ALTERNATIVES

State Street 2013 Alternative Fund Manager Survey

Executive Summary: Real Estate

September 2013

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ALTERNATIVES

State Street 2013 Alternative Fund Manager Study

• In July 2013, State Street conducted a survey of 391 leading alternative asset managers in

collaboration with Preqin, a leading source of data and intelligence for the alternative fund industry. Of

these, 57 were from the real estate sector.

• Managers provided their insights on current challenges, priorities and opportunities across the

industry, as well as their predictions for the future.

About the Research

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54% 30%

14%

2%

Real Estate Respondents by Location

North America

Europe

Asia Pacific

Other

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ALTERNATIVES

Drivers of Change

Real estate managers view investors’ demands for increased transparency and greater control of assets

as the greatest drivers of change in the industry today.

Source: State Street 2013 Alternative Fund Manager Survey

51%

40%

35%

32%

30%

0% 10% 20% 30% 40% 50% 60%

Investor demand for greater transparencyaround risk and performance

Investor demand for greater control of assets

Increased manager competition for limited pool of assets

Investor demand for more favorable fees

Investor demand for greater liquidity at fund level

Top Five Drivers of Change in the Real Estate Sector

Note: Respondents could select up to three answers. Only the top five responses are shown.

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ALTERNATIVES

Evolving Strategies Create Competitive Edge

Real estate managers are poised to expand their business over the next five years by

adding investment strategies and expanding into new regions.

35%

30%

26%

26%

16%

11%

7%

25%

14%

16%

33%

32%

9%

12%

Enter joint ventures with investors

Change fee structure

Offer managed accounts

Add new investment strategies with in-house resources

Expand into new regions

Offer funds with shorter lifespans

Add new investment strategies by acquiring another business

Product and Investment Changes Made by Real Estate Managers Since 2008 or Planned by 2018

Introduced this change since 2008 Plan to introduce this change over next five years

Source: State Street 2013 Alternative Fund Manager Survey

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ALTERNATIVES

Operational Excellence With a Spotlight on Risk

Real estate managers have reached a place of relative stability

after having made major operational and risk changes in the wake of the financial crisis.

51%

51%

42%

19%

16%

11%

18%

9%

14%

14%

Reduce amount of leverage we employ

Report more information to investors on holdings, risk andperformance

Report more frequently to investors on our investment holdings

Purchase or license software to upgrade investment ops technology

Use new techniques to assess performance & risk relative to peers

Risk and Operational Changes Made by Real Estate Managers Since 2008 or Planned by 2018

Introduced this change since 2008 Plan to introduce this change over next five years

Source: State Street 2013 Alternative Fund Manager Survey

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ALTERNATIVES

Challenges for the Future

Fundraising is the top concern for real estate managers as they face fierce competition for investor capital.

Source: State Street 2013 Alternative Fund Manager Survey

82%

54%

38%

20%

18%

0% 10% 20% 30% 40% 50% 60% 70% 80% 90%

Fundraising

Generating performance

Adapting to regulation

Preserving margins

Fulfilling investor demands

Top Five Challenges Predicted by Real Estate Managers Over Next Five Years

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