Courtland Partners, Ltd. Presentation to: Department of Water and Power Employees’ Retirement Plan (the “Plan”) 2017 Real Estate Portfolio Strategic Plan

February 8, 2017

127 Public Square, Suite 5050 | Cleveland, OH 44114 | Tel 216 522 0330

10866 Wilshire Blvd., Suite 830 | Los Angeles, CA 90024 | Tel 310 474 3040

42 Brook Street | London W1K 5DB, United Kingdom | Tel +44 7557 670374

www.courtland.com

Table of Contents

1

I. 2017 Strategic Plan Overview 2

II. 2016 Commitment Review 4

III. 2017 Projected Income Returns 5

IV. Proposed 2017 Strategic Plan 6

V. Risk/Return Targets 7

VI. Components of Return and Leverage 8

VII. Property Type Diversification 9

VIII. Geographic Diversification 10

IX. 2017 Portfolio Model 11

X. 2017 Strategy Implementation/Action Plan 21

2017 Strategic Plan Overview

Target Real Estate Allocation: 8% of the total portfolio.

Performance Objective*: To exceed the designated benchmark (NCREIF plus 50 basis points) in the Plan’s Investment Policy

for Real Estate. Based on the Plan’s long-term 70/20/10 (Core/Value/Opportunistic) allocation with the real estate portfolio assumed return of 8.4% and standard deviation of 8.9%.

Real Estate Portfolio Investment Objectives:

Attractive Income and Total Returns. Historically, real estate has provided stable, long term income returns that comprise a significant portion of total return [e.g., the NCREIF Property Index (“NPI”) income return comprises more than 80% of the total NPI return since inception]. Significant income return increases the transparency and decreases the volatility of total return. Of note, real estate income returns compare favorably to those generated by public equity and fixed income assets.

Portfolio Diversification. Investment in real estate may enhance the diversification of the Plan’s total investment

portfolio given the historically low or negative return correlation of real estate with other asset classes (e.g., equities and fixed income).

Inflation-Hedge. Real estate has historically provided a reasonable hedge against inflation.

2 1: Based on the target policy allocation of 70/20/10 core/value-add/opportunistic and return assumptions of 7% for core, 11% for value-add, and 13% for opportunistic.

1

2017 Strategic Plan Overview

The following have been established as short and long term investment themes and initiatives:

3

STRATEGIC INITIATIVES (Long-Term Plans)

Exceed benchmark: NCREIF + 50 basis points

Strategic target: 70/20/10 (core/value/opportunistic)

Maintain average commitment size of $60-$90 million

Maintain income and preservation of capital focus

Consider follow-on funds with existing high conviction managers

TACTICAL INITIATIVES (Short-Term Goals)

Continue to focus on income-oriented returns

Evaluate defensive opportunities including debt investments across the capital stack and niche strategies

Selectively allocate to core-plus strategies as opportunities arise

Continue to slightly overweight non-core component of portfolio, given market opportunity set

Evaluate investments in opportunistic category which benefit from market dislocation

Evaluate European and Asian opportunities

Evaluate core portfolio positions

2016 Commitment Review

4

The Plan made the following real estate allocations in 2016 to maintain the Plan’s real

estate allocation and satisfy the initiatives of 2016 Strategic Plan. Investments Date $ Amount Risk Profile Objectives

Lone Star Fund V 1Q16 $92.7 million Opportunistic Exposure to global investments in distressed commercial real estate

debt and equity.

Westbrook Fund X 1Q16 $60.0 million Value

Exposure to assets in need of improvements and repositioning

and/or distressed capital structures in select global markets.

Dimensional Global

Real Estate 1Q16

Extended contract for

3 years Core Exposure to global real estate

securities.

Heitman Real Estate

Securities 3Q16

Extended contract for

3 years Core Exposure to global real estate

securities.

DRA Fund IX 3Q16 $60.0 million Value Exposure to diversified properties in

need of value enhancement with strong income returns.

FPA Core Plus III 4Q16 $60.0 million Core-Plus Exposure to multifamily properties with below-market rents and strong

current income in the U.S.

2017 Projected Income Returns

5

Overall income returns have trended down recently as asset pricing has escalated, particularly for core investments.

In 2017, the portfolio is projected

to generate $28.2 million in income returns.

2016 investments: FPA Core Plus III has a moderate current income focus and DRA IX has a strong current income focus.

Debt funds continue to bring strong current income returns to the Plan’s portfolio.

Investment

2017 Expected

Income (%)

2017 Expected

Income ($)

Core DFA 2.00% $600,000 FPA Core Plus III 3.00% $300,000 Harrison Street 4.00% $2,500,000 Heitman Securities 2.00% $600,000 INVESCO 4.00% $2,300,000 Jamestown 4.00% $2,300,000 JP Morgan SPF 4.00% $3,000,000 PCCP II 6.00% $300,000 PRISA 4.00% $3,200,000 Prologis Industrial 4.00% $1,200,000 Value Angelo Gordon 6.00% $700,000 Almanac VI 6.00% $500,000 Almanac VII 8.00% $600,000 Bristol II 3.00% $400,000 DRA VII 7.00% $1,200,000 DRA VIII 7.00% $1,600,000 DRA IX 5.00% $500,000 Mesa West III 7.00% $1,400,000 Mesa West IV 7.00% $700,000 PRISA II 3.00% $1,000,000 Westbrook X N/A N/A Opportunistic Blackstone VII 2.00% $500,000 Blackstone Europe IV 2.00% $400,000 Lone Star REF II 0.00% N/A Lone Star REF IV 1.00% $300,000 Lone Star REF V N/A N/A Lone Star VII 4.00% $50,000 Torchlight IV 6.00% $1,500,000 Torchlight V 6.00% $500,000 Total $28,150,000

Proposed 2017 Strategic Plan

6

To achieve an 8% allocation to real estate, Courtland recommends the

following commitments be made in 2017:

Core: $60-$100 million

Value: $60-$90 million

Opportunistic: $60-$90 million

Additionally, Courtland projects the following 2018 commitment amounts to attain an 8% allocation to real estate:

• 2018 Core: $60-$90 million

• 2018 Value: $60-$90 million

• 2018 Opportunistic: $60-$90 million

Real estate drops to 5.2% by 2020 in the absence of new commitments based on 7.25% growth rate (actuarial return).

Risk/Return Targets

7

Investment and Portfolio Risk/Return Ranges1

Risk/Return

Nominal Net

Return

Standard2

Deviation

Exposure

9-30-16

Fully Funded

Exposure3

Proposed

Strategy Range

Policy

Range

Core 6%-8% 6.9% 63% 44% 50%-60% 50%-100%

Value-Add 10%-12% 11.9% 21% 33% 25%-30% 0%-40%

Opportunistic 13%+ 16.8% 16% 22% 15%-20% 0%-20%

For the core section of the portfolio, strong demand and recent run-up in valuations for institutional “trophy” real estate in major U.S. markets (from domestic and offshore) continues to be concerning, causing issues of potential pricing “bubbles.”

Continue to focus on downside protection via the inclusion of debt-oriented and defensive strategies.

Given current market conditions, selectively evaluate core-plus/value strategies that emphasize strong current income and modest use of leverage.

For opportunistic investments, continue to evaluate strategies that look to take advantage of dislocation in the capital markets, including niche and secondary strategies.

1: Data based on 9/30/16 valuations and managers in place at that time. 2: Based on historical Courtland Partners Index Quarterly Return Information as of 12/31/88 - 6/30/16, and assumptions for 2017. 3: Includes exposure as of 9-30-16 plus all unfunded commitments.

8

Leverage Review

Leverage Ranges and Average Loan-To-Value Target (as of 3Q2016)

Risk Actual Strategic Ranges Range

Aggregate Core 23.0% 20%-25% Up to 40% Aggregate Value 45.5% 50%-60% Up to 65%

Aggregate Opportunistic 54.6% 55%-65% Up to 75% Total Real Estate Portfolio 32.4% 25%-30% Up to 50%

Leverage, on a portfolio basis, rose from one year ago (28.5% in 3Q2015 to 32.4% in 3Q2016) and is slightly above the strategic range of 25%-30%. This is primarily due to the increase in Core leverage from 18.1% in 3Q2015 to 23.0% in 3Q2016 after the addition of Jamestown Premier Property Fund in late 2015, with higher leverage of 35.9%, as of 3Q2016.

The Plan’s Staff and Courtland have continued to pursue strategies where leverage is not the primary driver of returns. Leverage within Opportunistic risk/return category remains below the strategic range of 55%-65% as managers have worked to find distressed deals without using leverage as a main driver of return, but also rose from 45.2% in 3Q2016 to 54.6% in 3Q2016.

The Plan’s Staff and the Courtland will closely monitor the use of leverage, the debt maturity

schedule, and debt composition (fixed vs. floating) for investments that comprise the Real Estate Portfolio to avoid leverage related risks in case of market volatility.

9

Property Type Diversification Targets

Property Type Diversification (as of 9/30/2016)

Property Type Allocation** Policy Range NCREIF Property Index

Office 34.8% Up to 40% 36.6% Industrial 13.2% Up to 35% 14.1%

Retail 16.9% Up to 40% 23.4% Residential 22.5% Up to 40% 24.8%

Hotel 3.3% Up to 15% 1.0% Other* 9.3% Up to 20% N/A

Proposed Recommendation for 2017:

Pursue strategies which are diversified across property types (limit single property-type funds).

Consider non-traditional property types (e.g., medical office, storage, senior housing, and student housing), as these property types are generally not fully priced and are typically more immune to market downturns.

Consider investments with traditional property types generally more immune to market downturns (e.g., grocery-anchored retail).

*May include senior living, healthcare, student housing, land, self storage, and other non categorized investments (e.g. ,debt portfolio) . ** Due to pooled fund investments, it is difficult to project property type exposures.

10

Geographic Diversification Targets

Geographic Diversification (as of 9/30/2016)

Sub Regions Allocation* Policy Range NCREIF Property Index

West (1) 28.6% Up to 50% 37.9% South (2) 19.0% Up to 40% 19.9%

Midwest (3) 8.5% Up to 40% 9.0% East (4) 29.6% Up to 50% 33.2%

US Non Classified 3.6% N/A N/A International* 10.7% Up to 20% N/A

(1) Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, Wyoming. (2) Alabama, Arkansas, Florida, Georgia, Louisiana, Mississippi, Oklahoma, Tennessee, Texas. (3) Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin. (4) Connecticut, Delaware, District of Columbia, Kentucky, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, North Carolina, Pennsylvania, Rhode Island, South Carolina, Vermont, Virginia, West Virginia.

*Due to pooled fund investments, it is difficult to project geographic exposures.

Proposed Recommendation for 2017:

Maintain, but closely monitor, the portfolio’s exposure to coastal and gateway markets (i.e., East, West).

Avoid regions where oversupply has been an issue currently (e.g., Houston, Austin) and cyclically (e.g., Atlanta, Dallas).

Consider emerging secondary cities (e.g., Seattle, Portland, Denver) where pricing can still be found at relatively attractive levels.

Consider select tertiary markets very selectively based on property type and strategy.

11

Current RE Portfolio at 0% Plan Growth

Note: Based on 3Q16 data. Note: Estimated plan assets and over/under allocation based on assumed 0% total portfolio-level growth rate.

Dec-16 Mkt. Value Dec-17 Mkt. Value Dec-18 Mkt. Value Dec-19 Mkt. Value Dec-20 Mkt. Value Core: DFA Global Real Estate Securities 30,070,137 30,070,137 30,070,137 30,070,137 30,070,137 FPA Core Plus III 0 43,824,000 55,324,000 51,774,000 48,124,000 Harrison Street Core Property 61,921,935 61,921,935 61,921,935 61,921,935 61,921,935 Heitman REIT 28,354,493 28,354,493 28,354,493 28,354,493 28,354,493 Invesco Core Real Estate 58,139,599 58,139,599 58,139,599 58,139,599 58,139,599 Jamestown Premier 58,570,663 58,570,663 58,570,663 58,570,663 58,570,663 JP Morgan SPF 74,543,156 74,543,156 74,543,156 74,543,156 74,543,156 PCCP First Mortgage II 5,736,154 972,028 0 0 0 Prologis Industrial Fund 30,054,498 30,054,498 30,054,498 30,054,498 30,054,498 Prudential PRISA 80,060,161 80,060,161 80,060,161 80,060,161 80,060,161 Total 427,450,797 466,510,671 477,038,643 473,488,643 469,838,643 63% 59% 56% 56% 61% Value: AG Core Plus Realty Fund III 12,147,426 9,797,426 6,397,426 3,947,426 3,097,426 Almanac Realty Securities VI 7,973,847 7,686,877 7,286,877 6,852,877 6,408,877 Almanac Realty Securities VII 7,826,635 11,000,521 16,228,021 19,809,159 19,750,317 Bristol Value II 13,090,823 14,906,823 17,369,823 14,846,823 5,342,823 DRA Growth and Income Fund VII 16,927,106 13,075,666 8,075,666 3,779,666 0 DRA Growth and Income Fund VIII 22,203,645 19,935,051 18,386,770 10,683,289 570,638 DRA Growth and Income Fund IX 0 15,513,247 31,781,632 44,078,151 33,965,500 Mesa West Income Fund III 19,421,814 23,480,713 19,480,689 15,480,665 5,353,875 Mesa West Income Fund IV 0 20,000,000 36,500,000 53,000,000 49,500,000 Prudential PRISA II 36,248,802 36,248,802 36,248,802 36,248,802 36,248,802 Westbrook X 6,563,611 21,363,611 36,163,611 50,963,611 60,142,558 Total 142,403,709 193,008,737 233,919,315 259,690,469 220,380,816 21% 24% 28% 30% 29% Opportunistic: Blackstone BREP VII 24,755,103 19,238,699 13,197,972 8,213,188 4,213,188 Blackstone Europe IV 23,303,333 17,357,395 9,464,538 3,079,235 0 Lone Star Fund VII 1,160,459 274,500 225,815 0 0 Lone Star Real Estate Fund II 1,685,240 541,451 344,910 0 0 Lone Star Real Estate Fund IV 27,651,146 27,522,045 23,514,937 15,293,593 6,497,281 Lone Star Real Estate Fund V -530,685 29,870,155 55,198,731 59,387,214 39,387,214 Torchlight Debt Opportunity IV 25,614,356 10,614,356 5,893,298 3,343,250 583,156 Torchlight Debt Opportunity V 7,940,982 26,101,609 29,933,725 29,933,725 29,933,725 Total 111,579,933 131,520,210 137,773,926 119,250,205 80,614,564 16% 17% 16% 14% 10% Total Real Estate 681,434,439 791,039,617 848,731,884 852,429,317 770,834,023 % of Plan Assets 5.6% 6.5% 6.9% 7.0% 6.3% Plan Assets (0% Growth) 12,250,034,199 12,250,034,199 12,250,034,199 12,250,034,199 12,250,034,199 Over/Under Funded -298,568,297 -188,963,119 -131,270,852 -127,573,418 -209,168,712

12

Current RE Portfolio at 7.25% Plan Growth

Note: Based on 3Q16 data. Note: Estimated plan assets and over/under allocation based on assumed 7.25% total portfolio-level growth rate.

Dec-16 Mkt. Value Dec-17 Mkt. Value Dec-18 Mkt. Value Dec-19 Mkt. Value Dec-20 Mkt. Value Core: DFA Global Real Estate Securities 30,070,137 30,671,539 31,284,970 31,910,670 32,548,883 FPA Core Plus III 0 43,824,000 55,324,000 51,774,000 48,124,000 Harrison Street Core Property 61,921,935 64,398,812 66,974,765 69,653,755 72,439,906 Heitman REIT 28,354,493 28,921,583 29,500,015 30,090,015 30,691,815 Invesco Core Real Estate 58,139,599 60,465,183 62,883,790 65,399,142 68,015,108 Jamestown Premier 58,570,663 60,406,490 62,315,750 64,301,380 66,366,435 JP Morgan SPF 74,543,156 76,732,541 78,962,362 81,231,432 83,538,351 PCCP First Mortgage II 5,736,154 972,028 0 0 0 Prologis Industrial Fund 30,054,498 31,256,678 32,506,946 33,807,223 35,159,512 Prudential PRISA 80,060,161 83,262,567 86,593,070 90,056,793 93,659,065 Total 427,450,797 480,911,423 506,345,667 518,224,410 530,543,074 63% 60% 58% 58% 63% Value: AG Core Plus Realty Fund III 12,147,426 9,797,426 6,397,426 3,947,426 3,097,426 Almanac Realty Securities VI 7,973,847 7,686,877 7,286,877 6,852,877 6,408,877 Almanac Realty Securities VII 7,826,635 11,000,521 16,228,021 19,809,159 19,750,317 Bristol Value II 13,090,823 14,906,823 17,369,823 14,846,823 5,342,823 DRA Growth and Income Fund VII 16,927,106 13,075,666 8,075,666 3,779,666 0 DRA Growth and Income Fund VIII 22,203,645 19,935,051 18,386,770 10,683,289 570,638 DRA Growth and Income Fund IX 0 15,513,247 31,781,632 44,078,151 33,965,500 Mesa West Income Fund III 19,421,814 23,480,713 19,480,689 15,480,665 5,353,875 Mesa West Income Fund IV 0 20,000,000 36,500,000 53,000,000 49,500,000 Prudential PRISA II 36,248,802 37,336,266 38,456,354 39,610,045 40,798,346 Westbrook X 6,563,611 21,363,611 36,163,611 50,963,611 60,142,558 Total 142,403,709 194,096,201 236,126,867 263,051,712 224,930,360 21% 24% 27% 29% 27% Opportunistic: Blackstone BREP VII 24,755,103 19,238,699 13,197,972 8,213,188 4,213,188 Blackstone Europe IV 23,303,333 17,357,395 9,464,538 3,079,235 0 Lone Star Fund VII 1,160,459 274,500 225,815 0 0 Lone Star Real Estate Fund II 1,685,240 541,451 344,910 0 0 Lone Star Real Estate Fund IV 27,651,146 27,522,045 23,514,937 15,293,593 6,497,281 Lone Star Real Estate Fund V -530,685 29,870,155 55,198,731 59,387,214 39,387,214 Torchlight Debt Opportunity IV 25,614,356 10,614,356 5,893,298 3,343,250 583,156 Torchlight Debt Opportunity V 7,940,982 26,101,609 29,933,725 29,933,725 29,933,725 Total 111,579,933 131,520,210 137,773,926 119,250,205 80,614,564 16% 16% 16% 13% 10% Total Real Estate 681,434,439 806,527,833 880,246,460 900,526,327 836,087,999 % of Plan Assets 5.6% 6.1% 6.2% 6.0% 5.2% Plan Assets (7.25% Growth) 12,250,034,199 13,138,161,678 14,090,678,400 15,112,252,584 16,207,890,896 Over/Under Funded -298,568,297 -244,525,101 -247,007,812 -308,453,880 -460,543,273

13

Current & New RE Commitments at 0% Plan Growth

Note: Based on 3Q16 data. Note: Estimated plan assets and over/under allocation based on assumed 0% total portfolio-level growth rate.

Dec-16 Mkt. Value Dec-17 Mkt. Value Dec-18 Mkt. Value Dec-19 Mkt. Value Dec-20 Mkt. Value Core: DFA Global Real Estate Securities 30,070,137 30,070,137 30,070,137 30,070,137 30,070,137 FPA Core Plus III 0 43,824,000 55,324,000 51,774,000 48,124,000 Harrison Street Core Property 61,921,935 61,921,935 61,921,935 61,921,935 61,921,935 Heitman REIT 28,354,493 28,354,493 28,354,493 28,354,493 28,354,493 Invesco Core Real Estate 58,139,599 58,139,599 58,139,599 58,139,599 58,139,599 Jamestown Premier 58,570,663 58,570,663 58,570,663 58,570,663 58,570,663 JP Morgan SPF 74,543,156 74,543,156 74,543,156 74,543,156 74,543,156 PCCP First Mortgage II 5,736,154 972,028 0 0 0 Prologis Industrial Fund 30,054,498 30,054,498 30,054,498 30,054,498 30,054,498 Prudential PRISA 80,060,161 80,060,161 80,060,161 80,060,161 80,060,161 Core 2017 0 30,000,000 60,000,000 60,000,000 60,000,000 Core 2018 0 0 30,000,000 60,000,000 60,000,000 Total 427,450,797 496,510,671 567,038,643 593,488,643 589,838,643 63% 58% 52% 47% 48% Value: AG Core Plus Realty Fund III 12,147,426 9,797,426 6,397,426 3,947,426 3,097,426 Almanac Realty Securities VI 7,973,847 7,686,877 7,286,877 6,852,877 6,408,877 Almanac Realty Securities VII 7,826,635 11,000,521 16,228,021 19,809,159 19,750,317 Bristol Value II 13,090,823 14,906,823 17,369,823 14,846,823 5,342,823 DRA Growth and Income Fund VII 16,927,106 13,075,666 8,075,666 3,779,666 0 DRA Growth and Income Fund VIII 22,203,645 19,935,051 18,386,770 10,683,289 570,638 DRA Growth and Income Fund IX 0 15,513,247 31,781,632 44,078,151 33,965,500 Mesa West Income Fund III 19,421,814 23,480,713 19,480,689 15,480,665 5,353,875 Mesa West Income Fund IV 0 20,000,000 36,500,000 53,000,000 49,500,000 Prudential PRISA II 36,248,802 37,336,266 38,456,354 39,610,045 40,798,346 Westbrook X 6,563,611 21,363,611 36,163,611 50,963,611 60,142,558 Value 2017 0 20,000,000 40,000,000 60,000,000 60,000,000 Value 2018 0 0 20,000,000 40,000,000 60,000,000 Total 142,403,709 214,096,201 316,126,867 403,051,712 404,930,360 21% 25% 29% 32% 33% Opportunistic: Blackstone BREP VII 24,755,103 19,238,699 13,197,972 8,213,188 4,213,188 Blackstone Europe IV 23,303,333 17,357,395 9,464,538 3,079,235 0 Lone Star Fund VII 1,160,459 274,500 225,815 0 0 Lone Star Real Estate Fund II 1,685,240 541,451 344,910 0 0 Lone Star Real Estate Fund IV 27,651,146 27,522,045 23,514,937 15,293,593 6,497,281 Lone Star Real Estate Fund V -530,685 29,870,155 55,198,731 59,387,214 21,676,095 Torchlight Debt Opportunity IV 25,614,356 10,614,356 5,893,298 3,343,250 583,156 Torchlight Debt Opportunity V 7,940,982 26,101,609 29,933,725 29,933,725 29,933,725 Opportunistic 2017 0 20,000,000 40,000,000 60,000,000 60,000,000 Opportunistic 2018 0 0 20,000,000 40,000,000 60,000,000 Total 111,579,933 151,520,210 217,773,926 259,250,205 242,903,445 16% 18% 20% 21% 20% Total Real Estate 681,434,439 862,127,081 1,100,939,436 1,255,790,560 1,237,672,448 % of Plan Assets 5.6% 7.0% 9.0% 10.3% 10.1% Plan Assets (0% Growth) 12,250,034,199 12,250,034,199 12,250,034,199 12,250,034,199 12,250,034,199 Over/Under Funded -298,568,297 -117,875,655 120,936,700 275,787,824 257,669,713

14

Current & New RE Commitments at 7.25% Plan Growth

Note: Based on 3Q16 data. Note: Estimated plan assets and over/under allocation based on assumed 7.25% total portfolio-level growth rate.

Dec-16 Mkt. Value Dec-17 Mkt. Value Dec-18 Mkt. Value Dec-19 Mkt. Value Dec-20 Mkt. Value Core: DFA Global Real Estate Securities 30,070,137 30,671,539 31,284,970 31,910,670 32,548,883 FPA Core Plus III 0 43,824,000 55,324,000 51,774,000 48,124,000 Harrison Street Core Property 61,921,935 64,398,812 66,974,765 69,653,755 72,439,906 Heitman REIT 28,354,493 28,921,583 29,500,015 30,090,015 30,691,815 Invesco Core Real Estate 58,139,599 60,465,183 62,883,790 65,399,142 68,015,108 Jamestown Premier 58,570,663 60,406,490 62,315,750 64,301,380 66,366,435 JP Morgan SPF 74,543,156 76,732,541 78,962,362 81,231,432 83,538,351 PCCP First Mortgage II 5,736,154 972,028 0 0 0 Prologis Industrial Fund 30,054,498 31,256,678 32,506,946 33,807,223 35,159,512 Prudential PRISA 80,060,161 83,262,567 86,593,070 90,056,793 93,659,065 Core 2017 0 30,000,000 60,000,000 60,000,000 60,000,000 Core 2018 0 0 30,000,000 60,000,000 60,000,000 Total 427,450,797 510,911,423 596,345,667 638,224,410 650,543,074 63% 58% 53% 49% 50% Value: AG Core Plus Realty Fund III 12,147,426 9,797,426 6,397,426 3,947,426 3,097,426 Almanac Realty Securities VI 7,973,847 7,686,877 7,286,877 6,852,877 6,408,877 Almanac Realty Securities VII 7,826,635 11,000,521 16,228,021 19,809,159 19,750,317 Bristol Value II 13,090,823 14,906,823 17,369,823 14,846,823 5,342,823 DRA Growth and Income Fund VII 16,927,106 13,075,666 8,075,666 3,779,666 0 DRA Growth and Income Fund VIII 22,203,645 19,935,051 18,386,770 10,683,289 570,638 DRA Growth and Income Fund IX 0 15,513,247 31,781,632 44,078,151 33,965,500 Mesa West Income Fund III 19,421,814 23,480,713 19,480,689 15,480,665 5,353,875 Mesa West Income Fund IV 0 20,000,000 36,500,000 53,000,000 49,500,000 Prudential PRISA II 36,248,802 37,336,266 38,456,354 39,610,045 40,798,346 Westbrook X 6,563,611 21,363,611 36,163,611 50,963,611 60,142,558 Value 2017 0 20,000,000 40,000,000 60,000,000 60,000,000 Value 2018 0 0 20,000,000 40,000,000 60,000,000 Total 142,403,709 214,096,201 316,126,867 403,051,712 404,930,360 21% 24% 28% 31% 31% Opportunistic: Blackstone BREP VII 24,755,103 19,238,699 13,197,972 8,213,188 4,213,188 Blackstone Europe IV 23,303,333 17,357,395 9,464,538 3,079,235 0 Lone Star Fund VII 1,160,459 274,500 225,815 0 0 Lone Star Real Estate Fund II 1,685,240 541,451 344,910 0 0 Lone Star Real Estate Fund IV 27,651,146 27,522,045 23,514,937 15,293,593 6,497,281 Lone Star Real Estate Fund V -530,685 29,870,155 55,198,731 59,387,214 21,676,095 Torchlight Debt Opportunity IV 25,614,356 10,614,356 5,893,298 3,343,250 583,156 Torchlight Debt Opportunity V 7,940,982 26,101,609 29,933,725 29,933,725 29,933,725 Opportunistic 2017 0 20,000,000 40,000,000 60,000,000 60,000,000 Opportunistic 2018 0 0 20,000,000 40,000,000 60,000,000 Total 111,579,933 151,520,210 217,773,926 259,250,205 242,903,445 16% 17% 19% 20% 19% Total Real Estate 681,434,439 876,527,833 1,130,246,460 1,300,526,327 1,298,376,880 % of Plan Assets 5.6% 6.7% 8.0% 8.6% 8.0% Plan Assets (7.25% Growth) 12,250,034,199 13,138,161,678 14,090,678,400 15,112,252,584 16,207,890,896 Over/Under Funded -298,568,297 -174,525,101 2,992,188 91,546,120 1,745,608

Risk/Return Allocation

15 Note: The above risk/return levels are based on current portfolio with no proposed allocations.

Risk/Return Strategy

2016 2017 2018 2019 2020 Core 63% 60% 57% 58% 63% Value 21% 24% 27% 29% 27% Opportunistic 16% 16% 16% 13% 10% Total 100% 100% 100% 100% 100%

63% 21%

16%

2016

Core Value Opportunistic

63%

27%

10%

2020

Property Type Diversification

16 Note: The above property-type diversification tables/charts are based on current portfolio with no proposed allocations. Proposed allocation diversification information is not included as it is difficult to predict the nature of future commitments.

*Includes Mixed-Use, Self Storage, Operating Companies, Senior Housing, Healthcare, CMBS and Private Debt, Land, and Healthcare.

Property Type Diversification

2016 2017 2018 2019 2020 Office 32% 30% 29% 30% 31% Retail 17% 16% 17% 17% 17% Residential 17% 21% 22% 21% 21% Industrial 14% 12% 12% 12% 12% Hotel 3% 3% 3% 3% 2% Other* 17% 17% 17% 17% 17% Total 100% 100% 100% 100% 100%

32%

17% 17%

14%

3%

17%

2016

Office Retail Residential Industrial Hotel Other*

31%

17% 21%

12%

2%

17%

2020

Geographic Diversification

17 Note: The above geographic diversification tables/charts are based on current portfolio with no proposed allocations. Proposed allocation diversification information is not included as it is difficult to predict the nature of future commitments.

Geographic Diversification

2016 2017 2018 2019 2020 East 31% 28% 28% 29% 30% West 29% 30% 31% 32% 34% Midwest 9% 9% 10% 10% 9% South 19% 19% 17% 16% 16% International 11% 13% 13% 12% 10% Other* 1% 1% 1% 1% 1% Total 100% 100% 100% 100% 100%

*Includes Latin America, South America, and other (non-allocated).

31%

29%

9%

19%

11% 1%

2016

East West Midwest South International Other*

30%

34%

9%

16%

10% 1%

2020

Other Portfolio Structure Diversification

18 Note: The above property-type diversification are based on current portfolio with no proposed allocations. Proposed allocation diversification information is not included as it is difficult to predict the nature of future commitments.

Non-Development/Development

2016 2017 2018 2019 2020 Development 2% 3% 3% 3% 3% Non-Develop 98% 97% 97% 97% 97% Total 100% 100% 100% 100% 100%

Public vs. Private

2016 2017 2018 2019 2020 Public 12% 11% 10% 10% 11% Private 88% 89% 90% 90% 89% Total 100% 100% 100% 100% 100%

Debt vs. Equity (Portion of Capital Structure)

2016 2017 2018 2019 2020 Debt 17% 22% 24% 25% 21% Equity 83% 78% 76% 75% 79% Total 100% 100% 100% 100% 100%

Projected Changes in Portfolio Value

19 Note: The above projected changes in portfolio value are based on current portfolio with no proposed allocations.

In the absence of new commitments, the portfolio begins to decline in value starting in 2020.

Cash Flow out of/into Fund

2016-2017 Change 2017-2018 Change 2018-2019 Change 2019-2020 Change Return of Capital (43,391,687) (39,699,225) (49,613,862) (105,464,271) Capital Calls 151,747,498 95,919,577 51,366,141 9,178,947 Total 108,355,811 56,220,352 1,752,279 (96,285,324)

(150,000,000)

(100,000,000)

(50,000,000)

-

50,000,000

100,000,000

150,000,000

200,000,000

2016-2017 Change 2017-2018 Change 2018-2019 Change 2019-2020 Change

Return of Capital Capital Calls Total

Ret

urn

of

Cap

ital

C

apit

al C

alls

Projected Changes in Portfolio Value

20 Note: The above projected changes in portfolio value are based on current portfolio with no proposed allocations based on 7.25% growth rate (actuarial return).

Courtland Financial Model Projected Allocation to Real Estate

Assuming No Additional Investment Commitments

Dec-16 Dec-17 Dec-18 Dec-19 Dec-20

Total Plan Assets $12,250,034,199 $13,138,161,678 $14,090,678,400 $15,112,252,584 $16,207,890,896

Real Estate Investments $681,434,439 $806,527,833 $880,246,460 $900,526,327 $836,087,999

Real Estate Percent of Total 5.6% 6.1% 6.2% 6.0% 5.2%

Allocation to Real Estate $980,002,736 $1,051,052,934 $1,127,254,272 $1,208,980,207 $1,296,631,272

Remaining Commitments $436,173,113 $261,688,886 $146,897,284 $55,605,753 $43,564,677

Over/(Under) Allocation - Gross -$298,568,297 -$244,525,101 -$247,007,812 -$308,453,880 -$460,543,273

Over/(Under) Allocation - Net $137,604,816 $17,163,784 -$100,110,529 -$252,848,127 -$416,978,597

2017 Strategy Implementation/Action Plan

21

Risk/Return Action Plan Focus

Core $60-$100 million

• Focus on core-plus strategies. • Consider alternative core strategies (e.g., stabilized non-traditional property

types) and the debt portion of the capital stack. • Place continued emphasis on current income and preservation of capital/

downside protection. • Consider investments in international markets.

Value $60-$90 million

• Place continued emphasis on high income with potential for value creation. • Focus on managers that acquire assets below market value and discounts

to replacement cost and subsequently “manufacture” core assets. • Consider debt portion of capital structure. • Focus on top performing follow-on managers if their strategies continue to

be a portfolio fit. • Consider strategies that focus on secondary markets.

Opportunistic $60-$90 million

• Focus on investments that target stressed/distressed capital structures as opposed to stressed/distressed assets, including secondaries.

• Focus on strategies that provide basis protection in order to minimize downside volatility.

• Consider investments in international markets (preference for Europe) that have not had the market recovery experienced in the U.S.

• Focus on investments that are not generating returns solely through the use of financial engineering.