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OUR COMPANY AND AFFILIATES
CBRE GLOBAL INVESTORS

CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers providing real estate and infrastructure investment solutions to over 500 clients worldwide.

CBRE GROUP

CBRE Global Investors is the investment management division of CBRE Group, Inc. the world’s premier commercial real estate services and investment firm.  The company’s shares trade on the New York Stock Exchange under the symbol “CBRE.”

REAL ESTATE SERVICES

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MLP REALITY CHECK

Income Growth Favors Global Listed Infrastructure
October 2017

Investors in the U.S. midstream energy sector should be aware of the number and level of dividend cuts announced by MLPs and understand that distribution yield may not be as effective a valuation metric as it once was. For investors seeking visible and sustainable income growth, we believe exposure to global listed infrastructure is the better option.

Investors in MLPs have been told that despite poor price performance, their distributions, or dividends, have continued to rise. Distribution growth, as indicated by the Alerian MLP Index continues to be positive, even after oil collapsed in late 2014. This is simply not the case.

Auditing distribution growth is particularly challenging due to the extreme turnover among the constituents of the Alerian MLP Index. The turnover and the resulting survivor bias is likely what leads to “rosier than reality” distribution growth rates quoted for MLPs since 2014.

More recently, there have been numerous headlines from high-profi le companies announcing distribution cuts through both explicit cuts and stealth cuts (large mergers that effectively reduce payouts of acquired MLPs).

We unpacked the stealth cuts and index changes to illustrate the true market-capitalizationweighted average distribution growth of the MLP sector since 2012. Distributions in the MLP sector have decreased and are expected to continue to decrease. These reductions are not just isolated to the usual suspects: the high-risk, non-midstream MLPs. Some of the largest MLPs with some of the best midstream assets have recently reduced payouts.

Companies in the Alerian MLP Index have reduced distributions 56 times, including 45 explicit cuts and 11 stealth cuts over the last 3 years as of 10/31/2017

MLPs are Cutting Distributions
MLP Annual Dividend Growth

Source: CBRE Clarion, Alerian MLP Index as of 09/30/2017. An index is unmanaged and not available for direct investment.

Higher Oil Price Correlation and Volatility for MLPs
MLP and Infrastructure Performance vs. Oil Price Changes

Source: CBRE Clarion, FTSE Global Core Infrastructure 50/50 Index, Alerian MLP Index, WTI Oil as of 09/30/2017. An index is unmanaged and not available for direct investment

Global listed infrastructure volatility has remained well below MLPs over the longer-term. Since the oil price crash in 2014, MLP volatility has increased while global listed infrastructure has modestly decreased.

Listed Infrastructure volatility and correlation to oil is substantially lower than MLP volatility and correlation

Listed Infrastructure Volatility and Correlation to Oil is Low vs.MLPs
MLP, Infrastructure and Oil Volatility

Source: CBRE Clarion, FTSE Global Core Infrastructure 50/50 Index, Alerian MLP Index, WTI Oil as of 09/30/2017. An index is unmanaged and not available for direct investment.

While explicit cuts, stealth cuts, and index changes continue to negatively impact MLPs, income growth in the broader global listed infrastructure universe has excelled; growing 48% since 2011 while the growth rate for MLPs has been much lower, only +12.3%.

Listed Infrastructure income growth has far exceeded MLP income growth since 2011

Listed Infrastructure Volatility and Correlation to Oil is Low vs.MLPs
MLP, Infrastructure and Oil Volatility

Source: Bloomberg and CBRE Clarion Securities as of 09/30/2017.

In CBRE Clarion’s Global Listed Infrastructure strategy, we can have U.S. and Canadian Midstream exposure, or we can also choose not to. By utilizing a broad universe of infrastructure stocks that includes utilities, transportation (roads, airports, rails), communications, and midstream, we believe we can achieve a more stable and visible path to income growth than through a focused, energy infrastructure strategy.

We can identify and participate in secular trends like communications infrastructure, renewables development, and even U.S. energy exports. Canadian Midstream stocks and most of the infrastructure universe trade at lower yields than the MLP sector, but in this case, you get what you pay for with visible, sustainable income growth.

ABOUT CBRE CLARION SECURITIES

CBRE Clarion Securities is an industry-leading global investment management fi rm specializing in the management of listed real asset securities including real estate, infrastructure, and master limited partnerships (MLPs). CBRE Clarion manages client portfolios with a focus on generating attractive risk-adjusted returns through a total return, income focused, and absolute return-oriented strategies. Headquartered near Philadelphia, Pennsylvania, the fi rm has over 90 employees located in offi ces in the United States, United Kingdom, Hong Kong, Japan, and Australia.

The global transfer of ideas, in-depth local market research, and market intelligence distinguishes CBRE Clarion. Our team of over 41 dedicated listed real asset investment professionals draws upon the research and resources of CBRE’s global organization. Our global perspective and local infrastructure and real estate market insight combined with our disciplined investment approach enhance our teams’ ability to underwrite risks and capitalize on potential opportunities.

CBRE Clarion Securities is the listed equity management arm of CBRE Global Investors, an industryleading global real asset investment fi rm sponsoring investment programs across real estate, infrastructure, and private equity.

IMPORTANT DISCLOSURES

©2017 CBRE Clarion Securities LLC. All rights reserved. The views expressed represent the opinions of CBRE Clarion which are subject to change and are not intended as a forecast or guarantee of future results. Stated information is provided for informational purposes only, and should not be perceived as investment advice or a recommendation for any security. It is derived from proprietary and non-proprietary sources which have not been independently verifi ed for accuracy or completeness. While CBRE Clarion believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions which may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements.

Past performance of various investment strategies, sectors, vehicles and indices are not indicative of future results. Investing in Master Limited Partnerships involves risks, including the potential loss of principal. MLPs are typically controlled by a general partner, and therefore investors in the limited partnership units may have limited control and voting rights. MLPs present tax risks for unit holders associated with the ownership of partnership interests, including any changes in the tax status of the structure. Distributions from MLPs are subject to change, may be subject to interest rate risks, and may be subject to different tax treatments. MLP equities are subject to risks similar to those associated with direct ownership of energy and infrastructure assets, such as commodity risks, supply and demand risks, operational risks, and regulatory risks among others. Portfolios concentrated in MLPs and infrastructure securities may experience price volatility and other risks associated with non-diversifi cation. While equity securities may offer the potential for greater long-term growth than some debt securities, they generally have higher volatility. There is no guarantee that risk can be managed successfully. There are no assurances performance will match or outperform any particular benchmark. Indices are unmanaged and not available for direct investment. PA10312017