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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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A CASE FOR GLOBAL LISTED REAL ESTATE SECURITIES IN A MIXED ASSET PORTFOLIO

MAY 2015
EXECUTIVE SUMMARY

Access to Growing Global Markets−The number of listed real estate companies world-widecontinues to grow due to the increasing acceptance of the REIT vehicle as well as investors’healthy appetite for current income and exposure to institutional-quality property.

Diversification Benefits−Long-term correlations reflect a modest degree of correlation ofreturns between listed real estate and the broader global equity market and low correlation toglobalfixed-income markets. A global strategy also benefits investors given the low correlationsof listed real estate amongst the different geographic markets around the world.

Volatility Subsiding−The end of the Global Financial Crisis and listed real estate’srecapitalization and increasing stability of the global economy have spurred the sector’svolatility to return to a level relatively in-line with its more moderate long-term average.

Competitive Income-Oriented Total Returns−Long and short-term data demonstrate thata strategic commitment to global listed real estate has delivered strong performance resultsrelative to equities and bonds. This performance has been underpinned by an attractive, stablecurrent income stream.

ACCESS TO GROWING GLOBAL MARKETS

Since the advent of REIT legislation a little more than a half-century ago, the global listed real estate investment universe hasgrown to include more than 40 countries, comprised of more than 900 companies. This is a diverse and liquid market with anaggregate market capitalization nearing $2.6 trillion and a daily trading volume in excess of $10 billion.

The following chart (Exhibit 1) illustrates the magnitude of the increase in the investment universe over the past nine years aswell as the overall composition of the universe, which has become more diverse. The investment universe in Asia ex-Japanhas demonstrated particularly strong growth during this period as a result of IPO activity, the continued maturation of existingcompanies and the influx of capital into property stocks in this region. We believe that growth in the investment universe will likelycontinue at a healthy pace as new markets adopt the REIT structure and as more companies seek the advantages of operating inthe public market.

Source: CBRE Clarion investable universe. This is not representative of the composition of any CBRE Clarion portfolio. Percentages may not add to 100% due to rounding.

While the growth in the investment universe has been impressive, it should be noted that only 13% of institutional-quality commercialreal estate is held by companies that operate in the listed market. Today, many of the world’s private commercial real estatemarkets could be considered under-securitized, particularly in the newer REIT markets in Europe and a number of the emergingmarkets. The following chart (Exhibit 2) presents our estimate of the world’s total supply of institutional-quality commercialproperty which reflects that nearly 90 percent of the inventory remains in private hands. We expect a continued transition of realestate into the public arena in the coming decades as listed real estate becomes an increasingly accepted asset class and ownersand investors recognize the benefits of real estate in the public arena.

Exhibit 2: Listed Real Estate as a Percentage of the Global Commercial Real Estate Market

Source: CBRE Clarion, CBRE Global Investors, and EPRA. Dollar amounts expressed in Billions. Information is the opinion of CBRE Clarion Securities, is subject to change andis not intended to be a forecast of future events, a guarantee of future results or investment advice. Any factors discussed are not indicative of future investment performance.

Exhibit 3: Growth of the Global Listed Real Estate Markets

While REIT legislation has been adopted quite broadly around the world (Exhibit 3), there are a number of developed nationsand emerging countries that have yet to adopt REIT legislation. China, Brazil and India are three examples of emerging markets with significant inventories of commercial real estate. These countries, and selected others, are assessing potential REIT legislation. The timing of enactment in these markets is not yet known, but we expect this to occur in the reasonably near future.

The catalyst towards the further expansion of REIT legislation is likely a combination of the desire of both governments and traditional real estate owners. Selected governments are seeking to provide investors with the ability to access commercialreal estate in part because it provides afixed-income alternative. Likewise, many government organizations, banks, insurancecompanies, corporations, high net worth families and other entities currently hold non-strategic commercial real estate ontheir balance sheets and are seeking ways to either fully monetize these investments or convert their direct ownership to liquidshares that pay current income.

Further growth of the global listed real estate market will not solely be a function of the enactment of new REIT legislation.Inour view, new IPOs and secondary offerings will also contribute to the sector’s expansion. Furthermore, we expect that growthwill be driven by increased acquisition activity of single assets and portfolios of commercial properties by existing listed REITs.Given REITs’ access to capital at attractive pricing levels, both in the public and private markets, we expect acquisition activity to continue to positively impact the growth of the sector.

DIVERSIFICATION BENEFITS

Global listed real estate securities may help to diversifya portfolio in two ways: (1) through lower correlationto other asset classes; and (2) through lower correlationacross regions within the context of a global listed realestate mandate. The combination of these attributesenhances the relative attractiveness of a global listedreal estate strategy versus an asset class specific ormarket-specific strategy.

Over the long-term, global listed real estate hasevidenced a relatively modest correlation to the broaderglobal equity markets and a low correlation to globalfixed-income (Exhibit 4). Although correlations deviatedmaterially during the Global Financial Crisis, theyhave normalized more recently as the global economyand capital markets environment have improved andbecause listed property companies underwent a massiverecapitalization post-GFC.

Exhibit 4: Global Listed Real Estate Securities Correlation Trends Improving

Source: S&P 500 Index, MSCI World Index, Barclay’s U.S. Aggregate Bond Index, and Barclay’s Global Aggregate Bond Index in USD. Correlation coeficient is the degreeto which movements of two variables are related. 1.00 is perfect correlation. An index is unmanaged and not available for direct investment. During GFC: 01/01/2008-03/31/2009.Past performance is no guarantee of future results.

Low correlation between many of the listed property regions across the globe also support the notion of adopting a global rather than region-specific REIT investment strategy (Exhibit 5). In our view, investing in a global strategy allows for tactical reallocation of capital over time to those markets where valuations are most attractive and away from those that are richly priced.

Exhibit 5: Regional Property Markets Exhibit Low Correlations – Past 20 Years
Source: FTSE EPRA/NAREIT Developed Property Index USD. Correlation coefficient is the degree to which movements of two variables are related. 1.00 is perfect correlation.Past performance is no guarantee of future results.
VOLATILITY SUBSIDING
Although the volatility of listed property stocks spiked during the Global Financial Crisis, it has subsided in recent years.Infact, recent volatility is nearly in-line with the average volatility prior to the GFC (Exhibit 6). The above average volatility of thesector was largely because real estate is a capital intensive business and when the GFC occurred, REITs had significant nearterm debt maturities looming and the capital markets had effectively shut down.
Subsequent to the GFC, a massive recapitalization of the sector occurred. Many REITs restructured their balance sheets suchthat their average debt maturity is meaningfully longer than pre-GFC levels and a greater proportion of their debt isfixed ratedebt rather than variable rate debt. These factors coupled with the renewed health of the global economy and capital marketshave been the primary contributors to the normalization of listed property sector’s volatility.
Exhibit 6: Global Real Estate Securities Volatility Trends Improving
Source: FTSE EPRA/NAREIT Developed Property Index USD, MSCI World Equity Index in USD. An index is unmanaged and not available for direct investment.Past performance is no guarantee of future results.
COMPETITIVE INCOME-ORIENTED TOTALRETURNS

The combination of attractive long-term total returnsand a modestly low degree of correlation to othermajor asset classes, evidences the need to includeglobal listed real estate in a mixed-asset portfolio.The exceptional long-term performance deliveredby global listed real estate has been underpinnedby relatively stable dividends (Exhibit 7). The chartreflects the total return of the sector over variousshort, medium and long term time periods and thecomposition of the returns between income andcapital appreciation. While capital appreciation hasvaried during certain time periods, dividends haveremained relatively stable.

In numerous time periods over the past 20 years,listed real estate has delivered strong returns relativeto global bonds and equities. Furthermore, therelative performance of the sector versus globalequities and bonds has been impressive (Exhibit 8).These performance results have been underpinnedby healthy and relatively stable current income.

In a today’s world, institutional and retail investorsare increasingly focused on current income as a keycomponent of total return. The contractual natureof listed property companies’ underlying leasesprovides for highly visible earnings and dividendstreams over the short term which is a key attributeof the sector.

Exhibit 7: Global Listed Real Estate Securities Historical Returns

Source: FTSE EPRA/NAREIT Developed Property Index. Performance over 1-year are annualized. Anindex is unmanaged and not available for direct investment.Past performance is no guarantee offuture results.

Exhibit 8: Global Listed Real Estate Returns Relative to Other Classes
Source: FTSE EPRA/NAREIT Developed Property Index, S&P 500 Index, MSCI World Index, Barclay’s Global Aggregate Bond Index, is based on 20 year annualized period. Performance over 1-year isannualized.Past performance is no guarantee of future results.

Today, global listed property stocks offer attractive dividend yields relative tofixed income alternatives including long termgovernment bonds (Exhibit 8). The chart below reflects the average dividend yield of property stocks in the major REIT marketsaround the world. It also illustrates the current yield spread versus long term government bonds in each respective market aswell as a comparison with the average historic spread. This data reveals that the current yield spread is substantially higher(average >100 basis points) versus the historic average spread (+2 basis points). This is an attractive differential in today’sinvestment environment where transparent, stable current income is of increasing importance to investors.

Exhibit 9: Global Listed Real Estate Securities Attractive Dividend Yield

Source: CBRE Clarion, FactSet, and Bloomberg. Not all countries included. Yieldsfluctuate and are not guaranteed. This information is subject to change and should not beconstrued as investment advice.Past performance is no guarantee of future results

CONCLUSION

An investment in global listed real estate offer investors numerous investment benefits:

•Access to Growing Global Markets−The growth of the global listed real estate market is expected to continue at a healthypace given investors’ increased demand for current income, the desire for asset monetization by private commercial realestate owners, and the access to capital offered by the listed property sector.

•Diversification Benefits−Long-term correlations between global listed property and the broader global equity markets aremodest. Furthermore, correlations are low between global listed property and globalfixed-income markets. A diversifiedglobal strategy also benefits investors via low correlations between major listed real estate markets given that most privateand public real estate markets do not move in tandem with one another in terms of their underlying fundamentals andshare price performance results.

•Volatility Diminishing−The volatility of listed real estate has subsided in recent years. The dramatic recapitalization oflisted real estate companies and the improved global economy and capital markets environment have each contributed tothe volatility of the sector returning to pre-GFC levels.

•Competitive Total Return Driven by Stable, Consistent Income−Over the short-term and long-term time periods, globallisted real estate has performed well relative to other asset classes. A commitment to global listed real estate within thecontext of a diversified investment portfolio may add value and enhance the total return potential of the overall portfolio.

INDEX DEFINITIONS:

Standard & Poor’s 500 Index is an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of thebroad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.MSCI World Index is an unmanaged market capitalization-weighted index designed to measure the performance of equity securitiesindeveloped countries throughout the world.

FTSE EPRA/NAREIT Developed Property Index is an unmanaged market-weighted index consisting of real estate companies from developedmarkets, where greater than 75% of their EBITDA (earnings before interest, taxes, depreciation, and amortization) is derived from relevantreal estate activities.

FTSE EPRA/NAREIT Index is an unmanaged market-weighted index consisting of real estate companies from developed markets, wheregreater than 75% of their EBITDA (earnings before interest, taxes, depreciation, and amortization) is derived from relevant real estateactivities.

Barclays Capital U.S. Aggregate Bond Index is an unmanaged index composed of securities from Barclays Capital U.S. Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Based Securities Index.

Barclays Global Aggregate Bond Index provides a broad-based measure of the global investment gradefixed-rate debt markets. The Global Aggregate Index contains three major components: the U.S. Aggregate (USD 300mn), the Pan-European Aggregate (EUR 300mn),and the Asian-Pacific Aggregate Index (JPY 35bn). In addition to securities from these three benchmarks (94.0% of the overall GlobalAggregate market value as of December 31, 2010), the Global Aggregate Index includes Global Treasury, Eurodollar (USD 300mn), Euro-Yen (JPY 25bn), Canadian (USD 300mn equivalent), and Investment Grade 144A (USD 300mn) index-eligible securities not already inthe three regional aggregate indices. The Global Aggregate Index family includes a wide range of standard and customized subindices byliquidity constraint, sector, quality, and maturity. A component of the Multiverse Index, the Global Aggregate Index was created in 1999,with index history backfilled to January 1, 1990.

INDEX DEFINITIONS:

Standard & Poor’s 500 Indexis an unmanaged capitalization-weighted index of 500 stocks designed to measure performance of thebroad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.MSCI World Index is an unmanaged market capitalization-weighted index designed to measure the performance of equity securitiesindeveloped countries throughout the world.FTSE EPRA/NAREIT Developed Property Indexis an unmanaged market-weighted index consisting of real estate companies from developedmarkets, where greater than 75% of their EBITDA (earnings before interest, taxes, depreciation, and amortization) is derived from relevantreal estate activities.FTSE EPRA/NAREIT Indexis an unmanaged market-weighted index consisting of real estate companies from developed markets, wheregreater than 75% of their EBITDA (earnings before interest, taxes, depreciation, and amortization) is derived from relevant real estateactivities.Barclays Capital U.S. Aggregate Bond Indexis an unmanaged index composed of securities from Barclays Capital U.S. Government/Corporate Bond Index, Mortgage-Backed Securities Index and the Asset-Based Securities Index.Barclays Global Aggregate Bond Indexprovides a broad-based measure of the global investment gradefixed-rate debt markets. TheGlobal Aggregate Index contains three major components: the U.S. Aggregate (USD 300mn), the Pan-European Aggregate (EUR 300mn),and the Asian-Pacific Aggregate Index (JPY 35bn). In addition to securities from these three benchmarks (94.0% of the overall GlobalAggregate market value as of December 31, 2010), the Global Aggregate Index includes Global Treasury, Eurodollar (USD 300mn), Euro-Yen (JPY 25bn), Canadian (USD 300mn equivalent), and Investment Grade 144A (USD 300mn) index-eligible securities not already inthe three regional aggregate indices. The Global Aggregate Index family includes a wide range of standard and customized subindices byliquidity constraint, sector, quality, and maturity. A component of the Multiverse Index, the Global Aggregate Index was created in 1999,with index history backfilled to January 1, 1990.IMPORTANT DISCLOSURES:©2014 CBRE Clarion Securities LLC. All rights reserved. All data as of 12/31/2014 unless otherwise noted. The views expressed represent the opinions of CBRE Clarion which aresubject 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 perceivedas investment advice or a recommendation for any security. It is derived from proprietary and non-proprietary sources which have not been independently verified for accuracyor 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 ofthese statements. Accordingly, such statements are inherently speculative as they are based on assumptions which may involve known and unknown risks and uncertainties. Actualresults, 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 real estate securities involves risk including topotential loss of principal. Real estate equities are subject to risks similar to those associated with the direct ownership ofreal estate. Portfolios concentrated in real estate securitiesmay experience price volatility and other risks associated with non-diversification. While equities may offer the potential for greater long-term growth than some debt securities,they generally have higher volatility. International investments may involve risk of capital loss from unfavorablefluctuation in currency values, from differences in generallyaccepted accounting principles, or from economic or political instability in other nations. There is no guarantee that risk canbe managed successfully. There are no assurancesperformance will match or outperform any particular benchmark. Indices are unmanaged and not available for direct investment.

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