presented to: imperial county employees’ retirement system

REAL ESTATE INVESTMENT MANAGEMENTWWW.CLARIONPARTNERS.COM

WWW.CLARIONPARTNERS.COM

REAL ESTATE INVESTMENT MANAGEMENT

│ 21 August 2013

FOR USE WITH INSTITUTIONS ONLY. NOT FOR USE WITH THE INVESTING PUBLIC.CONFIDENTIAL, NOT FOR DISTRIBUTION WITHOUT PRIOR APPROVAL

Presented to: Imperial County Employees’ Retirement System


Important Legal Information

2

Copyright ©2013, Clarion Partners and/or its affiliates. All rights reserved.

This is not an offer to sell, or solicitation of offers to buy, securities. Investments in Clarion Lion Properties Fund (the “Fund”) can be made only pursuant tothe Fund’s subscription documents and private placement memorandum. Investment in the Fund entails significant risks and is suitable only for certaininvestors as part of an overall diversified investment strategy and only for investors able to withstand a total loss of investment. This report is for distributiononly to prospective investors who meet statutory qualifications as “accredited investors” and “qualified purchasers” under the U.S. Securities Act of 1933, asamended and the U.S. Investment Company Act of 1940, as amended, respectively.Unless otherwise indicated, returns are presented on a gross basis and do not reflect any expenses, management fees or incentive allocations which in theaggregate may be substantial and have the effect of reducing returns. References to indices and NCREIF benchmarks are hypothetical illustrations ofaggregate returns and do not reflect the performance of any actual investment. Investors cannot invest in an index. Past performance is not anindication of future results. Any investor’s actual returns may vary significantly from the aggregate returns set forth in this presentation. Please seeadditional important information regarding returns and references to indexes at the end of this presentation.Statements regarding forecasts and projections rely on a number of economic and financial variables and are inherently speculative. Forecasts relating tomarket conditions, returns and other performance indicators are not guaranteed and are subject to change without notice. Forecasts are basedon complex calculations and formulas that contain substantial subjectivity and no express or implied prediction is made hereby with respect to the Fund or anyother Clarion Partners fund. There can be no assurance that market conditions will perform according to any forecast or that the Fund will achieve itsobjectives or that investors will receive a return of their capital or that investors will receive a return of their capital.] There can be no assurance thatunrealized investments will be realized at the valuations shown or in accordance with any return projections. Actual realized returns depend on, among otherfactors, future operating results, the value of the assets and market conditions at the time of disposition, related transaction costs and the timing and mannerof sale, all of which may differ from the assumptions on which the valuations and projections contained herein are based.The information contained in this presentation, including information supporting forecasts and projections, has been obtained or derived from independentthird party sources believed to be reliable but the Fund cannot guarantee the accuracy or completeness of such information and has not reviewed theassumptions on which such information is based. This presentation contains forward-looking statements relating to the plans, objectives, opportunities, futureperformance and business of the Fund and the future performance of the U.S. market generally. Such statements are forward-looking in nature and involve anumber of known and unknown risks, uncertainties and other factors, and accordingly, actual results may differ materially from those reflected orcontemplated in such forward-looking statements. Investors are cautioned not to place undue reliance on any forward-looking statements or examplesincluded in this presentation and none of the Fund, Clarion or any of their respective affiliates assumes any obligation to update any forward-lookingstatements.This material does not constitute investment advice and should not be viewed as a current or past recommendation to buy or sell any securities or to adoptany investment strategy. Any specific investments referenced may or may not be held by accounts managed by Clarion Partners or its affiliates and may notrepresent all of the investments purchased, sold or recommended for any particular investment portfolio. It should not be assumed that any investments inproperties described were or will be profitable.Clarion Partners Europe Ltd is authorised and regulated by the UK Financial Conduct Authority.This presentation is strictly confidential and is not intended for distribution without the express permission of Clarion Partners.


Key Fund Statistics

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As of June 30, 2013.Please refer to the important disclosures at the beginning of this presentation.

PROPERTY TYPEDIVERSIFICATION %

41.2

37.7

12.8

8.3GEOGRAPHIC DIVERSIFICATION %

West

East

South

Midwest

33.1

27.6

17.1

13.2

8.80.2

Office

Apartment

Industrial

Retail

Hotel

Other

6/30/13

Gross Asset Value $7.0 billion

Net Asset Value $4.7 billion

Management Co-investment $13.5 million

Number of Investments 136

Number of Markets 34

Average Investment Size $47 million

Average Property Age 18 Yrs

Portfolio Occupancy 91.8%

Leverage Ratio 28.4%

Entry / Exit Queue None


Investment Plan 2013

4

As of June 30, 2013. Please refer to the important disclosures at the beginning of this presentation.

Existing Portfolio Operations

- Seek to deliver on projected NOI growth - industrial and hotel components principal drivers

– Progress multifamily development projects

Portfolio Rebalancing Objectives

– Seek increased exposure to top metro picks - New York, San Francisco/Bay Area, Houston• Continued focus on employment drivers: technology, health care, energy• Urban /mass transit options

– Seek increased Industrial exposure consistent with house view

– Seek increased disposition activity to rebalance, migrate to better relative value• Sell poor performers/non-strategic assets/markets or properties at risk• Reduce emphasis on Washington DC• Reduce Hotel exposure as assets fully stabilize

Risk Management Objectives

– Maintain leverage within strategic range of 20-30% LTV

– Commence program seeking to reduce cost of leverage as financings mature

– Maintain value-add component within 15% limitation


Fund Investment Performance – Rolling Time Periods

5

Past performance is not indicative of future results.

As of June 30, 2013. Chart returns are presented before fee. NFI-ODCE Equal Weight Index presented as benchmark. Please refer to the important disclosures at the beginning of this presentation.

4.4%

11.8%

17.0%

-2.8%

5.3%6.3%

3.7%

11.9%

14.9%

-0.6%

6.6% 6.9%

-5%

0%

5%

10%

15%

20%

Quarter 1-Year 3-Year 5-Year 10-Year SinceInception

Lion Properties Fund NFI-ODCE

LION PROPERTIES FUND 2Q13 1-YEAR 3-YEAR 5-YEAR 10-YEAR SINCE INCEPTION

Income Return 1.27% 5.14% 5.68% 5.53% 5.83% 6.51%

Appreciation Return 3.08% 6.38% 10.90% (8.01%) (0.50%) (0.15%)

Total Gross of Fee Return 4.36% 11.76% 17.02% (2.82%) 5.30% 6.33%

Total Net of Fee Return 4.14% 10.78% 16.01% (3.73%) 4.35% 5.48%


Property Type Diversification

6

As of June 30, 2013. Please refer to the important disclosures at the beginning of this presentation.

33.1%

27.6%

17.1%

13.2%

8.8%

0.2%

37.4%

26.2%

13.3%

18.7%

1.9% 2.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

Office Apartment Industrial Retail Hotel Other

Lion Properties Fund NFI-ODCELion Properties Fund Target Range


Washington DC 23.0%

Geographic Diversification

7

So. California 18.9%

South Florida 1.6%

As of June 30, 2013. LPF percentages represent Gross Real Estate Value.Please refer to the important disclosures at the beginning of this presentation.

Office

Apartment

Industrial

Retail

Hotel

Other

West

37.7%

South

12.8%

East

41.2%Midwest

8.3%

S.F. / Bay Area 7.3%

Houston 5.4%

Seattle 3.1%

New York 10.7%

Boston 3.1%Chicago 6.5%

Remainder of Portfolio 20.4%


YTD Same Property NOI Analysis

8

As of June 30, 2013. Past performance is not an indication of future results.Please refer to the important disclosures at the beginning of this presentation.

PROPERTY TYPE

YTD 2013ACTUAL NOI

(M)

YTD 2012 ACTUAL NOI

(M)VARIANCE %

YTD 2013ACTUAL NOI

(M) (1)

YTD 2013 BUDGET NOI (M)

VARIANCE %

Industrial $30.9 $28.7 7.8% $31.5 $30.7 2.6%

Office $49.9 $49.0 1.9% $53.7 $52.1 3.1%

Apartment $39.9 $37.6 6.0% $41.3 $39.9 3.5%

Retail $22.7 $20.8 9.3% $23.2 $22.8 1.7%

Hotel $17.8 $15.1 17.8% $20.0 $19.7 1.7%

Total $161.2 $151.2 6.6% $169.7 $165.2 2.7%

(1) The property set will differ in the analyses above primarily as a result of new investment activity. For example, properties acquired in 2012 would not be included in the year-over year- comparison but would be included in the Actual vs. Budget comparison. The Fund’s current budget projections are based on assumptions about future operating results and a wide range of factors outside of the Fund’s control. Accordingly, there can be no assurance that NOI growth will occur in accordance with the budget presented and readers are cautioned not to place undue reliance on the Fund’s budget projections. Furthermore, growth in the Fund’s Same Property NOI does not represent the performance of any investor’s investment in the Fund.


Financial Management

9

AMOUNT RATE YEARS

Property Mortgages $975M 5.7% 3.2

Fund Level Notes $950M 5.6% 4.0

Total Debt (Par Value) $1,925M 5.7% 3.5

Total Debt (FMV) $1,994M 4.8%

– Current leverage ratio of 28.4%, down from 31.9% at YE12

– Roughly evenly split between property mortgages and Fund level notes

– $250 million revolving line of credit for liquidity purposes which remains undrawn

– Fund Notes• Maturities spread over 2015-2019• Inflexible prepayment options• Above market rates

– 2014 Maturities • $188 million Lion ES Hotels (57% LTV); recent

refinance provides for three 1-year extensions• $119 million Gramercy at the Metropolitan

apartments (69% LTV)• $189 million across nine other properties (39%

LTV)

– Mark to Market • Cumulative $70 million debt mtm• Expected to burn off as loans approach maturity

As of June 30, 2013.Please refer to the important disclosures at the beginning of this presentation.

$0 M

$100 M

$200 M

$300 M

$400 M

$500 M

2013 2014 2015 2016 2017 2018 2019

Property Mortgages Fund Level Notes

ANNUAL DEBT MATURITIES

Actual Interest Rate: - 5.8% 5.4% 5.7% 5.5% 5.8% 5.7%


10

Recent Investment Activity

As of August 1, 2013.The transactions described above include all transactions consummated by the Fund since 1/1/2013. Projected IRRs are shown gross of fees which in the aggregate may be substantial and will have the effect of lowering returns. Please refer to important information at the beginning of this presentation regarding the valuation of unrealized assets.

ACQUISITIONS

DISPOSITIONS

PROPERTY PROPERTY TYPE METRO MARKET CLOSE DATE LAST APPRAISED

VALUE ($)SALE PRICE

($) REALIZED IRR

Progress Distribution Center Industrial Atlanta 3/11/13 6,500,000 6,500,000 14.0%

RAMCO JV Portfolio Retail Detroit/Florida 3/25/13 259,770,000 260,671,600 0.9%

Elliott West Office Seattle 4/08/13 142,500,000 142,500,000 8.6%

One Metro Center Office Washington DC 7/30/13 310,000,000 307,500,000 8.4%

Knoll North I & II Medical Office Baltimore 8/1/13 16,083,648 16,750,000 -12.9%

TOTAL $734,853,648 $733,921,600 5.3%

PROPERTY PROPERTY TYPE METRO MARKET CLOSE DATE PURCHASE PRICE ($) CAP RATE PROJECTED

IRR

Redlands Business Center Industrial Riverside 1/30/13 43,000,000 5.6% 7.9%

7400 Hazard Industrial Los Angeles 4/09/13 26,700,000 5.4% 6.8%

100 Fifth Avenue Office New York 6/04/13 230,000,000 3.9% 6.5%

Waterway Plaza I & II Office Houston 6/19/13 124,500,000 5.5% 8.6%

Infinity Harbor Point Apartment New York 7/25/13 99,000,000 5.0% 6.9%

TOTAL $523,200,000 4.7% 7.2%


Today’s Presenters

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Copyright ©2013, Clarion Partners and/or its affiliates. All rights reserved.

KHALIF EDWARDS – Director, Senior Account ManagerKhalif Edwards is an equity partner and Director at Clarion Partners as well as a Senior Account Manager. As part of the Client Capital Management team, Khalif works with a broad base of clients, prospects and consultants with a focus on the Western United States and international markets. Khalif joined Clarion Partners in 2012 and began working in the real estate industry in 1999.

Khalif received his MBA with a concentration in Real Estate and Corporate Finance from Columbia Business School in 2004, and a BA in Economics from Stamford University I 1996.

JANIS MANDARINO – Vice President, Lion Properties Fund Financial Analyst

Janis Mandarino is a Vice President and Financial Analyst for the Lion Properties Fund at Clarion Partners. Janis is responsible for portfolio analytics, return calculations, attribution analysis, fund level modeling and quarterly performance reporting. She is also a LEED Green Associate. Janis joined Clarion Partners in 2006 and began working in the finance industry in 2000.

Janis received her Bachelor of Business Administration from Emory University in 2000.

presented to: imperial county employees’ retirement system

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