight
Benchmark
Weight Weight Excess
ProLogis Inc NORTH AMERICA INDUSTRIAL 3.17 2.17 0.99
AvalonBay Communities Inc NORTH AMERICA RESIDENTIAL 2.92 1.86 1.06
HCP Inc NORTH AMERICA HEALTH CARE 2.47 1.06 1.41
GGP NORTH AMERICA RETAIL 2.38 1.02 1.36
Simon Property Group Inc NORTH AMERICA RETAIL 2.36 3.54 -1.18
Sun Hung Kai Properties Ltd ASIA-PACIFIC DIVERSIFIED 2.08 1.47 0.61
Welltower NORTH AMERICA HEALTH CARE 2.07 1.93 0.14
Equity Residential NORTH AMERICA RESIDENTIAL 2.07 1.65 0.42
CubeSmart NORTH AMERICA STORAGE 2.02 0.30 1.71
Cheung Kong Property Holdings ASIA-PACIFIC DIVERSIFIED 1.99 1.50 0.48
Complete List of Holdings
26
Security Region Sector Weight
Benchmark
Weight
Weight
Excess Market Value
Sun Hung Kai Properties Ltd ASIA DIVERSIFIED 2.08 1.47 0.61 576,919.79
Cheung Kong Property Holdings ASIA DIVERSIFIED 1.99 1.50 0.48 555,903.39
Mitsubishi Estate Co Ltd ASIA DIVERSIFIED 1.95 1.55 0.40 549,236.32
Mitsui Fudosan Co Ltd ASIA DIVERSIFIED 1.83 1.59 0.24 514,987.13
Scentre Group ASIA RETAIL 1.68 1.12 0.56 467,949.31
Link REIT/The ASIA RETAIL 1.33 1.19 0.14 369,215.99
Goodman Group ASIA INDUSTRIAL 0.99 0.75 0.25 280,959.32
Sumitomo Realty & Development ASIA DIVERSIFIED 0.90 0.94 -0.03 259,597.45
City Developments Ltd ASIA DIVERSIFIED 0.86 0.26 0.60 254,228.17
Vicinity Centres ASIA RETAIL 0.89 0.46 0.43 254,211.37
Activia Properties Inc. ASIA DIVERSIFIED 0.85 0.18 0.67 235,203.81
Wharf Holdings Ltd ASIA DIVERSIFIED 0.83 0.71 0.12 230,440.06
Nippon Prologis REIT ASIA INDUSTRIAL 0.80 0.25 0.55 223,718.41
Nippon Building Fund ASIA OFFICE 0.73 0.46 0.28 209,451.76
GPT Group ASIA DIVERSIFIED 0.70 0.47 0.24 202,755.37
Japan Retail Fund Investment C ASIA RETAIL 0.68 0.35 0.33 184,674.26
Hulic REIT Inc. ASIA OFFICE 0.59 0.10 0.49 167,127.98
Japan Hotel REIT ASIA DIVERSIFIED 0.60 0.19 0.42 166,981.13
Hang Lung Properties Ltd ASIA DIVERSIFIED 0.59 0.36 0.24 160,257.48
Kenedix Realty Investment Corp ASIA RESIDENTIAL 0.55 0.13 0.42 154,859.38
Mapletree Industrial Trust ASIA INDUSTRIAL 0.54 0.12 0.42 154,341.43
Frasers Centrepoint Trust ASIA RETAIL 0.53 - 0.53 149,673.33
Swire Properties ASIA DIVERSIFIED 0.48 0.25 0.24 145,825.79
Stockland Australia ASIA DIVERSIFIED 0.49 0.57 -0.09 135,636.96
Sekisui House SI Investment C ASIA DIVERSIFIED 0.45 0.08 0.37 124,343.18
Frasers Logistics & Industrial ASIA INDUSTRIAL 0.42 - 0.42 119,769.91
Westfield Corp ASIA RETAIL 0.40 0.83 -0.43 115,045.49
Global One REIT ASIA OFFICE 0.38 - 0.38 106,359.02
Sino Land Co Ltd ASIA DIVERSIFIED 0.27 0.34 -0.07 96,507.68
Ingenia Communities Group ASIA RESIDENTIAL 0.20 - 0.20 74,111.30
Investa Off ice Fund ASIA OFFICE 0.13 0.13 0.00 37,030.74
Japan Rental Housing Investmen ASIA RESIDENTIAL 0.15 0.08 0.07 36,934.85
Hulic Co. ASIA DIVERSIFIED 0.10 0.26 -0.16 31,073.94
Unibail-Rodamco SE EUROPE RETAIL 1.65 1.76 -0.11 462,807.06
Vonovia EUROPE RESIDENTIAL 1.11 1.31 -0.20 312,967.08
Gecina EUROPE OFFICE 0.94 0.44 0.50 265,059.48
BUWOG AG EUROPE RESIDENTIAL 0.88 0.22 0.66 246,336.93
Land Securities Group PLC EUROPE OFFICE 0.71 0.70 0.01 199,441.21
Tritax Big Box REIT EUROPE INDUSTRIAL 0.64 0.18 0.45 174,696.78
Shaftesbury PLC EUROPE RETAIL 0.58 0.20 0.38 164,055.44
Aedifica EUROPE RESIDENTIAL 0.57 0.11 0.46 161,054.93
Hibernia REIT EUROPE OFFICE 0.54 0.08 0.46 154,001.19
Derwent London PLC EUROPE OFFICE 0.53 0.24 0.28 152,375.58
Swiss Prime Site AG EUROPE OFFICE 0.56 0.45 0.10 152,344.28
British Land Co PLC EUROPE OFFICE 0.55 0.57 -0.02 152,143.23
Merlin Properties Socimi EUROPE DIVERSIFIED 0.54 0.30 0.24 149,796.98
Deutsche Wohnen AG EUROPE RESIDENTIAL 0.54 0.96 -0.42 149,121.16
TAG Immobilien AG EUROPE RESIDENTIAL 0.51 0.16 0.35 144,028.78
Hammerson PLC EUROPE RETAIL 0.50 0.42 0.09 140,495.80
D Carnegie EUROPE RESIDENTIAL 0.49 0.03 0.45 136,079.49
Grainger PLC EUROPE RESIDENTIAL 0.48 0.10 0.38 134,039.46
Alstria Office EUROPE OFFICE 0.45 0.13 0.32 126,574.58
ICADE EUROPE OFFICE 0.44 0.21 0.23 123,146.89
Warehouses De Pauw EUROPE INDUSTRIAL 0.44 0.12 0.32 121,745.95
Hemfosa Fastigheter EUROPE RESIDENTIAL 0.40 0.11 0.29 113,704.82
Primary Health Properties PLC EUROPE HEALTH CARE 0.39 0.06 0.33 106,553.86
Security Region Sector Weight
Benchmark
Weight
Weight
Excess Market Value
Axiare Patrimonio Socimi EUROPE OFFICE 0.34 0.08 0.27 96,045.53
Hamborner REIT AG EUROPE OFFICE 0.34 0.05 0.28 92,712.22
NSI NV EUROPE DIVERSIFIED 0.32 0.04 0.27 89,120.81
New River REIT EUROPE RETAIL 0.31 0.08 0.23 85,273.73
Segro PLC EUROPE INDUSTRIAL 0.29 0.45 -0.16 77,587.96
Coima Res EUROPE OFFICE 0.19 - 0.19 53,923.01
Selvaag Bolig ASA EUROPE OFFICE 0.19 - 0.19 51,713.58
Inmobiliaria Colonial SA EUROPE OFFICE 0.04 0.16 -0.12 12,310.66
ProLogis Inc NORTH AMERICA INDUSTRIAL 3.17 2.17 0.99 894,553.20
AvalonBay Communities Inc NORTH AMERICA RESIDENTIAL 2.92 1.86 1.06 828,252.70
HCP Inc NORTH AMERICA HEALTH CARE 2.47 1.06 1.41 696,088.80
Simon Property Group Inc NORTH AMERICA RETAIL 2.36 3.54 -1.18 669,362.88
GGP NORTH AMERICA RETAIL 2.38 1.02 1.36 656,499.40
Welltower NORTH AMERICA HEALTH CARE 2.07 1.93 0.14 587,347.95
Equity Residential NORTH AMERICA RESIDENTIAL 2.07 1.65 0.42 586,281.98
CubeSmart NORTH AMERICA STORAGE 2.02 0.30 1.71 574,820.44
Essex Property Trust Inc NORTH AMERICA RESIDENTIAL 1.80 1.18 0.62 511,967.30
National Retail Properties Inc NORTH AMERICA RETAIL 1.72 0.41 1.31 487,577.00
Vornado Realty Trust NORTH AMERICA OFFICE 1.67 1.14 0.53 467,622.00
Extra Space Storage Inc NORTH AMERICA STORAGE 1.48 0.67 0.81 421,044.00
Kilroy Realty Corp NORTH AMERICA OFFICE 1.40 0.51 0.89 409,567.50
First Capital Realty Inc NORTH AMERICA RETAIL 1.41 0.16 1.25 396,356.36
Equinix NORTH AMERICA OFFICE 1.35 - 1.35 388,818.96
Retail Properties of America NORTH AMERICA RETAIL 1.28 0.20 1.08 370,085.10
American Homes 4 Rent NORTH AMERICA RESIDENTIAL 1.28 0.36 0.92 362,790.18
EPR Properties NORTH AMERICA SPECIALTY 1.23 0.32 0.91 359,350.00
DiamondRock Hospitality Co NORTH AMERICA HOTEL/RESORT & ENTERTAINMENT 1.26 0.15 1.10 354,484.35
DCT Industrial Trust Inc NORTH AMERICA INDUSTRIAL 1.23 0.35 0.88 347,894.40
Camden Property Trust NORTH AMERICA RESIDENTIAL 1.18 0.52 0.67 330,068.60
Alexandria Real Estate Equitie NORTH AMERICA OFFICE 1.15 0.76 0.39 327,678.40
Cyrusone NORTH AMERICA OFFICE 1.15 - 1.15 325,022.50
Acadia Realty Trust NORTH AMERICA RETAIL 1.10 0.16 0.94 320,256.00
Physicians Realty Trust NORTH AMERICA HEALTH CARE 1.03 0.22 0.81 292,170.98
Park Hotels & Resorts NORTH AMERICA HOTEL/RESORT & ENTERTAINMENT 0.96 0.24 0.72 268,305.92
CareTrust REIT Inc. NORTH AMERICA HEALTH CARE 0.92 0.09 0.83 259,763.94
Federal Realty Investment Trus NORTH AMERICA RETAIL 0.92 0.64 0.29 259,099.50
Sunstone Hotel Investors Inc NORTH AMERICA HOTEL/RESORT & ENTERTAINMENT 0.90 0.25 0.65 258,613.16
Smart REIT NORTH AMERICA RETAIL 0.88 0.20 0.68 249,055.52
Cousins Properties Inc NORTH AMERICA OFFICE 0.84 0.26 0.59 239,527.50
DDR Corp NORTH AMERICA RETAIL 0.84 0.20 0.64 236,500.25
Taubman Centers Inc NORTH AMERICA RETAIL 0.82 0.25 0.57 224,503.50
Paramount Group NORTH AMERICA OFFICE 0.73 0.22 0.51 199,696.00
Healthcare Trust of America In NORTH AMERICA HEALTH CARE 0.66 0.41 0.25 191,264.28
Rexford Industrial Realty Inc NORTH AMERICA INDUSTRIAL 0.63 0.13 0.50 175,698.32
Brandyw ine Realty Trust NORTH AMERICA OFFICE 0.60 0.21 0.39 170,093.59
New York REIT NORTH AMERICA OFFICE 0.79 - 0.79 168,480.00
Hudson Pacific Properties Inc NORTH AMERICA OFFICE 0.60 0.38 0.23 166,539.49
Boston Properties Inc NORTH AMERICA OFFICE 0.51 1.33 -0.83 144,425.48
Invitation Homes NORTH AMERICA RESIDENTIAL 0.52 0.13 0.39 141,676.50
Pennsylvania Real Estate Inves NORTH AMERICA RETAIL 0.45 0.05 0.40 122,844.64
Summit Hotel Properties Inc NORTH AMERICA HOTEL/RESORT & ENTERTAINMENT 0.45 0.13 0.32 120,161.95
Allied Properties Real Estate NORTH AMERICA OFFICE 0.40 0.18 0.22 113,400.54
Interxion Holding NORTH AMERICA OFFICE 0.43 - 0.43 108,361.26
Pure Industrial Real Estate Tr NORTH AMERICA INDUSTRIAL 0.28 0.10 0.18 72,116.30
Empire State Realty Trust NORTH AMERICA OFFICE 0.04 0.19 -0.14 10,758.86
Cash & Cash Equivalent (main acc.) CASH Cash & Cash Equivalent 0.89 - 0.89 399,637.09
Portfolio Review & Characteristics 26
Change in Market Value Since Inception
27Portfolio Review & Characteristics
Portfolio data for Los Angeles Water and Power Employees’ Retirement PlanAs of 6/30/17
$13.68
$16.48
$20.24
$21.50
$25.68
$26.71
$25.01 $24.72$25.68
$27.22$28.03 $28.35
$26.96$27.48
$28.31
$10.00
$15.00
$20.00
$25.00
$30.00
12/31/2013 6/30/2014 12/31/2014 6/30/2015 12/31/2015 6/30/2016 12/31/2016 6/30/2017
Market Value ($ in milllions)
Comparative Portfolio Metrics
1. Numbers are weighted averages.2. Lesser of 12 month purchases or sales divided by average 12 month market valueAs of June 30, 2017. Inception date for Global Diversified Developed is 12/31/10.
28
FTSE/EPRA NAREITGlobal Diversified Developed
Developed Strategy Benchmark
Implied Cap/EBITDA Yield1 5.53% 5.38%
Premium/Discount to NAV1 -4.40% -2.29%
Dividend Yield1 3.47% 3.87%
1 Year Dividend Growth1 12.34% 10.47%
Beta (Since Inception) 0.99 1.00
# of Names 114 335
Active Share 51.15% N/A
Tracking Error (Since Inception) 0.86% N/A
Cash Position 1.01% N/A
Turnover (Rolling 12-Months)2 143.53% N/A
Portfolio Review & Characteristics 28
Global Diversified Developed – North AmericaAttribution Review – 1 Year
29
Unite d State s -2.81% 95 .09% -2 b p s 149 b p s 147 b p s
Niche 12.12% 4.30% 33 bps 37 bps 70 bps
Industrial 18.44% 7.83% 20 bps 28 bps 48 bps
Hotels/Resort & Entertainment 19.64% 5.76% -2 bps 45 bps 43 bps
Health Care 2.68% 12.75% 0 bps 32 bps 32 bps
Residential 7.23% 16.15% 1 bps 27 bps 28 bps
Self-Storage -16.01% 6.33% 7 bps 19 bps 26 bps
Regional Malls -22.62% 12.01% 18 bps -3 bps 15 bps
Office 4.46% 13.35% -12 bps -7 bps -19 bps
Strip Centers -26.68% 8.11% -23 bps -7 bps -30 bps
Triple Net -10.53% 8.50% 5 bps -70 bps -65 bps
Canada 0.37% 4.91% 2 b p s 29 b p s 30 b p s
Industrial 40.55% 0.33% 21 bps 0 bps 22 bps
Diversified 1.65% 1.60% 1 bps 17 bps 17 bps
Retail -10.25% 1.54% -4 bps 14 bps 11 bps
Hotel/Resort & Entertainment 2.60% 0.01% 0 bps 0 bps 0 bps
Health Care 1.93% 0.27% 0 bps 0 bps 0 bps
Residential 3.29% 0.88% -6 bps -2 bps -9 bps
Office 4.90% 0.28% -9 bps 0 bps -9 bps
Cas h & Cas h Equivale nt - - -11 b p s 0 b p s -11 b p s
Total -2.65 % 100.00% -11 b p s 177 b p s 166 b p s
Property Type¹Relative
Returns Portfolio Effect
Relative Allocation
Contribution3
Selection +
Interaction EffectTotal EffectIndex² Index²
Average Weighting
-0 .38%
1.56%
0.62%
-0.06%
-0.38%
0.17%
-0.17%
-0.60%
-1.06%
0.80%
-1.26%
-0.26%
0.60%
-1.11%
0.84%
-0.01%
-0.27%
-0.70%
0.38%
0.64%
-2% 0% 2%
1.56%
10.02%
3.69%
9.76%
2.81%
1.86%
2.70%
-0.19%
-0.67%
-0.92%
-9.72%
6 .53%
-0.57%
8.45%
5.33%
0.00%
0.00%
-18.11%
-0.11%
0.00%
1.66%
-20% 0% 20%
The Country Returns shown aboveare supplemental information to the Global DiversifiedDeveloped Strategy Composite.1. RepresentativeGlobalDiversified Developed North America Strategy.2. FTSE EPRA/NAREIT Developed North America Index.3. Allocation Contribution includescurrency effect.
Returns are presented in US Dollars. 12 MonthsEnding 6/30/17.Please read Performance Notes pages for important disclosure information.Please read Attribution Analysis Performance Notes page for important disclosure information.
Portfolio Review & Characteristics
Global Diversified Developed – Asia-PacificAttribution Review – 1 Year
30Portfolio Review & Characteristics
Relative Relative
China - - 3 b p s 0 b p s 3 b p s
Investors & REITs - - -3 bps 0 bps -3 bps
Ne w Ze aland 3.63% 0.36% 0 b p s 0 b p s 0 b p s
Investors & REITs 3.63% 0.36% -2 bps 0 bps -2 bps
Cas h & Cas h Equivale nt - - -13 b p s 0 b p s -13 b p s
Cash & Cash Equivalent - - -3 bps 0 bps -3 bps
Singap ore 14.66% 8.5 1% 4 b p s -33 b p s -29 b p s
Property Cos & Dev 23.81% 3.22% -10 bps 2 bps -9 bps
Investors & Reits 9.53% 5.28% -5 bps -18 bps -23 bps
Aus tralia -3.35 % 22.12% 14 b p s -88 b p s -73 b p s
Investors & Reits -3.35% 22.12% 6 bps -88 bps -82 bps
Hong Kong 24.18% 28.5 1% -5 1 b p s -49 b p s -100 b p s
Developers 24.68% 15.92% -7 bps 35 bps 28 bps
Investors & REITs 23.52% 12.58% 11 bps -89 bps -77 bps
Jap an -4.75 % 40.5 1% -2 b p s -138 b p s -140 b p s
Developers 7.23% 17.48% -3 bps -55 bps -59 bps
Investors & Reits -12.89% 23.02% -7 bps -65 bps -72 bps
Total 4.67% 100.00% -45 b p s -307 b p s -35 3 b p s
Returns Average Weighting Portfolio Effect
Property Type¹ Index² Index²Allocation
Contribution3
Selection +
Interaction EffectTotal Effect
0 .00%
0.00%
0 .00%
0.00%
0 .00%
0.00%
-4.30%
-1.90%
-2.46%
-3 .44%
-3.44%
-2 .14%
3.21%
-8.06%
-3 .00%
-2.76%
-2.14%
-3 .5 3%
-10% -5% 0% 5%
0 .35%
0.35 %
-0 .36%
-0.36%
1 .09%
1.09%
-0 .12%
-0.87%
0.75 %
0 .66%
0.66%
-1 .99%
-1.5 1%
-0.48%
0 .36%
-0.33%
0.69%
-4% -2% 0% 2%
The Country Returns shown aboveare supplemental information to the Global DiversifiedDeveloped Strategy Composite.1. RepresentativeGlobalDiversified Developed Asia-Pacific Strategy.2. FTSE EPRA/NAREIT Developed Asia Index.3. Allocation Contribution includescurrency effect.
Returns are presented in US Dollars. 12 MonthsEnding 6/30/17.Please read Performance Notes pages for important disclosure information.Please read Attribution Analysis Performance Notes page for important disclosure information.
Global Diversified Developed – EuropeAttribution Review – 1 Year
31Portfolio Positioning & Performance
Cas h & Cas h Equivale nt - - 25 b p s 0 b p s 25 b p sCash & Cash Equivalent - - -4 bps 0 bps -4 bpsEurop e 10.14% 69.83% -7 b p s -37 b p s -44 b p s
Ne utral 5 .88% 24.12% -11 b p s 86 b p s 75 b p sResidential 14.07% 2.18% 21 bps 21 bps 42 bpsIndustrial 18.32% 0.68% 35 bps -1 bps 34 bpsRetail 0.11% 15.02% 25 bps 5 bps 30 bpsOffice 16.44% 6.24% 2 bps -10 bps -8 bpsDe fe ns ive 10.28% 28.30% -1 b p s -13 b p s -14 b p sRetail -5.45% 2.17% 33 bps 5 bps 39 bpsDiversified 24.92% 0.92% -12 bps 0 bps -12 bpsResidential 14.09% 18.84% 12 bps -25 bps -13 bpsOffice 3.16% 6.38% 11 bps -30 bps -19 bpsCyclical 16.10% 17 .41% -31 b p s -74 b p s -105 b p sResidential 5.88% 2.70% 21 bps 6 bps 27 bpsRetail 16.08% 1.76% 0 bps 0 bps 0 bpsHotel/Resort & Entertainment 17.44% 0.41% -1 bps 0 bps -1 bpsDiversified 26.65% 2.95% -9 bps -16 bps -25 bpsOffice 15.98% 9.58% -20 bps -79 bps -99 bps
Unite d Kingdom 6.95 % 30.17% 6 b p s -68 b p s -62 b p sNe utral 2.78% 21.25 % -6 b p s -11 b p s -17 b p sRetail 4.60% 5.46% -6 bps 20 bps 14 bpsOffice -0.38% 11.35% 2 bps -2 bps 0 bpsDiversified 6.30% 2.82% -1 bps 0 bps -1 bpsResidential 23.26% 0.57% -7 bps -3 bps -10 bpsStorage 7.56% 1.06% 3 bps -20 bps -17 bpsDe fe ns ive 12.34% 4.77% 5 b p s -25 b p s -20 b p sRetail 16.97% 0.25% 9 bps -4 bps 6 bpsIndustrial 16.43% 0.86% -4 bps 2 bps -2 bpsDiversified 18.94% 1.18% -6 bps 0 bps -6 bpsHealth Care 12.31% 1.29% -3 bps -8 bps -11 bpsResidential 4.26% 1.20% -8 bps -11 bps -19 bpsCyclical 22.66% 4.15 % -30 b p s -3 b p s -33 b p sDiversified 13.78% 0.84% 5 bps 0 bps 5 bpsIndustrial 24.30% 2.79% 4 bps -2 bps 2 bpsOffice 29.10% 0.51% 0 bps -1 bps -1 bps
Total 9.15 % 100.00% 24 b p s -104 b p s -81 b p s
Selection +
Interaction EffectTotal Effect
Returns Average Weighting Portfolio Effect
Allocation
Contribution3Property Type¹ Index²Relative
Index²Relative
0 .00%0.00%
-0 .71%3 .1 7%
23.72%-8.36%
0.29%-2.81%-0 .37%
5 .19%0.00%
-1.67%-6.17%-5 .82%
-1.19%0.00%0.00%
-14.16%-6.90%
-2 .25%-0 .44%
2.78%-0.23%
0.00%-26.86%
-6.97%-4.10%-2.83%
0.83%0.00%
-3.84%-15 .05 %
-1 .96%-12.06%-11.43%
-21.28%-0 .81%
-40 % -20% 0% 20% 40%
0 .69%0.69%
-0.26%3 .97%
1.35 %1.82%
-1.05 %1.85 %
-3 .67%-1.26%-0.92%
-0.11%-1.38%
-0 .5 6%-2.5 1%
-1.76%-0.41%
-0.70%4.83%
-0 .43%0 .5 4%
2.32%0.28%
-2.82%-0.38%
1.14%1 .5 3%
0.22%1.47%
-1.18%0.79%
0.22%-2 .5 0%
-0.83%-2.02%
0.35 %
-5% 0% 5% 10%
The Country Returns shown aboveare supplemental information to the Global DiversifiedDeveloped Strategy Composite.
1. RepresentativeGlobalDiversified Developed EuropeStrategy.2. FTSE EPRA/NAREIT Developed Europe Index.3. Allocation Contribution includescurrency effect.
Returns are presented in US Dollars. 12 MonthsEnding 6/31017.Please read Performance Notes pages for important disclosure information.Please read Attribution Analysis Performance Notes page for important disclosure information.
PAGE INTENTIONALLY BLANK
Heitman Key Differentiators
True bottom-up approach with local and integrated teams
An investment process that goes beyond valuation
Disciplined oversight, dedicated risk management
Employee ownership drives actions and aligns our interest with yours
33Conclusion
PAGE INTENTIONALLY BLANK
WPERP Fee Schedule
35Appendix: Fee Schedule
62.5 bps per annumon the average of the month end market values,
as computed by the custodian
PAGE INTENTIONALLY BLANK
Common REIT Terms
Cash Available for Distribution (CAD): CAD is calculated by subtracting from Funds from Operations (FFO)both (1) normalized recurring expenditures that are capitalized by the REIT and then amortized, but which arenecessary to maintain a REIT's properties and its revenue stream (e.g., new carpeting and drapes in apartmentunits, leasing expenses and tenant improvement allowances) and (2) "straight-lining" of rents.
Capitalization Rate: The capitalization rate (or "cap" rate) for a property is determined by dividing theproperty's net operating income by its purchase price. Generally, high cap rates indicate higher returns andgreater perceived risk.
Funds From Operations (FFO): The most commonly accepted and reported measure of REIT operatingperformance. Equal to a REIT's net income, excluding gains or losses from sales of property, and adding backreal estate depreciation.
Mortgage REIT: A REIT that makes or owns loans and other obligations that are secured by real estatecollateral.
Multiple to Growth: This is a common valuation measure that is calculated by dividing a REIT’s following yearPrice/FFO multiple by its FFO growth rate plus dividend yield and then dividing by 100.
Net Asset Value (NAV): The net "market value" of all a company's assets, including but not limited to itsproperties, after subtracting all its liabilities and obligations.
Straight-lining: Real estate companies such as REITs "straight line" rents because generally acceptedaccounting principles require it. Straight lining averages the tenant's rent payments over the life of the lease.
Payout Ratio: This is a measure of the security of a company’s dividend and is calculated by dividing a REITsCAD by its dividend.
37Appendix: Glossary of Investment Terms
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Presenters
Jerry Ehlinger, CFA is Managing Director and the Lead Portfolio Manager in Heitman's North American Public Real Estate Securities group. He alsoserves on the group’s Global Investment Committee and co-manages the group’s global real estate securities strategies. He is an equity owner ofthe firm. Throughout his career, Jerry has held a number of related investment positions in the REIT industry. Before joining Heitman in 2013, Jerrywas Lead Portfolio Manager and Head of Real Estate Securities, Americas at DB/RREEF Real Estate. Prior, Jerry served as Senior Vice President andPortfolio Manager of Heitman's real estate securities group from 2000 to 2004. He began his career at Morgan Stanley in 1996 where he primarilycovered the REIT sector both as a sell-side analyst and as a senior research associate at Morgan Stanley Asset Management. Jerry received an MS inFinance, Investment and Banking from the University of Wisconsin-Madison and a BS in Finance from the University of Wisconsin-Whitewater.Among other professional affiliations, Jerry is a member of the NAREIT Real Estate Investment Advisory Council, National Multi Housing Council,International Council of Shopping Centers, the CFA Institute, and the CFA Society of Chicago.
John Mancuso is a Senior Vice President in Heitman’s Client Service & Marketing group. He is responsible for developing and maintainingrelationships with institutional investors in the western region of the US in private real estate equity, public securities, and private real estate debt.Prior to joining Heitman, John was the head of private markets research at Russell Investments. He was responsible for overseeing Russell’s privatemarkets investment research practice on a global basis by setting research priorities, identifying strategies for inclusion in client portfolios, andmanaging the due diligence process. Previously, John was with Meketa Investment Group, where he was responsible for supporting several clientrelationships and coordinating the research and due diligence process for real estate investments. John began his career at Lucent Technologies,working in several accounting and finance roles across the business. John received a BS in Finance from Boston College and an MS in Managementfrom the F.W. Olin School of Business at Babson College. He is a member of the Pension Real Estate Association, CFA Institute and the CFA Societyof Colorado.
39Appendix: Biographies
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1. Heitman Real Estate Securities LLC (“HRES”) is an investment adviser specializing in the investment of equity, convertible and debt instruments of North American publicly traded real estate related companies (REITs – real estateinvestment trusts and REOCs – real estate operating companies). Heitman International Real Estate Securities GmbH (“HIRES”) is an investment adviser specializing in the investment of equity, convertible and debt instruments ofEuropean publicly traded real estate related companies. Heitman International Real Estate Securities HK Limited (“HIRES HK”) is an investment adviser specializing in the investment of equity, convertible and debt instruments of Asia /Pacific publicly traded real estate related companies Heitman International Real Estate Securities Pty Limited (“HIRES PTY”) is an investment adviser specializing in the investment of equity, convertible and debt instruments of Asia /Pacific publicly traded real estate related companies. HRES, HIRES and HIRES PTY HIRES HK (collectively, “Company”) are limited liability companies whose sole member is Heitman LLC. The members of Heitman are: (i) OMAM (HFL), Inc., asubsidiary of OM Asset Management plc, which is an affiliate of Old Mutual plc and (ii) a group of key Heitman employees.
2. This composite includes all discretionary, global diversified strategy clients benchmarked to the FTSE EPRA/NAREIT Developed Index.
3. The Company claims compliance with Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with GIPS standards. The Company has been independently verified for the periods ofJanuary 1, 1993 through December 31, 2015. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures aredesigned to calculate and present performance in compliance with the GIPS standards. The verification does not ensure the accuracy of any composite presentation.
4. Trade date settlement valuation is used and dividends are recorded on “ex-date” for this composite. This composite is denominated in US dollars.
5. The FTSE EPRA/NAREIT Developed Index is a market cap weighted index of publicly traded REITs and REOCS from around the world. The Indices are presented for illustrative purposes only and are not intended to imply Heitman’s past orfuture performance. The performance of the Indices assumes dividend reinvestment, but do not reflect transaction costs, advisory fees, custodian fees, trading costs and other costs of investment. Individuals cannot directly invest in theindices described above.
6. Accounts are included in this composite the first full month under management. Terminated accounts are included in this composite through completion of their last full month under management. This composite was created in January2011.
7. Representative fee schedule is as follows: first $75 million – 0.65%; over $75 million to $200 million – 0.60%; over $200 million to $500 million – 0.55%; over $500 million – 0.50%. Advisory fees are described in Part II of Form ADV (copyavailable upon request).
8. Performance results presented gross and net of management fees. Gross of fees performance is presented before management fees, but after all relevant trading expenses and all applicable non reclaimable withholding taxes. Net of Feesperformance is presented after management fees and any performance fees, all relevant trading expenses and other expenses that may be incurred in the management of an account and all applicable non reclaimable withholding taxes.Composite descriptions, policies for calculating performance, preparing compliant presentations, and valuing portfolios are available upon request. Past performance is no guarantee of future results. Advisory fees are described in Part II ofForm ADV (available upon request).
Global Diversified Developed Strategy
41Appendix: Performance Notes & Disclaimer
Three Year
Three Year Annualized ex-post
Total Return Total Return FTSE EPRA/NAREIT Total Composite Assets Total Firm Assets Percentage Annualized ex-post Standard Deviation
Net of Fees Gross of Fees Developed Index Number of Standard at End of Period at End of Period of Firm Standard Deviation FTSE EPRA/NAREIT
Year (percent) (percent) (percent) Portfolios Deviation ($millions) ($millions) Assets Composite Developed Index
2011 -2.88 -2.65 -5.82 less than 5 N/A 123 2,398 5.13 N/A N/A2012 28.07 28.38 28.65 less than 5 N/A 218 2,440 8.93 N/A N/A2013 4.69 4.96 4.39 less than 5 N/A 214 2,176 9.83 N/A N/A2014 17.89 18.26 15.89 less than 5 N/A 247 3,217 7.68 12.42 12.482015 0.91 1.23 0.05 less than 5 N/A 235 3,371 6.97 12.3 12.27
Attribution Analysis
1. The results are gross of fees and calculated based on transactions. Theresults may vary slightly from the actual returns due to rounding, intra-daytrading and fees.
2. Please note that the portfolio’s performance as represented in this file ispreliminary and may vary from the official result.
3. Attribution analysis are performed on a representative account in a strategyand not on the entire constituents of a strategy’s composite. Therefore,there may be a disparity between the returns calculated through theattribution analysis for a representative account and a composite.
42Appendix: Performance Notes & Disclaimer
IMPORTANT NOTICE AND DISCLAIMER− This confidential presentation and the information set out herein (the “Presentation”) is summary in nature only and is qualified in its entirety by the information
set out in the confidential private placement memorandum or other formal disclosure document (the “Disclosure Document”) relating to the potentialopportunity described herein (the “Opportunity”).
− This Presentation has been provided to the recipient by Heitman or an affiliate as sponsor (the “Sponsor”) and is only intended to assist sophisticatedprofessional investors in deciding whether they wish to consider reviewing the Disclosure Document. This Presentation is meant for use in one-on-onepresentations with sophisticated professional investors. However, the contents of this Presentation are not to be construed as investment, legal or tax adviceand do not consider the particular circumstances specific to any individual recipient to whom this Presentation has been delivered. The recipient should obtainadvice from the appropriate qualified experts. Further, the Sponsor is not acting in the capacity of a fiduciary of any recipient of this Presentation.
− This Presentation is furnished on a strictly confidential basis to sophisticated professional investors. None of the information contained herein may bereproduced or passed to any person or used for any purpose other than for the purpose of considering the Opportunity. No approach of any kind may be madeby any officer, employee or adviser of the recipient of this Presentation to any officer, employee, customer or supplier of the Sponsor without the prior writtenapproval of the Sponsor. Notwithstanding the foregoing, recipients (and each employee, agent or representative of any recipient) may disclose to any and allpersons, without limitation of any kind, the tax treatment and tax structure of an investment described herein and all materials of any kind (including opinions orother tax analyses) that are provided that relate to such tax treatment or tax structure, except to the extent maintaining such confidentiality is necessary tocomply with any applicable securities laws. The foregoing language is not intended to waive any confidentiality obligations otherwise applicable, except withrespect to the information and materials specifically referenced in the preceding sentence. By accepting delivery of this Presentation, each prospective investoragrees to the foregoing.
− Any opinions, forecasts, projections or other statements, other than statements of historical fact, that are made in this Presentation are forward-lookingstatements. Although the Sponsor believes that the expectations reflected in such forward-looking statements are reasonable, they do involve a number ofassumptions, risks and uncertainties. Accordingly, neither the Sponsor nor any of its affiliates makes any express or implied representation or warranty, and noresponsibility is accepted with respect to the adequacy, accuracy, completeness or reasonableness of the facts, opinions, estimates, forecasts, or otherinformation set out in this Presentation or any further information, written or oral notice, or other document at any time supplied in connection with thisPresentation, and nothing contained herein or in the Disclosure Document shall be relied upon as a promise or representation regarding any future events orperformance. Past returns from investment in real estate (or real estate related investments) are no guarantee that the same (or enhanced) returns fromreal estate (or real estate related investments) will be achieved in the future.
− The recipient’s attention is specifically drawn to the risk factors identified by the Sponsor relating to the Opportunity as set out in the Disclosure Document orany other documents provided to the recipient. The Sponsor also advises that the potential investment described herein is speculative, involves a degree of riskand there is no guarantee of performance or a return of any capital with respect to any investment.
− By accepting delivery of this Presentation, the recipient accepts the terms of this notice and agrees, upon request, to return all materials received by therecipient from the Sponsor, including this Presentation without retaining any copies thereof.
Notice and Disclaimer
Appendix: Performance Notes & Disclaimer 43