Second Quarter 2017 NCREIF Indices Review August 8, 2017

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1 Second Quarter 2017 NCREIF Indices Review August 8, 2017

2 Panelist Overview Jeff Fisher NCREIF Data & Research Consultant Sara Rutledge NCREIF Director of Research Arthur Jones Director, Commercial Real Estate Research Principal Real Estate Investors

3 Disclaimer Today we will be presenting what we see in the NCREIF data, trends and changes; all comments about future expectations are the personal views of the speakers and not a reflection of a NCREIF opinion or forecast.

4 Overview NPI Return Edges Up in 2Q 2017 Quarterly downward trend in NPI returns halted by 1.75% total return in 2Q 2017 Property values still rising with MVI up 5% YoY to a new high Institutional sales volume solid with cap rates holding near historic lows Net NFI-ODCE fund flows still negative for the trailing year, despite 2Q improvement Occupancy has been holding near a 15-year high since mid-2016 NOI growth slows to 5.1%, but still above its 3.2% long-term average 4

5 NCREIF Overview Second Quarter 2017 Index Composition NPI NPI - Leveraged Properties Only NFI-ODCE Farmland Timberland Contributors Properties 7,161 3,631 2, Market Value $539.2 B $349.1 B $224.1 B $8.1 B $25.4 B Inception Date 1978 Q Q Q Q Q1 Sold Properties Leverage Unlevered 41.5% 21.5% Unlevered Unlevered Quarterly Return 1.75% 2.34% 1.70% 1.63% 0.70% 1 Year Return 6.97% 9.31% 7.87% 6.55% 3.35% Note: NFI-ODCE returns are gross of fees. 5

Total Return Trends by Asset Class Comparison as of June 30, 2017 2Q 2017 1-Year 10-Year 20% 18% 17.9% 16% 14% 12.8% 12% 10% 8% 6% 7.0% 6.4% 9.3% 8.1% 6.6% 7.9% 5.6% 5.3% 6.

6 Total Return Trends by Asset Class Comparison as of June 30, Q Year 10-Year 20% 18% 17.9% 16% 14% 12.8% 12% 10% 8% 6% 7.0% 6.4% 9.3% 8.1% 6.6% 7.9% 5.6% 5.3% 6.2% 7.2% 4% 2% 0% 1.8% 2.3% 1.6% 0.7% 3.4% NPI Leveraged NPI NCREIF Farmland NCREIF Timberland 1.7% NFI-ODCE - gross of fees 2.3% 0.2% NAREIT Equity REIT Index 3.1% S&P 500 Index 6

7 Market Value Index NPI Total Return NPI Total Return Increases After 8 Consecutive Quarters of Decline 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 2015Q1 2015Q2 2015Q3 2015Q4 2016Q1 2016Q2 2016Q3 2016Q4 2017Q1 2017Q2 with Prices Still Rising Well Above Long-Term Trend and Prior Peak Note: The Market Value Index (MVI) is an equal-weighted index and excludes expansion capital expenditures. 7

8 1978Q1 1979Q1 1980Q1 1981Q1 1982Q1 1983Q1 1984Q1 1985Q1 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 1978Q1 1979Q1 1980Q1 1981Q1 1982Q1 1983Q1 1984Q1 1985Q1 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 Quarterly NPI Return History 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% 0.0% -1.0% -2.0% -3.0% -4.0% -5.0% -6.0% -7.0% -8.0% -9.0% Total Return 20Y Average SI Average 6.0% 4.0% 2.0% 0.0% -2.0% -4.0% -6.0% -8.0% Real Total Return 20Y Average SI Average 8

9 1979Q1 1980Q1 1981Q1 1982Q1 1983Q1 1984Q1 1985Q1 1986Q1 1987Q1 1988Q1 1989Q1 1990Q1 1991Q1 1992Q1 1993Q1 1994Q1 1995Q1 1996Q1 1997Q1 1998Q1 1999Q1 2000Q1 2001Q1 2002Q1 2003Q1 2004Q1 2005Q1 2006Q1 2007Q1 2008Q1 2009Q1 2010Q1 2011Q1 2012Q1 2013Q1 2014Q1 2015Q1 2016Q1 2017Q1 Annual NPI Return History 30% Total Return Income Return Capital Return 20% 10% 0% -10% -20% -30% 9

10 LTV % of NPI Properties with Leverage NPI Leveraged Property Analysis Leveraged NPI Properties and Loan-to-Value 70% Loan-to-Value (4QMA) Share with Leverage 70% 60% 60% 50% 50% 40% 40% 30% 20% 30% 20% 10% 0% 3.0% 2.5% Unlevered NPI NPI Properties with Leverage Total Quarterly Returns 2.0% 1.5% 1.0% 0.5% 0.0% 2Q Q Q Q Q

11 Question What will be the best performing asset class in 2017? A. NCREIF Leveraged Returns B. S&P 500 Stocks C. Corporate Bonds D. NAREIT Index 11

12 Real GDP Growth NPI Total Return Annual Real GDP Growth and NPI Total Return Annual GDP Growth Annual NPI Total Return 6% 5% 4% 3% 2% 1% 0% 25% 20% 15% 10% 5% 0% -5% -1% -2% -3% -4% -10% -15% -20% -25% Source: U.S. Bureau of Labor Statistics, NCREIF. 12

13 Quarterly NPI Total Return Shaded Areas Represent Recessions 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% Source: National Bureau of Economic Research, NCREIF. 13

14 Quarterly Growth, SAAR Quarterly Real GDP Growth: Contributions by Major Component 6% Personal Consumption Business Investment Residential Investment Inventories Exports Imports Government GDP Growth 5% 4% 3% 2% 1% 0% -1% -2% -3% 1Q Q Q Q Q Q Q Q Q Q 2017 Source: U.S. Bureau of Economic Analysis, NCREIF. 14

15 Office Employment Growth NPI Total Return Annual Office Employment Growth and NPI Total Returns Annual Office Job Growth Annual NPI Total Return 8% 6% 4% 2% 0% -2% -4% -6% -8% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% Source: U.S. Bureau of Labor Statistics, NCREIF. 15

16 Annual Job Growth Annual Job Growth: Key Real Estate Segments 8% Office Job Growth Transp/Warehousing Job Growth Retail Job Growth 6% 4% 2% 0% -2% -4% -6% -8% Source: U.S. Bureau of Labor Statistics, NCREIF. 16

17 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2017 ODCE Net Fund Flows ($Bil) NFI-ODCE Fund Flows 4Q Rolling Total as of June 30, 2017 $20.0 Contributions Distributions/Redemptions $18.0 $16.0 $14.0 $12.0 $10.0 $8.0 $6.0 $4.0 $2.0 $0.0 17

18 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2017 NFI-ODCE Fund Flows (% Net RE Assets) NFI-ODCE Fund Flows as Share of Net Real Estate Assets 4Q Rolling Total as of June 30, % Net Flows Contributions Distributions/Redemptions 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 18

19 4Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2017 NFI-ODCE Net Fund Flows (% Net RE Assets) Annual Total Return NFI-ODCE Net Fund Flows as Share of Net Real Estate Assets with Total Returns 4Q Rolling Fund Flows Share/Annual Returns as of June 30, % Net Flows NFI-ODCE Annual Total Return NPI Annual Total Return 25.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% 20.0% 15.0% 10.0% 5.0% 0.0% -5.0% -10.0% -15.0% -20.0% -25.0% -30.0% -35.0% -40.0% 19

20 1990Q4 1991Q4 1992Q4 1993Q4 1994Q4 1995Q4 1996Q4 1997Q4 1998Q4 1999Q4 2000Q4 2001Q4 2002Q4 2003Q4 2004Q4 2005Q4 2006Q4 2007Q4 2008Q4 2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4 2015Q4 2016Q4 Capital Return Percent Sold 1990Q4 1991Q4 1992Q4 1993Q4 1994Q4 1995Q4 1996Q4 1997Q4 1998Q4 1999Q4 2000Q4 2001Q4 2002Q4 2003Q4 2004Q4 2005Q4 2006Q4 2007Q4 2008Q4 2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4 2015Q4 2016Q4 Sold Properties Sales Volume ($Bil) NPI Sale Transactions 1, Q Rolling Sold Properties 4Q Rolling Sales Volume Annual NPI Sales Transactions and Volume $45 $40 $35 $30 $25 $20 $15 $10 $5 $0 Annual Capital Return and Share of NPI Properties Sold 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% Capital Return Percent Sold 20% 18% 16% 14% 12% 10% 8% 6% 4% 2% 0% 20

21 billions $ CRE investment activity good but not great Comparative volume across all property types roughly 25% below year-to-date levels At the current pace the market will see $ billion in 2017 $600 RCA Property Type Sales Volume $500 $400 $300 $200 $100 $0 Office Apartment Retail Industrial Hotel 21 Source: CBRE EA, Principal Real Estate Investors, July2017.

22 QMA Value Weighted Cap Rate Long-Term NPI Implied Appraisal Capitalization Rate Trend 9.0% Cap Rate 20Y Avg SI Avg 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% 4.5% 4.0% Note: Implied Cap Rate Equals Current Quarter NOI Divided by Current Quarter Market Value Multiplied by 4. 22

23 1997Q1 1997Q3 1998Q1 1998Q3 1999Q1 1999Q3 2000Q1 2000Q3 2001Q1 2001Q3 2002Q1 2002Q3 2003Q1 2003Q3 2004Q1 2004Q3 2005Q1 2005Q3 2006Q1 2006Q3 2007Q1 2007Q3 2008Q1 2008Q3 2009Q1 2009Q3 2010Q1 2010Q3 2011Q1 2011Q3 2012Q1 2012Q3 2013Q1 2013Q3 2014Q1 2014Q3 2015Q1 2015Q3 2016Q1 2016Q3 2017Q1 NPI Cap Rate Spread NPI Cap Rate Spreads: 10Y U.S. Treasury and Corporate BBB Effective Yield 5% Spread to Corp BBB 20Y Avg - BBB Spread to 10Y UST 20Y Avg - UST 4% 3% 2% 1% 0% -1% -2% -3% -4% -5% Source: Federal Reserve Bank of St. Louis (FRED), NCREIF. 23

24 Question What will cap rates be for the nation by the end of 2017? A. Below 4% B. 4% to 5% C. 5% to 6% D. Above 6% 24

25 QMA Cap Rate NPI Capitalization Rates: Trend by Property Type 10% Apartment Industrial Office Retail 9% 8% 7% 6% 5% 4% 25

26 2011-Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Discount Rate NFI-ODCE Fund Discount Rates: Trend by Property Type 10-Year Holding Period 9.0% Apartment Industrial Office Retail 8.5% 8.0% 7.5% 7.0% 6.5% 6.0% 5.5% 5.0% Note: Includes 22 of 24 NFI-ODCE funds. Source: Altus, NCREIF. 26

27 2Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q NCREIF Indicators: Market Value Index (MVI) Level Annual Change MVI 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% -30% MVI by Property Type Apartment Industrial Office Retail Note: The Market Value Index (MVI) is an equal-weighted index and excludes expansion capital expenditures. 27

28 Question When will the Market Value Index (MVI) peak for this cycle? A B C D or later 28

29 NPI Total Returns: Current Quarter Detail Property Size Total Returns 2.5% 2.0% 1.5% Fund Type Total Returns 2.5% 2.0% 1.5% 1.0% 1.61% 1.97% 1.0% 1.70% 1.78% 1.70% 2.28% 0.5% 0.5% 0.0% > $100 million <= $100 million Appraisal Type Total Returns 0.0% ODCE Open End Separate Account Ownership Returns Closed 2.0% 1.5% 1.0% 0.5% 0.0% 1.77% 1.79% External Internal 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1.73% 1.75% Joint Venture Wholly Owned 29

90% Other Markets Top 10 Markets MV ($Bil) New York City $ 66.24 Los Angeles $ 41.81 Washington DC $ 40.89 Chicago $ 31.

30 Seattle Los Angeles Denver San Francisco Dallas Boston NPI Chicago Washington DC New York City Houston NPI Total Returns: Top 10 Markets by Market Value Top 10 Markets versus All Others 2.0% 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 3.0% 1.63% Top 10 Markets 1.90% Other Markets Top 10 Markets MV ($Bil) New York City $ Los Angeles $ Washington DC $ Chicago $ San Francisco $ Seattle $ Boston $ Dallas $ Houston $ Denver $ Quarterly Total Return: Top 10 and NPI 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 30

31 Current Quarter Basis Point Total Return Impact by Metro Apartment Office Houston Chicago New York Washington DC 0.54 Denver Industrial Retail 3.57 Los Angeles Inland Empire Oakland Orange Co New York New York Washington DC 3.21 Cambridge MA Houston 2.04 Los Angeles San Francisco Boston CBSA New York Dallas Denver 31

32 NPI Total Returns by Property Type: 2Q 2017 Income Capital Total 3.5% 3.0% 3.1% 2.5% 2.2% 2.0% 1.5% 1.0% 1.1% 1.5% 1.8% 1.3% 1.8% 1.6% 1.5% 1.1% 1.2% 0.5% 0.4% 0.5% 0.4% 0.0% -0.5% -1.0% -0.5% Apartment Hotel Industrial Office Retail 32

33 NPI Total Returns: Current Quarter Property Type Detail Apartment by Subtype 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 1.11% 1.51% Office by Location/Value 2.08% High-rise Low-Rise Garden Industrial by Size/Type 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% 3.52% Local Wh. (<= 250K SF) Retail by Type 2.96% 2.82% Regional Wh. (250K-500K SF) National/Bulk Wh. (500K+ SF) 3.09% Other Industrial 2.0% 1.5% 1.0% 0.5% 0.0% 1.88% 1.49% 1.44% CBD Suburban > $100M Suburban <= $100M 1.8% 1.6% 1.4% 1.2% 1.0% 0.8% 0.6% 0.4% 0.2% 0.0% 1.62% 1.39% 1.43% Super Reg./Reg. Neighborhood/Comm. Other Retail 33

34 NPI Total Returns by Property Type: Annual Returns Over Last Five Years 16.0% 2Q Q Q Q Q % 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Apartment Hotel Industrial Office Retail 34

35 NCREIF Analytics: Market Performance Report 5-Yr. Risk v. Return San Francisco Dallas Los Angeles Boston Chicago New York Washington DC

36 Question What will be the best performing property sector in 2017? A. Apartment B. Hotel C. Industrial D. Office E. Retail 36

37 NPI Net Operating Income Growth Rolling Four Quarters 6.0% 5.0% 4.0% 3.0% 2.0% 4.1% 5.7% 5.5% 5.6% 5.1% 1.0% 0.0% 2Q Q Q Q Q

38 Q Rolling NOI Growth NPI Net Operating Income Growth Trends by Property Type 15% Apartment Industrial Office Retail 10% 5% 0% -5% -10% 38

39 NPI Rental Income Growth Rolling Four Quarters 6.0% 5.0% 4.0% 3.0% 2.0% 4.0% 3.3% 4.5% 4.4% 4.5% 1.0% 0.0% 2Q Q Q Q Q

40 Q Rolling Rent Growth NPI Rental Income Growth Trends by Property Type Apartment Industrial Office Retail 10% 8% 6% 4% 2% 0% -2% -4% -6% -8% -10% 40

41 Rent levels mostly back to pre-gfc levels Rents are back to pre-crisis levels (notable exception being retail) Income growth going forward will be challenged by weaker demand in the office sector Apartment and industrial are facing potential supply side issues despite healthy demand 130 Rent Indexed to Prior Peak (Q = 100) Apartment Industrial Office Retail 41 Source: CBRE EA, Principal Real Estate Investors, Q

42 2011-Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q2 Rent Growth NFI-ODCE Average Projected Market Rent Growth by Property Type 10-Year Holding Period 3.8% Apartment Industrial Office Retail 3.6% 3.4% 3.2% 3.0% 2.8% 2.6% 2.4% 2.2% 2.0% Note: Includes 22 of 24 NFI-ODCE funds. Source: Altus, NCREIF. 42

43 Question Which property type will have the highest NOI growth in 2017? A. Apartment B. Industrial C. Office D. Retail 43

44 Recent Occupancy Rate Trends 100% Occupancy Last Five Years NPI ODCE 95% 90% 91.1% 90.3% 92.3% 91.2% 93.1% 92.4% 93.2% 92.9% 93.3% 92.3% 85% Occupancy Last Five Quarters 95% 94% 93.2% 93.2% 93.2% 93.3% 92.9% 93.0% 93% 92.6% 92.7% 92.2% 92.3% 92% 91% 90% 89% 88% 87% 86% 85% 2Q Q Q Q Q % 2Q Q Q Q Q

45 1Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2017 Occupancy Rate Long-Term Occupancy Rate Trends 95.0% 94.0% 93.0% 92.0% 91.0% 90.0% 89.0% 88.0% 87.0% 86.0% NPI NFI-ODCE 85.0% 45

46 Occupancy Rate Trends by Property Type Apartment Industrial Office Retail 46 90% 91% 92% 93% 94% 95% 96% 97% NPI ODCE 86% 88% 90% 92% 94% 96% NPI ODCE 84% 86% 88% 90% 92% 94% 96% 98% NPI ODCE 82% 84% 86% 88% 90% 92% 94% NPI ODCE

47 CRE fundamentals are OK Apartment supply putting pressure on landlords despite strong demand for class B space Industrial continues to generate significant income growth but has a large supply pipeline Office market seeing slower demand, occupiers cautious and cost conscious late cycle Retail demand soft amid secular headwinds but supply remains limited 500 Vacancy Rate Relative to Historical Average ( ), BPS Office Industrial Apartment Retail 47 Source: CBRE EA, Principal Real Estate Investors, Q2 2017

48 Completions Rate New supply not yet a headwind With the exception of apartment, supply remains below historical averages across all property types 4.5% Commercial Real Estate New Construction* 4.0% 3.5% 3.0% 2.5% 2.0% 1.5% 1.0% 0.5% 0.0% Completions Rate Completions Rate (Historical Average) 48. * Apartment stock converted from units to SF assuming average unit size of 750 Source: CoStar Portfolio Strategy and Principal Real Estate Investors Research, as of Q

49 NPI Income Statement Income Breakdown Income 2Q 2017 Potential Gross Income $8,530,692,371 Vacancy (6.87%) $585,955,968 Base Rent $7,944,736,403 Contingent Rent $36,741,335 Reimbursements $1,506,213,810 Other Income $529,967,862 Total Income $10,017,659,410 Base Rent Reimbursements 5.3% 15.0% 0.4% Contingent Rent Other Income 79.3% 49

50 NPI Income Statement Expenses 2Q 2017 Admin Exp $411,465,884 Marketing Exp $111,193,036 Utilities $376,582,364 Maintenance $705,202,620 Insurance $112,226,459 Management $257,594,249 Property Tax $1,439,653,501 Expense Breakdown Admin Exp Marketing Exp Utilities Maintenance Insurance Management Property Tax Other Expense 10.4% 10.8% 2.9% 9.9% Other Expense $396,151,929 Total Expense $3,801,070,042 NOI (62% of total income) $6,207,589, % 18.6% Valuation Cap Rate 4.62% Value $537,362,157, % 3.0% 50

51 NPI Income Statement Cap Ex Breakdown Capital Expenditures 2Q 2017 Lease Commissions $318,270,229 Tenant Improvements $553,207,552 Building Improvements $636,077,339 Building Expansion $166,116,434 Other Capital Expenditures $223,947,105 Total Capital Expenditures $1,897,618,659 Cash Flow $4,309,970,709 Lease Commissions Building Improvements Other Capital Expenditures 11.8% 8.8% 33.5% Tenant Improvements Building Expansion 16.8% 29.2% 51

52 Minneapolis Chicago Cambridge Houston Austin Dallas New York Boston Ft. Lauderdale Washington DC Denver Atlanta Phoenix Miami Portland Los Angeles Orlando Baltimore Orange Co Oakland San Diego Riverside Seattle San Jose Las Vegas San Francisco NCREIF Effective Property Tax Rate by CBSA: 2Q % 2.0% 1.5% 1.0% 0.5% 0.0% 52

53 NCREIF Indictors: Cap Ex Ratio (CXR) and Free Cash Flow Yield (FCFY) Cap Ex Ratio, Rolling Four Quarters 2.5% 2.0% CXR (4Q roll) 20Y Avg 1.5% 1.0% 0.5% 0.0% Free Cash Flow Yield, Rolling Four Quarters 9% FCFY (4Q Roll) 20Y Avg SI Avg 8% 7% 6% 5% 4% 3% 2% 53

54 2Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q QMA CapEx as % of NOI NCREIF Indicators: Total Capital Expenditures as Share of NOI by Property Type 50% Apartment Industrial Office Retail 45% 40% 35% 30% 25% 20% 15% 10% 5% 54

55 2Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q Q 2017 NCREIF Indicators: Capital Expenditure Detail as Share of NOI by Property Type Apartment 40% 35% Leasing Com. TI's Bldg Imp. 30% 25% 20% 15% 10% 5% 0% Industrial 14% 12% Leasing Com. TI's Bldg Imp. 10% 8% 6% 4% 2% 0% Office Retail 25% 20% 15% 10% 20% 15% 10% Leasing Com. TI's Bldg Imp. 5% 0% Leasing Com. TI's Bldg Imp. 5% 0% 55

56 Question What will the annual NPI total return be for 2017? A. Below 5% B. 5%-to-7% C. 7%-to-9% D. Above 9% 56

57 Summary Trailing 4-quarter NPI returns in the 1.5%-1.75% range may signal a stabilizing trend Cap rates leveling out with spreads near long-term averages suggest fair real estate pricing and insulate values against rising interest rates Modest, yet favorable economic conditions support property fundamentals All real estate is local and conditions vary across property type and geography 57

58 Upcoming NCREIF Events NCREIF/INREV Fall Training Course 2017 New York, NY September 28 NCREIF Fall Conference 2017 Palm Beach, FL Eau Palm Beach Resort November 6 9 NCREIF Winter Conference 2018 Scottsdale, AZ Scottsdale Resort at McCormick Ranch March Visit for more information 58

Third Quarter 2017 NCREIF Indices Review. Fall Conference November 7, 2017

Third Quarter 2017 NCREIF Indices Review Fall Conference November 7, 2017 Panelist Overview Jeff Fisher NCREIF Data & Research Consultant Sara Rutledge NCREIF Director of Research John Ehli Portfolio Manager