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Presentation for:
Water and Power Employees’ Retirement PlanAugust 8, 2018
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 of Heitman 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 asset management services). Further, this presentation is subject to correction, completion and amendment without notice.
Table of Contents
2Table of Contents
Heitman Overview 3
Investment Process & Discipline 7
Market Overview 9
Performance Review 13
Portfolio Review & Characteristics 21
Conclusion 27
APPENDICES
− Fee Schedule 29− Glossary of Investment Terms 31− Biographies 33− Performance Notes & Disclaimer 35
Michael MoranSENIOR VICE PRESIDENT, PUBLIC REAL ESTATE EQUITYT: +1.312.425.0383 • MICHAEL.MORAN@HEITMAN.COM
John MancusoSENIOR VICE PRESIDENT, CLIENT SERVICE & MARKETING – NORTH AMERICAT: +1.312.912.6672 • JOHN.MANCUSO@HEITMAN.COM
Heitman is a Real Estate Specialist
As of June 30, 208
3
50 years investing on behalf of clients with an exclusive focus on real estate
$42 billion managed across three complementary business units
36 partners from across the Heitman platform own 100% of the company
CHICAGO
LOS ANGELES
LONDON
FRANKFURT
LUXEMBOURG
MUNICH
WARSAW
HONG KONG
MELBOURNE
SEOUL
TOKYO
11 Offices
332Employees
$35BPRIVATE EQUITY
$2BPRIVATE DEBT
$5BPUBLIC EQUITY
Heitman Overview
Client Relationships Built on Trust and Experience
AUM of $41.5 billion as of June 30, 2018Heitman 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 not construed 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, Mutual Fund and Sovereign
Wealth Funds2. Corporate includes sub-advised and model-only portfolios
4
REPRESENTATIVE CLIENT LIST
APG Investments
ATP Real Estate
BT Investment Solutions (Australia)
California State Teachers’ Retirement System
Exelon Corporation
GE Capital Real Estate
HI Asset Management Co., Ltd
L-3 Communications Corporation
Munich Ergo Asset Management GmbH
National Pension Service (South Korea)
Navy Exchange Service Command Retirement Trust
New York State Common Retirement Fund
Nomura Asset Management Co., Ltd.
Ohio Public Employees Retirement System
Pennsylvania State Employees’ Retirement System
Producer-Writers Guild of America
Sompo Japan Nipponkoa Asset Management Co., Ltd.
State Board of Administration of Florida
State of Wisconsin Investment Board
Stichting Instituut Gak
Syntrus Achmea
Sunsuper (Australia)
Teacher Retirement System of Texas
Teachers' Retirement System of the State of Illinois
The Korean Teachers’ Credit Union
Tokio Marine Asset Management Co., Ltd.
59%
Public
$24,616
32%
Corporate²
$13,312
9%
Other¹
$3,576
TOTAL AUM BY CLIENT TYPE
74%
North America
$30,627
10%
Europe
$4,278
16%
Asia-Pac
$6,599
TOTAL AUM BY DOMICILE
Heitman Overview
Global
Benchmarked
Securities
$1.2B
23%
Prime
$2.6B
50%
US
Benchmarked
Securities
$1.4B
27%
Why Heitman?
Experience− 18 member global investment team made up of country
and sector specialists with 15 average years of experience
Information Advantage− Over $36B global private platform
Risk-Adjusted Performance− Top quartile information ratio
− Consistently low tracking error
Team Alignment− Employee ownership and compensation structure
aligns the team with clients
5Heitman Overview
As of June 30, 2018From 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.
$5.3 Billion Assets Under Management
Heitman’s Global Public Equity Team
6Heitman Overview
As of June 30, 20181. 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
Jerry Ehlinger, CFA¹Senior Managing Director
Firm Tenure
Years Experience8
23
REGIONALINVESTMENT TEAM
Jerry Ehlinger, CFA¹SENIOR MANAGING DIRECTOR
Jeff Yurk, CFAPORTFOLIO MANAGER
Charles Harbin, CFAPORTFOLIO MANAGER
Mat SpencerPORTFOLIO MANAGER
Gabriel HilmoeSENIOR ANALYST
John Minor, CFA ANALYST
Mark ZaharaHEAD TRADER
Vicky Madison TRADER
14
16
8
16
3
7
2
14
<1
7
18
18
John White²SENIOR MANAGING DIRECTOR
Karena FungPORTFOLIO MANAGER
Jeff Mak, CFAASSISTANT PORTFOLIO MANAGER
Jason Lai, CFASENIOR ANALYST
Philip HunterTRADER
Jacques PerdrixSENIOR VICE PRESIDENT,
PORTFOLIO MANAGER
Andreas WelterSENIOR VICE PRESIDENT,
PORTFOLIO MANAGER
Jacques PerdrixPORTFOLIO MANAGER
Andreas WelterPORTFOLIO MANAGER
Fabien VaccaroSENIOR ANALYST
Peter BurdettTRADER
5
14
9
16
5
20
7
16
<1
16
1
14
8
23
11
27
EUROPE ASIA-PACIFICNORTH AMERICA STRATEGY
Mike Moran, CFASENIOR VICE PRESIDENT,
GLOBAL INVESTMENT STRATEGIST
10
13
6
6
25
25
3
6
12
14GLOBAL INVESTMENT COMMITTEE
5
172
11
ANALYTICS
Shruti WaghrayVICE PRESIDENT
Will LouxAVP, PORTFOLIO ANALYST
Tony VoASSOCIATE
Diane LehmannPORTFOLIO COORDINATOR
<1
7
OPERATIONSBill Pogorelec
DIRECTOR OF OPERATIONS
Hima PandyaMANAGER
David RadziwonMANAGER
Colleen CallahanTRADING
ADMINISTRATOR
Paul Wilson TRADING
ADMINISTRATOR
Michael ServialRECONCILIATION
ASSOCIATE
23
25
<1
11
1
9
2
23
2
6
1
12
5
14
9
16
Philosophy & Process
As of June 30, 2018
7Investment Process & Discipline
$36.2 billion private global portfolio
Experienced and local securities teams
Private real estate expertise
Public market acumen
Sophisticated portfolio
construction & risk management
Top quartileperformance
Over the long term, underlying real estate
and management’s ability to affect value
drive share prices
Short-term pricing inefficiencies create alpha opportunities
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-country stock 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 the lesser of cost or market value of the portfolio. No issue
purchased in the portfolio if more than 10% of outstanding share of that company 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
7. Cannot purchase letter or restricted stock, naked options or future contracts, and uncovered short positions or commodities. Use of any derivative
instruments for speculation is prohibited
8. Rule 144A international equity instruments with registration rights are permissible up to 10% of the lesser of cost or market value of any single international
equity portfolio
9. Ineligible for cross transactions
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 FTSE EPRA/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/NAREIT Developed Index on a 24-
month rolling basis, using monthly holdings data
PERFORMANCE OBJECTIVES:
− On an annual basis, Heitman is expected to outperform the FTSE EPRA/NAREIT Developed Index, net of fees, to be measured over a market cycle of three-to-
five years
COMPLIANCE:
− With the exception of the recent portfolio turnover, Heitman is in compliance with the guidelines for the year ending June 30, 2018
− As of June 30, 2018, the one-year turnover was 154% for both accounts
8Investment Process & Discipline
Investment Themes & Outlook
9Market Overview
GLOBAL INVESTMENT OUTLOOK
Macro Economy
− The economic cycle continues as global growth has become
more synchronized
− Political uncertainties continue to add to market uncertainty,
along with concerns about a potential US-led global trade war
Capital Markets
− The after effects of unprecedented central bank easing policies
are allowing continued access to equity and debt capital globally
− M&A activity has picked up and could continue as long as the
capital markets remain robust
Real Estate Markets
− Economic growth should lead to slow but steady job growth that
will drive demand for commercial real estate
− New supply remains in check in most areas given risk aversion
and lack of funding due to tighter regulations on banks-2
-1
0
1
2
3
4
5
6
7
Jun
-07
Oc
t-0
7F
eb
-08
Jun
-08
Oc
t-0
8F
eb
-09
Jun
-09
Oc
t-0
9F
eb
-10
Jun
-10
Oc
t-10
Fe
b-1
1Ju
n-1
1O
ct-
11F
eb
-12
Jun
-12
Oc
t-12
Fe
b-1
3Ju
n-1
3O
ct-
13F
eb
-14
Jun
-14
Oc
t-14
Fe
b-1
5Ju
n-1
5O
ct-
15F
eb
-16
Jun
-16
Oc
t-16
Fe
b-1
7Ju
n-1
7O
ct-
17F
eb
-18
Jun
-18
Spread L-T Avg.
As of June 30, 2018
Sources: Heitman Research, FTSE EPRA/NAREIT
-50%
-40%
-30%
-20%
-10%
0%
10%
20%
30%
40%
Jun
-08
No
v-0
8
Ap
r-0
9
Se
p-0
9
Fe
b-1
0
Jul-
10
De
c-1
0
Ma
y-1
1
Oc
t-11
Ma
r-12
Au
g-1
2
Jan
-13
Jun
-13
No
v-1
3
Ap
r-14
Se
p-1
4
Fe
b-1
5
Jul-
15
De
c-1
5
Ma
y-1
6
Oc
t-16
Ma
r-17
Au
g-1
7
Jan
-18
Jun
-18
DIVIDEND YIELD SPREAD TO GLOBAL BONDSFTSE EPRA/NAREIT ADEVELOPED INDEX
PREMIUM/(DISCOUNT) TO NAVFTSE EPRA/NAREIT DEVELOPED INDEX
NORTH AMERICA INVESTMENT OUTLOOK
Macro Economy
− The economic recovery should continue and likely receive a boost
from tax law and spending changes
− Canadian growth is strong, but NAFTA risk lingers
− Though, the potential of a US-led global trade war could dampen
sentiment
Capital Markets
− REIT equity and debt markets are open with strong demand from
investors and increasing IPO activity
− There remains strong demand for REIT debt and several companies
have successfully issued 30-year bonds
− Public-to-public M&A activity has increased
Real Estate Markets
− Property fundamentals remain strong for this late in the cycle. Rent
growth remains above trend growth as new supply is reasonable
− REIT transaction activity has slowed in most sectors
-10.47%
-1.64%
-7.54%
0.62% 0.19%
-1.77%
-15%
-10%
-5%
0%
5%
10%
15%
US Canada FTSE EPRA/NAREIT
Developed Index
5-yr average prem/(disc) to NAV
Investment Themes & Outlook
10Market Overview
PREMIUM/DISCOUNT TO NAV BY REGION –FTSE EPRA/NAREIT DEVELOPED INDEX
-2
-1
0
1
2
3
4
5
6
7
8
Jun
-07
Oc
t-0
7F
eb
-08
Jun
-08
Oc
t-0
8F
eb
-09
Jun
-09
Oc
t-0
9F
eb
-10
Jun
-10
Oc
t-10
Fe
b-1
1Ju
n-1
1O
ct-
11F
eb
-12
Jun
-12
Oc
t-12
Fe
b-1
3Ju
n-1
3O
ct-
13F
eb
-14
Jun
-14
Oc
t-14
Fe
b-1
5Ju
n-1
5O
ct-
15F
eb
-16
Jun
-16
Oc
t-16
Fe
b-1
7Ju
n-1
7O
ct-
17F
eb
-18
Jun
-18
Spread L-T Avg.
As of June 30, 2018
Sources: Heitman Research, FTSE EPRA/NAREIT
FTSE EPRA/NAREIT NORTH AMERICADIVIDEND YIELD SPREAD TO BONDS
-3
-2
-1
0
1
2
3
4
5
Jun
-07
Oc
t-0
7F
eb
-08
Jun
-08
Oc
t-0
8F
eb
-09
Jun
-09
Oc
t-0
9F
eb
-10
Jun
-10
Oc
t-10
Fe
b-1
1Ju
n-1
1O
ct-
11F
eb
-12
Jun
-12
Oc
t-12
Fe
b-1
3Ju
n-1
3O
ct-
13F
eb
-14
Jun
-14
Oc
t-14
Fe
b-1
5Ju
n-1
5O
ct-
15F
eb
-16
Jun
-16
Oc
t-16
Fe
b-1
7Ju
n-1
7O
ct-
17F
eb
-18
Jun
-18
Spread L-T Avg.
-6.40%
-10.47%
-7.54%
2.76%
-2.12% -1.77%
-15%
-10%
-5%
0%
5%
10%
Continental Europe UK FTSE EPRA/NAREIT
Developed Index
5-yr average prem/(disc) to NAV
EUROPE INVESTMENT OUTLOOK
Macro Economy
− Growth in Continental Europe is expected to continue as the
lagged effects of QE support the economy
− UK consumer data to remain soft as Brexit bites into sentiment and
inflation remains relatively high
Capital Markets
− Policy issues surrounding the EU, such as Brexit, will continue to
cause near-term uncertainty
− Accommodative central bank policies to continue to support
capital markets in the short-term
Real Estate Markets
− There is a shortage of new supply in most asset classes and
countries
− Selected asset classes (residential, offices, logistics) and prime
locations expected to continue to outperform
− Expect consolidation and M&A to continue to be a theme
Investment Themes & Outlook
11Market Overview
PREMIUM/DISCOUNT TO NAV BY REGION –FTSE EPRA/NAREIT DEVELOPED INDEX
As of June 30, 2018
Sources: Heitman Research, FTSE EPRA/NAREIT
FTSE EPRA/NAREIT EUROPEDIVIDEND YIELD SPREAD TO BONDS
-1.35%
-24.65%
-11.44%-7.54%
1.94%
-22.03%
6.22%
-1.77%
-30%
-20%
-10%
0%
10%
20%
Australia/New
Zealand
Asia Ex-Japan Japan FTSE
EPRA/NAREIT
Developed Index
5-yr average prem/(disc) to NAV
ASIA-PACIFIC INVESTMENT OUTLOOK
Macro Economy
− Japan, Hong Kong and Singapore are growing above trend as global
growth becomes more synchronized, while domestic conditions in
Australia remain sluggish
− Rising rates in the US are a concern, possibly leading to tighter credit
conditions in most markets
Capital Markets
− Rising US rates and a flattening yield curve implies the potential for
tightening financial conditions
− Sentiment remains cautiously positive
Real Estate Markets
− Office markets appear buoyant throughout the region with rent
growth now evident in all markets while retail conditions remain
challenging, except in Hong Kong
− Apart from pockets of oversupply in some markets, the logistics
sector is benefiting from strong ongoing demand from e-commerce
growth
Investment Themes & Outlook
12Market Overview
PREMIUM/(DISCOUNT) TO NAV BY REGION –FTSE EPRA/NAREIT DEVELOPED INDEX
0
1
2
3
4
5
6
7
Jun
-07
Oc
t-0
7F
eb
-08
Jun
-08
Oc
t-0
8F
eb
-09
Jun
-09
Oc
t-0
9F
eb
-10
Jun
-10
Oc
t-10
Fe
b-1
1Ju
n-1
1O
ct-
11F
eb
-12
Jun
-12
Oc
t-12
Fe
b-1
3Ju
n-1
3O
ct-
13F
eb
-14
Jun
-14
Oc
t-14
Fe
b-1
5Ju
n-1
5O
ct-
15F
eb
-16
Jun
-16
Oc
t-16
Fe
b-1
7Ju
n-1
7O
ct-
17F
eb
-18
Jun
-18
Spread L-T Avg
As of June 30, 2018
Sources: Heitman Research, FTSE EPRA/NAREIT
FTSE EPRA/NAREIT ASIA-PACIFICDIVIDEND YIELD SPREAD TO BONDS
Portfolio Portfolio FTSE EPRA/NAREIT Spread Spread
(Gross of Fee)1 (Net of Fee)1 Developed Index (Gross of Fee) (Net of Fee)
Month To Date 1.67% 1.62% 1.58% +0.10% +0.04%
Quarter To Date 6.08% 5.91% 5.45% +0.63% +0.46%
Year To Date 1.49% 1.17% 0.91% +0.58% +0.26%
Rolling One Year 7.18% 6.51% 6.70% +0.47% -0.20%
Rolling Three Years 6.79% 6.12% 6.70% +0.08% -0.59%
Since Inception (10/31/13) 6.89% 6.23% 6.21% +0.68% +0.02%
1.67%
6.08%
1.49%
7.18%6.79% 6.89%
1.62%
5.91%
1.17%
6.51%6.12% 6.23%
1.58%
5.45%
0.91%
6.70% 6.70%
6.21%
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
LA Water and Power Employees’ Retirement Plan Performance
13
1. Returns are calculated and presented in US Dollars. Periods Ending 6/30/18.2. FTSE EPRA/NAREIT Developed IndexPlease read Performance Notes pages for important disclosure information
ENDING MARKET VALUE AS OF JUNE 30, 2018: $24,265,166
Performance Review
Portfolio Portfolio FTSE EPRA/NAREIT Spread Spread
(Gross of Fee)1 (Net of Fee)1 Developed Index (Gross of Fee) (Net of Fee)
Month To Date 1.67% 1.61% 1.58% +0.09% +0.04%
Quarter To Date 6.07% 5.91% 5.45% +0.62% +0.46%
Year To Date 1.49% 1.17% 0.91% +0.58% +0.26%
Rolling One Year 7.20% 6.53% 6.70% +0.49% -0.18%
Rolling Three Years 6.80% 6.14% 6.70% +0.10% -0.57%
Since Inception (10/31/13) 6.90% 6.23% 6.21% +0.69% +0.02%
LA Water and Power Employees’ Retiree Health Benefit Plan Performance
1. Returns are calculated and presented in US Dollars. Periods Ending 6/30/18. 2. FTSE EPRA/NAREIT Developed IndexPlease read Performance Notes pages for important disclosure information
1.67%
6.07%
1.49%
7.20%6.80% 6.90%
1.61%
5.91%
1.17%
6.53%6.14% 6.23%
1.58%
5.45%
0.91%
6.70% 6.70%6.21%
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
ENDING MARKET VALUE AS OF JUNE 30, 2018: $6,031,540
Performance Review 14
LA Water and Power Employees’ Retiree Health Benefit Plan
Performance Review
Source: eVestment; HeitmanQuartile performance ranking calculated using the Global Diversified Developed CompositeReturns calculated and presented in USD and Gross of Fees for the Composite. As of 6/30/18
LA Water and Power Employees ’ Retirement Plan LA Water and Power Employees ’ Retiree Health B enefit Plan
1 Year 3 Years 1 Year 3 Years
l LA Water ERP 7.18% 6.79% l LA Water ERHBP 7.20% 6.80%
1st Quart ile 1st Quart ile
2nd Quart ile 2nd Quart ile
3rd Quart ile 3rd Quart ile
4t h Quart ile 4t h Quart ile
High 11.52 11.93 High 11.52 11.9325th Percentile 8.35 7.49 25th Percentile 8.35 7.49Median 7.37 6.52 Median 7.37 6.5275th Percentile 6.08 5.40 75th Percentile 6.08 5.40Low 2.38 3.81 Low 2.38 3.81Observations 53 53 Observations 53 53
COMPETITIVE PERFORMANCE IN USD COMPETITIVE PERFORMANCE IN USD
LA WATER AND POWER EMPLOYEES’ RETIREMENT PLAN
LA WATER AND POWER EMPLOYEES’ RETIREE HEALTH BENEFIT PLAN
21
LA Water and Power Employees’ Retiree Health Benefit Plan
Performance Review 16
LA WATER AND POWER EMPLOYEES’ RETIREMENT PLAN
LA WATER AND POWER EMPLOYEES’ RETIREE HEALTH BENEFIT PLAN
Source: eVestment; HeitmanQuartile performance ranking calculated using the Global Diversified Developed CompositeReturns calculated and presented in USD and Gross of Fees for the Composite. As of 6/30/18
2017 2016 2015 2014 2017 2016 2015 2014
l LA Water ERP 10.98 4.33 1.10 18.15 l LA Water 11.00 4.33 1.13 18.13
1st Quart ile 1st Quart ile
2nd Quart ile 2nd Quart ile
3rd Quart ile 3rd Quart ile
4t h Quart ile 4t h Quart ile
High 23.43 14.33 6.13 25.04 High 23.43 14.33 6.13 25.0425th Percentile 15.11 4.96 2.58 18.33 25th Percentile 15.11 4.96 2.58 18.33Median 12.77 4.00 1.28 16.60 Median 12.77 4.00 1.28 16.6075th Percentile 11.57 1.73 -0.11 14.87 75th Percentile 11.57 1.73 -0.11 14.87Low 7.49 -1.41 -21.97 11.28 Low 7.49 -1.41 -21.97 11.28Observations 57 58 58 54 Observations 57 58 58 54
COMPETITIVE PERFORMANCE IN USDCOMPETITIVE PERFORMANCE IN USD
Heitman Global Real Estate Securities StrategyRisk-Adjusted Performance
17Performance Review
HEITMAN GLOBAL REAL ESTATE SECURITIES STRATEGY
The Risk Adjusted Performance is shown above as supplemental information to the Heitman Global Real Estate Securities Strategy Composite.
1. Returns are calculated and presented in US Dollars and Gross of Fees. Periods Ending 6/30/18.
2. FTSE EPRA/NAREIT Developed Index3. Linked monthly excess returns over risk-free T-bills.
4. For the periods when the excess returns over risk-free T-bills are negative, the Sharpe ratio has been adjusted to the Modified Sharpe Ratio.
Please read Performance Notes pages for important disclosure information.
Portfolio¹ Index2 Portfolio¹ Index2 Portfolio¹ Index2
Annualized return 6.60% 6.70% 7.47% 6.89% 8.46% 7.59%
Excess return over 90-day T-bills 3 5.89% 5.99% 7.03% 6.45% 8.14% 7.28%
Annualized standard deviation 11.12% 11.24% 10.87% 11.06% 13.40% 13.44%
Sharpe Ratio4 0.53 0.53 0.65 0.58 0.61 0.54
Excess return over benchmark
Tracking error vs. benchmark
Information Ratio
Alpha
Beta
R2
Upside Market Capture
Downside Market Capture
3 Years 5 Years
-0.10%
0.88%
-0.12
-0.01
0.99
0.99
0.99
1.00
0.58%
1.02
0.98
Since Inception (12/31/10)
0.86%
0.93%
0.93
0.84
0.99
1.00
1.02
0.98
0.93%
0.63
0.67
0.98
0.99
Retail
18.0%
Office
19.9%
Residential
18.2%
Diversified
12.5% Industrial
9.3% Health Care 7.0%
Self-Storage 3.7%
Hotel/Resort & Entertainment 5.2%
Specialty 4.4%
Data Centers 1.7%
SECTOR WEIGHTINGS
Heitman Global Real Estate Securities Strategy
18Performance Review
PORTFOLIO CHARACTERISTICS
Heitman Index¹
Number of Securities 104 338
Top 10 Holdings 25.12% 19.65%
Active Share
Beta 1.00 1.00
Dividend Yield 3.53% 3.97%
NAV Prem/(Disc) -8.63% -7.54%
Earnings Growth 5.67% 4.73%
LTV 31.31% 31.78%
52.96%
As of June 30, 2018.
The Portfolio Characteristics shown above are supplemental information to the Heitman Global Real Estate Securities Strategy Composite.
The composite benchmark changed from the FTSE EPRA/NAREIT Developed Rental Index to the FTSE EPRA/NAREIT Developed Index effe ctive June 1, 2012.
1. FTSE EPRA/NAREIT Developed Index and the respective regional sleeves.
Japan, 10.80%
Hong Kong, 7.99%
Australia, 5.06%
Singapore, 2.38% US, 52.98%
Canada, 2.75%
Europe, 13.08%
UK, 4.97%
Asia-Pacific
26%
North America
56%
Europe
18%
0%
10%
20%
30%
40%
50%
60%
70%
Asia-Pacific North America Europe
COUNTRY WEIGHTINGS
OVERWEIGHTS/UNDERWEIGHTS
Security Sector Heitman Active Weight
AvalonBay Communities Residential 3.57% +1.97
Sunstone Hotel Investors Hotel/R&E 1.91% +1.66
Cyrusone Data Centers 1.59% +1.59
Welltower Health Care 3.10% +1.53
Liberty Property Trust Industrial 1.83% +1.38
Realty Income Specialty 0.00% -1.03
Essex Property Trust Residential 0.00% -1.06
Ventas Health Care 0.00% -1.37
Equity Residential Residential 0.00% -1.55
Public Storage Storage 0.58% -1.69
To
p 5
Bo
tto
m 5
Heitman Global Real Estate Securities StrategyPerformance Attribution - USD
19Performance Review
Positive performance from Hong Kong, Japan, and the US
− An overweight in Wharf Real Estate Investment, which spun out of Wharf Holdings, was a positive performer
− In Japan, positive stock selection among office landlords added to performance
− In the US, industrial was the top performer as we owned DCT Industrial Trust when it was acquired by Prologis
Singapore and Europe detracted modestly from performance
− In Singapore, our holdings in residential developers detracted from performance
− In the UK, negative stock selection related to rumored and potential M&A deals in the retail space detracted
− In Europe, some holdings in the periphery underperformed as investors favored more defensive sectors
Heitman Global
North America 54.47 5.04 5.11 3.01 54.83 4.34 4.42 2.64 0.00 0.58 -0.20 0.38 0.02 0.40
Asia-Pacific 27.08 8.74 8.90 2.15 27.24 7.97 8.14 1.96 -0.03 0.28 -0.06 0.19 0.00 0.19
Middle East 0.00 - - 0.00 0.11 -8.62 -4.15 -0.01 0.01 0.00 0.00 0.01 0.01 0.02
Cash 0.75 142.68 177.66 0.01 0.00 - - 0.00 0.01 0.00 0.00 0.01 -0.03 -0.03
Europe 17.70 11.64 10.44 1.95 17.82 12.47 11.27 2.09 0.01 -0.66 0.50 -0.15 0.02 -0.13
Total 100.00 7.12 7.09 7.12 100.00 6.67 6.66 6.67 0.00 0.21 0.23 0.43 0.01 0.45
Portfolio¹ FTSE EPRA/NAREIT Developed Attribution Analysis
Total
Return
Total
Currency
Effect
Total
Effect
Total
Return
(Local)
Contribution
To Return
Allocation
Effect
(Local)
Selection
Effect
(Local)
Interaction
Effect
(Local)
Total
Effect
(Local)
Average
WeightRegion & Country Grouping
Average
Weight
Total
Return
Total
Return
(Local)
Contribution
To Return
Returns are presented in US Dollars. 12 Months Ending 6/30/18.
Representative Heitman Global Real Estate Securities Strategy.
Please read Performance Notes pages for important disclosure information.Please read Attribution Analysis Performance Notes page for important disclosure information.
Top Ten Contributors/Detractors
20Performance Review
Portfolio data for Los Angeles Water and Power Employees’ Retirement PlanOne year ended 6/30/18
Top Ten Contributors
Ventas 0.35
Wharf Real Estate Investment 0.26
Extra Space Storage 0.22
DCT Industrial Trust 0.21
Lifestyle Intl. 0.15
VICI Properties 0.13
American Campus Communities 0.13
Education Realty Trust 0.12
Hudson Pacific Properties 0.12
Highwoods Properties 0.11
Bottom Ten Detractors
American Homes 4 Rent -0.14
CareTrust REIT -0.14
Kilroy Realty -0.14
City Developments -0.15
Public Storage -0.15
HCP -0.18
AvalonBay Communities -0.19
New York REIT -0.19
GGP -0.22
Physicians Realty Trust -0.30
Top Ten Holdings
21Portfolio Review & Characteristics
Portfolio data for Los Angeles Water and Power Employees’ Retirement Plan6/30/18
Security Region Sector
Portfolio
Weight
Benchmark
Weight
Excess
Weight
Simon Property Group North America Retail 3.74% 3.55% +0.19
AvalonBay Communities North America Residential 3.51% 1.60% +1.90
Welltower North America Health Care 3.05% 1.58% +1.47
Vonovia Europe Residential 2.26% 1.65% +0.61
CK Asset Holding Asia Diversified 2.16% 1.45% +0.72
Boston Properties North America Office 2.11% 1.31% +0.80
Unibail-Rodamco-Westfield Europe Retail 1.94% 2.00% -0.07
Mitsubishi Estate Asia Diversified 1.93% 1.40% +0.53
Sunstone Hotel Investors North America Hotel/R&E 1.91% 0.25% +1.66
DCT Industrial Trust North America Industrial 1.90% 0.43% +1.47
Complete List of Holdings
22Portfolio Review & Characteristics 22
Portfolio data for Los Angeles Water and Power Employees’ Retirement Plan6/30/18
Portfolio Benchmark Weight Market Portfolio Benchmark Weight Market
Security Region Sector Weight Weight Excess Value Security Region Sector Weight Weight Excess Value
Goodman Group Asia-Pacific Industrial 1.24 0.85 0.39 301,822.88 Derwent London Europe Office 0.86 0.28 0.58 209,381.65Ingenia Communities Group Asia-Pacific Residential 0.35 0.00 0.35 84,959.40 Primary Health Properties Europe Health Care 0.51 0.07 0.44 124,515.35Scentre Group Asia-Pacific Retail 1.40 1.12 0.28 340,144.68 Grainger Europe Residential 0.50 0.11 0.39 121,649.57Investa Office Fund Asia-Pacific Office 0.41 0.14 0.27 99,591.63 British Land Co Europe Office 0.98 0.59 0.39 236,644.52GPT Group Asia-Pacific Diversified 0.72 0.46 0.26 174,206.62 Segro Europe Industrial 0.85 0.60 0.25 206,388.14Mirvac Group Asia-Pacific Diversified 0.53 0.40 0.13 128,368.55 Shaftesbury Europe Retail 0.43 0.19 0.24 104,254.32Vicinity Centres Asia-Pacific Retail 0.27 0.42 -0.15 65,459.24 Tritax Big Box REIT Europe Industrial 0.37 0.21 0.17 90,290.16CK Asset Holding Asia-Pacific Diversified 2.16 1.45 0.72 524,751.11 Hammerson Europe Retail 0.36 0.37 -0.01 87,059.52Lifestyle Intl. Asia-Pacific Retail 0.53 0.00 0.53 127,684.79 First Capital Realty North America Retail 0.77 0.16 0.62 187,839.60Wheelock & Co Asia-Pacific Retail 0.52 0.00 0.52 126,178.88 Allied Properties Real Estate North America Office 0.78 0.20 0.58 189,262.72Swire Properties Asia-Pacific Diversified 0.70 0.26 0.44 170,681.73 Canadian Apartment Properties North America Residential 0.79 0.30 0.49 191,720.76Sino Land Co Asia-Pacific Diversified 0.60 0.34 0.26 146,613.67 InterRent Real Estate Investment North America Residential 0.40 0.00 0.40 95,863.77Hang Lung Properties Asia-Pacific Diversified 0.52 0.28 0.24 126,448.37 AvalonBay Communities North America Residential 3.51 1.60 1.90 850,855.50Wharf Real Estate Investment Asia-Pacific Diversified 0.58 0.59 0.00 141,051.42 Sunstone Hotel Investors North America Hotel/R&E 1.91 0.25 1.66 464,080.26Link REIT/The Asia-Pacific Retail 1.08 1.33 -0.25 262,509.81 Cyrusone North America Office 1.57 0.00 1.57 382,024.56Sun Hung Kai Properties Asia-Pacific Diversified 1.09 1.45 -0.37 263,619.19 Welltower North America Health Care 3.05 1.58 1.47 740,619.66Kenedix Office Investment Asia-Pacific Residential 0.84 0.15 0.69 204,974.50 DCT Industrial Trust North America Industrial 1.90 0.43 1.47 460,036.62Japan Rental Housing Investment Asia-Pacific Residential 0.69 0.08 0.60 166,511.98 Liberty Property Trust North America Industrial 1.79 0.44 1.35 433,547.40Hulic REIT Asia-Pacific Office 0.65 0.10 0.55 158,021.04 Apartment Investment & Mngt North America Residential 1.73 0.45 1.29 420,885.00Mitsubishi Estate Co Asia-Pacific Diversified 1.93 1.40 0.53 468,314.54 Federal Realty Investment Trust North America Retail 1.86 0.62 1.24 452,289.70Daiwahouse Residential Investment Asia-Pacific Residential 0.80 0.28 0.52 194,626.46 Physicians Realty Trust North America Health Care 1.44 0.20 1.24 348,544.04Nippon Building Fund Asia-Pacific Office 0.97 0.49 0.48 236,527.78 Equinix North America Data Centers 1.17 0.00 1.17 283,727.40Japan Hotel REIT Asia-Pacific Hotel/R&E 0.64 0.20 0.43 154,362.84 Hudson Pacific Properties North America Office 1.49 0.37 1.13 362,626.05Orix JREIT Asia-Pacific Office 0.68 0.28 0.40 166,095.79 Four Corners Property Trust North America Specialty 1.21 0.10 1.11 293,885.16Aeon REIT Investment Asia-Pacific Retail 0.51 0.12 0.40 124,512.26 Agree Realty North America Specialty 1.19 0.11 1.08 288,599.13Sumitomo Realty & Development Asia-Pacific Diversified 1.35 1.08 0.27 327,038.78 Invitation Homes North America Residential 1.47 0.47 1.00 356,184.76Mitsui Fudosan Co Asia-Pacific Diversified 1.43 1.54 -0.12 346,015.82 American Campus Communities North America Residential 1.29 0.39 0.89 312,337.92UOL Group Asia-Pacific Hotel/R&E 0.66 0.19 0.47 159,206.86 Empire State Realty Trust-A North America Office 1.03 0.16 0.87 249,762.60Mapletree Logistics Trust Asia-Pacific Industrial 0.50 0.13 0.37 121,128.16 Brandywine Realty Trust North America Office 1.06 0.20 0.86 257,757.60CapitaCommercial Trust Asia-Pacific Office 0.57 0.19 0.37 137,462.85 Boston Properties North America Office 2.11 1.31 0.80 512,842.38City Developments Asia-Pacific Diversified 0.61 0.25 0.35 147,585.06 Sabra Health Care REIT North America Health Care 1.02 0.26 0.76 247,070.10CapitaMall Trust Asia-Pacific Retail 0.00 0.24 -0.24 156.37 Washington REIT North America Office 0.91 0.16 0.75 220,802.40Warehouses De Pauw Europe Industrial 0.50 0.14 0.36 122,132.79 Extra Space Storage North America Storage 1.51 0.82 0.68 365,304.60Aedifica Europe Health Care 0.45 0.11 0.34 110,152.32 CubeSmart North America Storage 1.06 0.40 0.66 257,115.60ICADE Europe Office 0.58 0.20 0.39 141,944.02 Retail Properties of America North America Retail 0.84 0.19 0.65 204,237.18Carmila Europe Retail 0.40 0.06 0.34 95,957.59 Camden Property Trust North America Residential 1.20 0.55 0.65 290,157.92Gecina Europe Office 0.81 0.59 0.22 196,254.61 DDR North America Retail 0.73 0.15 0.57 176,207.60Unibail-Rodamco-Westfield Europe Retail 1.94 2.00 -0.07 469,782.28 Highwoods Properties North America Office 0.90 0.35 0.55 218,798.49Adler Real Estate Europe Residential 0.71 0.03 0.67 171,405.75 Store Capital North America Specialty 0.88 0.33 0.55 212,350.00Vonovia Europe Residential 2.26 1.65 0.61 548,467.36 Host Hotels & Resorts North America Hotel/R&E 1.55 1.04 0.51 377,089.79Aroundtown Europe Office 0.47 0.35 0.13 114,860.63 GGP North America Retail 1.31 0.86 0.45 318,340.26Deutsche Wohnen AG Europe Residential 0.69 1.16 -0.47 167,292.94 CareTrust REIT North America Health Care 0.46 0.08 0.38 112,373.77Irish Residential Properties Europe Residential 0.46 0.04 0.42 111,738.09 Summit Hotel Properties North America Hotel/R&E 0.38 0.10 0.28 93,129.48Cairn Homes Europe Residential 0.32 0.00 0.32 77,190.71 VICI Properties North America Specialty 0.65 0.38 0.27 157,235.52Lar Espana Real Estate Europe Retail 0.48 0.07 0.41 116,562.50 Simon Property Group North America Retail 3.74 3.55 0.19 906,942.51Inmobiliaria Colonial SA Europe Office 0.59 0.21 0.37 142,246.74 Macerich Co/The North America Retail 0.50 0.52 -0.03 120,479.60Merlin Properties Socimi Europe Office 0.53 0.33 0.20 129,349.68 National Retail Properties North America Specialty 0.43 0.45 -0.03 103,657.68Samhallsbyggnadsbolaget Europe Office 0.35 0.00 0.35 84,300.68 Education Realty Trust North America Residential 0.03 0.21 -0.19 6,100.50Catena Europe Industrial 0.35 0.02 0.33 86,110.40 ProLogis Inc North America Industrial 1.86 2.35 -0.50 450,502.02Wihlborgs Fastigheter AB Europe Office 0.35 0.10 0.25 85,764.24 Digital Realty Trust North America Data Centers 0.56 1.55 -0.99 135,011.80Hemfosa Fastigheter Europe Office 0.32 0.12 0.20 77,528.10 Public Storage North America Storage 1.09 2.28 -1.18 265,426.20Fabege AB Europe Office 0.19 0.21 -0.02 47,299.12
Change in Market Value Since Inception
23Portfolio Review & Characteristics
Portfolio data for Los Angeles Water and Power Employees’ Retirement Plan and Retiree Health Benefit Plan combinedAs of 6/30/18
$13.68
$16.48
$20.24
$21.50
$25.68
$26.71
$25.01 $24.72
$25.90
$27.22$28.03 $28.35
$26.96$27.49
$28.31$28.77
$29.88
$28.58
$30.30
$10.00
$15.00
$20.00
$25.00
$30.00
$35.00
12/31/2013 6/30/2014 12/31/2014 6/30/2015 12/31/2015 6/30/2016 12/31/2016 6/30/2017 12/31/2017 6/30/2018
Market Value ($ in milllions)
Heitman Global Real Estate Securities StrategyNorth America – Attribution Review – 1 Year
24Portfolio Review & Characteristics
Unite d State s 4.01% 94.71% 0 b p s 61 b p s 61 b p s
Data Centers -0.02% 3.15% -6 bps 48 bps 42 bps
Industrial 13.43% 9.58% 3 bps 38 bps 41 bps
Strip Centers 3.24% 6.53% 0 bps 34 bps 33 bps
Triple Net 5.72% 8.11% -4 bps 21 bps 16 bps
Office 1.62% 14.19% 0 bps 12 bps 12 bps
Residential 0.40% 16.87% 2 bps 8 bps 10 bps
Self-Storage 21.44% 6.40% 1 bps 9 bps 9 bps
Diversified 1.70% 0.91% 3 bps 0 bps 3 bps
Hotels/Resort & Entertainment 17.37% 6.67% 6 bps -16 bps -10 bps
Health Care -8.93% 12.07% 0 bps -43 bps -43 bps
Regional Malls 4.69% 10.23% -3 bps -50 bps -53 bps
Canada 10.22% 5 .29% 3 b p s 6 b p s 9 b p s
Diversified 7.68% 1.55% 7 bps 0 bps 7 bps
Residential 22.36% 0.88% 5 bps 0 bps 5 bps
Health Care 2.08% 0.33% 4 bps 0 bps 4 bps
Office 13.60% 0.53% 4 bps -1 bps 3 bps
Retail 4.30% 1.58% -8 bps 8 bps 0 bps
Industrial 16.14% 0.43% -11 bps 1 bps -10 bps
Cas h & Cas h Equivale nts - - -1 b p s 0 b p s -1 b p s
Total 4.34% 100.00% 2 b p s 67 b p s 69 b p s
Selection +
Interaction EffectTotal Effect
Returns Average Weighting Portfolio Effect
Allocation
Contribution3 Property Type¹ Index²
RelativeIndex²
Relative
-0.74%
1.86%
0.14%
0.59%
-1.10%
0.04%
-0.10%
0.00%
-0.88%
0.07%
-0.64%
-0.71%
0.08%
-1.55%
-0.15%
-0.33%
0.84%
1.12%
0.14%
0.66%
-2% 0% 2% 4%
0 .64%
9.98%
4.36%
4.84%
2.47%
0.87%
0.49%
1.5 1%
-6.12%
-2.19%
-2.80%
-5 .05 %
1 .40%
0.00%
-9.86%
0.00%
-4.09%
1.70%
-13.90%
0 .00%
0 .69%
-20% -10% 0% 10% 20%
The Country Returns shown above are supplemental information to the Heitman Global Real
Estate Securities Strategy Composite.1. Representative Heitman Global Real Estate Securities North America Strategy.
2. FTSE EPRA/NAREIT Developed North America Index.
3. Allocation Contribution includes currency effect.
Returns are presented in US Dollars. 12 Months Ending 6/30/18.Please read Performance Notes pages for important disclosure information.Please read Attribution Analysis Performance Notes page for important disclosure information.
Heitman Global Real Estate Securities StrategyAsia-Pacific – Attribution Review – 1 Year
25Portfolio Review & Characteristics
The Country Returns shown above are supplemental information to the Heitman Global
Real Estate Securities Strategy Composite.1. Representative Heitman Global Real Estate Securities Asia-Pacific Strategy.2. FTSE EPRA/NAREIT Developed Asia Index.
3. Allocation Contribution includes currency effect.
Returns are presented in US Dollars. 12 Months Ending 6/30/18.Please read Performance Notes pages for important disclosure information.Please read Attribution Analysis Performance Notes page for important disclosure information.
Relative Relative
Hong Kong 10.49% 30.66% 2 b p s 65 b p s 66 b p s
Investors & REITs 15.14% 13.78% 9 bps 90 bps 99 bps
Developers 6.65% 16.88% 1 bps -37 bps -36 bps
Jap an 6.81% 38.66% 7 b p s 5 1 b p s 5 9 b p s
Investors & REITs 8.42% 21.13% 7 bps 66 bps 73 bps
Developers 4.83% 17.53% 5 bps -22 bps -17 bps
Aus tral ia 8 .5 3% 20.80% -3 b p s 13 b p s 11 b p s
Investors & REITs 8.53% 20.80% -4 bps 13 bps 9 bps
Ne w Ze aland -6.5 7% 0.35 % 6 b p s 0 b p s 6 b p s
Investors & REITs -6.57% 0.35% 3 bps 0 bps 3 bps
Cas h & Cas h Equivale nts - - 2 b p s 0 b p s 2 b p s
Cash & Cash Equivalents - - -3 bps 0 bps -3 bps
France - - 1 b p s 0 b p s 1 b p s
Defensive - - -1 bps 0 bps -1 bps
Singap ore 3.84% 9.5 3% -1 b p s -64 b p s -65 b p s
Developers - - -5 bps 0 bps -5 bps
Investors & REITs 6.89% -5 bps -5 bps -10 bps
Property Cos & Dev -1.13% -12 bps -37 bps -49 bps
Total 7 .97% 100.00% 15 b p s 66 b p s 80 b p s
Index² Index²Allocation
Contribution3
Selection +
Interaction EffectTotal Effect
Returns Average Weighting Portfolio Effect
Property Type¹
2 .44%
7.64%
-2.06%
1 .25%
3.11%
-1 .28%
1 .13%
1.13%
0 .00%
0.00%
0 .00%
0.00%
0 .00%
0.00%
-6 .61%
0.00%
-0.93%
-8.5 8%
0 .80%
-10% 0% 10%
-0 .66%
-0.14%
-0.5 2%
0 .5 8%
0.25 %
0.33%
0 .05%
0.05 %
-0 .35%
-0.35 %
0 .91%
0.91%
0 .06%
0.06%
-0 .60%
0.36%
-1.44%
0.48%
-2% -1% 0% 1% 2%
Heitman Global Real Estate Securities StrategyEurope – Attribution Review – 1 Year
26Portfolio Review & Characteristics
The Country Returns shown above are supplemental information to the Heitman Global Real
Estate Securities Strategy Composite.1. Representative Heitman Global Real Estate Securities Europe Strategy.
2. FTSE EPRA/NAREIT Developed Europe Index.
3. Allocation Contribution includes currency effect.
Returns are presented in US Dollars. 12 Months Ending 6/30/18.Please read Performance Notes pages for important disclosure information.
Please read Attribution Analysis Performance Notes page for important disclosure information.
Cas h & Cas h Equivale nts - - -11 b p s 0 b p s -11 b p s
Cash & Cash Equivalent - - -10 bps 0 bps -10 bps
Europ e 13.00% 71.41% -4 b p s -22 b p s -26 b p s
Cyclical 15 .66% 19.82% 14 b p s 11 b p s 24 b p s
Retail -0.22% 2.66% 51 bps 3 bps 55 bps
Industrial 0.45% 0.34% -2 bps 3 bps 1 bps
Office 20.33% 12.72% -4 bps 2 bps -2 bps
Hotel/Resort & Entertainment 16.55% 1.15% -4 bps -22 bps -26 bps
Residential 13.34% 2.95% 3 bps -31 bps -28 bps
De fe ns ive 11 .99% 5 1.5 9% 19 b p s -67 b p s -48 b p s
Office 10.31% 13.05% -4 bps 31 bps 27 bps
Industrial 26.03% 0.75% 10 bps -2 bps 8 bps
Health Care 7.74% 1.69% -8 bps -4 bps -12 bps
Residential 25.07% 21.18% 4 bps -43 bps -39 bps
Retail -3.16% 14.92% -9 bps -34 bps -43 bps
Unite d Kingdom 11.23% 28.5 9% 1 b p s -5 5 b p s -5 4 b p s
De fe ns ive 13.01% 12.5 2% 12 b p s -25 b p s -13 b p s
Retail -4.10% 2.33% 9 bps 11 bps 19 bps
Health Care 0.75% 1.35% -14 bps 24 bps 10 bps
Office 20.14% 3.60% -8 bps 13 bps 5 bps
Residential 18.70% 2.25% 5 bps -17 bps -11 bps
Industrial 14.48% 1.84% -4 bps -13 bps -17 bps
Storage 30.87% 1.15% -26 bps 0 bps -26 bps
Cyclical 9.91% 16.07% 2 b p s -41 b p s -39 b p s
Industrial 40.40% 3.40% 26 bps -5 bps 21 bps
Office 9.93% 8.18% -1 bps -8 bps -10 bps
Retail -8.20% 4.49% 1 bps -55 bps -54 bps
Total 12.49% 100.00% -14 b p s -76 b p s -90 b p s
Returns Average Weighting Portfolio Effect
Property Type¹ Index²
Relative
Index²
RelativeAllocation
Contribution3
Selection +
Interaction EffectTotal Effect
0 .00%
0.00%
-0 .38%
0 .15%
2.94%
17.83%
-0.06%
-13.88%
-7.5 3%
-1 .14%
4.5 4%
-11.18%
-2.44%
-1.79%
-2.21%
-1 .78%
-1 .61%
1.46%
7.99%
3.76%
-5 .77%
-2.5 5 %
0.00%
-2 .31%
-2.35 %
-1.12%
-12.16%
-0 .90%
-20% 0% 20%
0 .79%
0.79%
-0 .74%
4.79%
-1.68%
1.02%
4.11%
-0.35 %
1.68%
-5 .53%
-4.5 2%
0.77%
1.73%
-1.35 %
-2.15 %
-0 .05%
3 .91%
0.84%
1.75 %
0.35 %
0.90%
1.24%
-1.15 %
-3 .96%
0.27%
-1.76%
-2.48%
-10% -5% 0% 5% 10%
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
27Conclusion
PAGE INTENTIONALLY BLANK
WPERP Fee Schedule
29Appendix: Fee Schedule
62.5 bps per annum on 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 are necessary to
maintain a REIT's properties and its revenue stream (e.g., new carpeting and drapes in apartment units, 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 the property's net
operating income by its purchase price. Generally, high cap rates indicate higher returns and greater perceived risk.
− Funds From Operations (FFO): The most commonly accepted and reported measure of REIT operating performance.
Equal to a REIT's net income, excluding gains or losses from sales of property, and adding back real estate depreciation.
− Mortgage REIT: A REIT that makes or owns loans and other obligations that are secured by real estate collateral.
− Multiple to Growth: This is a common valuation measure that is calculated by dividing a REIT’s following year Price/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 its properties, after
subtracting all its liabilities and obligations.
− Straight-lining: Real estate companies such as REITs "straight line" rents because generally accepted accounting
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 REITs CAD by its
dividend.
31Appendix: Glossary of Investment Terms
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Presenters
Mike Moran, CFA is a Senior Vice President, Global Investment Strategy in Heitman's Public Real Estate Securities group. He serves on the group's Global Investment Committee. Mike's primary responsibilities include integrating company, sector, country, regional, and global data to support Heitman's team of analysts and portfolio managers in their stock selection. He is also responsible for identifying and implementing best practices across the global team, including the development and enhancement of Heitman's investment process. In addition, Mike works with the firm's Client Service & Marketing group to understand the needs, situations and objectives of Heitman's clients. Prior to his current role, he was an Assistant Portfolio Manager in Heitman's North American Public Real Estate Securities group where he was responsible for fundamental company and market analysis supporting his stock recommendations. Prior to joining Heitman, Mike was with RHS Companies as a development associate, responsible for developing financial models and performing investment analysis, feasibility analysis and due diligence for potential development projects. He was also a project manager for a large mixed use land development project and a condo-hotel project. Mike received a BBA and an MBA from the University of Wisconsin-Madison and is a CFA Charterholder.
John Mancuso is a Senior Vice President in Heitman’s Client Service & Marketing group. He is responsible for developing and maintaining relationships 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 private markets investment research practice on a global basis by setting research priorities, identifying strategies for inclusion in client portfolios, and managing the due diligence process. Previously, John was with Meketa Investment Group, where he was responsible for supporting several client relationships 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 Management from 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 Society of Colorado.
33Appendix: Biographies
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Heitman Global Real Estate Securities Strategy
35Appendix: Performance Notes & Disclaimer
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 estate investment 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 of European pub licly 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 KE I LLC and KE 2 LLC, both members are comprised of a group of key Heitman employees.
2. This composite includes all discretionary, global 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 of January 1, 1993 through December 31, 2016. 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 are designed 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 or future 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 the indices described above.
6. The dispersion of annual returns is measured using a simple annual standard deviation of accounts in the composite for the entire year. For the purpose of this presentation, a significant population count is defined as more than 5 accounts in the composite. Periods with five or fewer accounts are marked “N/A”.
7. 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 September 2017.
8. 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 $500 million – 0.50%. Advisory fees are described in Part II of Form ADV (copy available upon request).
9. Performance results presented gross and net of management fees. Gross of fees performance is presented before management fees, but after all relevant trading expenses and all applicable non reclaimable withholding taxes. Net of Fees performance is presented after management fees and any performance fees, all relevant trading expenses and other expenses that may be incurred in the management of an account and all applicable non reclaimable withholding taxes. Composite descriptions, policies for calculating performance, preparing compliant presentations, and valuing portfolios are available upon request. Past performance is no guarantee of future results. Advisory fees are described in Part II of Form ADV (available upon request).
Three Year
Annualized ex-post
Three Year Standard Deviation
Total Return Total Return FTSE EPRA/NAREIT Total Composite Total Firm Percentage Annualized ex-post FTSE EPRA/NAREIT
Net of Fees Gross of Fees Developed Index Number of Standard at End of Period at End of Period of Firm Standard Deviation Developed
Year (percent) (percent) (percent) Portfolios Deviation ($millions) ($millions) Assets Composite Index
2011 -2.88 -2.65 -5.82 less than 5 N/A 123 2,398 5.12 N/A N/A
2012 28.03 28.35 28.65 less than 5 N/A 218 2,440 8.94 N/A N/A
2013 4.63 4.93 4.39 less than 5 N/A 200 2,176 9.18 16.53 16.43
2014 18.07 18.49 15.89 5 N/A 411 3,217 12.76 12.4 12.48
2015 1.25 1.58 0.05 7 0.25 776 3,371 23.03 12.31 12.27
2016 3.55 3.89 4.99 6 0.21 636 3,371 18.88 11.97 12.22
Attribution Analysis
1. The results are gross of fees and calculated based on transactions. The results may vary slightly from the actual returns due to rounding, intra-day trading and fees.
2. Please note that the portfolio’s performance as represented in this file is preliminary and may vary from the official result.
3. Attribution analysis are performed on a representative account in a strategy and not on the entire constituents of a strategy’s composite. Therefore, there may be a disparity between the returns calculated through the attribution analysis for a representative account and a composite.
36Appendix: 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 potential opportunity 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 sophisticated professional investors in deciding whether they wish to consider reviewing the Disclosure Document. This Presentation is meant for use in one-on-one presentations with sophisticated professional investors. However, the contents of this Presentation are not to be construed as investment, legal or tax advice and do not consider the particular circumstances specific to any individual recipient to whom this Presentation has been delivered. The recipient should obtain advice 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 be reproduced 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 made by any officer, employee or adviser of the recipient of this Presentation to any officer, employee, customer or supplier of the Sponsor without the prior written approval of the Sponsor. Notwithstanding the foregoing, recipients (and each employee, agent or representative of any recipient) may disclose to any and all persons, without limitation of any kind, the tax treatment and tax structure of an investment described herein and all materials of any kind (including opinions or other tax analyses) that are provided that relate to such tax treatment or tax structure, except to the extent maintaining such confidentiality is necessary to comply with any applicable securities laws. The foregoing language is not intended to waive any confidentiality obligations otherwise applicable, except with respect to the information and materials specifically referenced in the preceding sentence. By accepting delivery of this Presentation, each prospective investor agrees to the foregoing.
− Any opinions, forecasts, projections or other statements, other than statements of historical fact, that are made in this Presentation are forward-looking statements. Although the Sponsor believes that the expectations reflected in such forward-looking statements are reasonable, they do involve a number of assumptions, risks and uncertainties. Accordingly, neither the Sponsor nor any of its affiliates makes any express or implied representation or warranty, and no responsibility is accepted with respect to the adequacy, accuracy, completeness or reasonableness of the facts, opinions, estimates, forecasts, or other information set out in this Presentation or any further information, written or oral notice, or other document at any time supplied in connection with this Presentation, and nothing contained herein or in the Disclosure Document shall be relied upon as a promise or representation regarding any future events or performance. Past returns from investment in real estate (or real estate related investments) are no guarantee that the same (or enhanced) returns from real 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 or any other documents provided to the recipient. The Sponsor also advises that the potential investment described herein is speculative, involves a degree of risk and 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 the recipient from the Sponsor, including this Presentation without retaining any copies thereof.
Notice and Disclaimer
Appendix: Performance Notes & Disclaimer 37
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