CULTIVATING GROWTH BUILDING VALUE

Transcription

1 INSTITUTIONAL REAL ESTATE LETTER Sponsor Profile REAL ESTATE INVESTMENT MANAGEMENT CULTIVATING GROWTH BUILDING VALUE ING Clarion Partners ING Clarion Real Estate Securities ING Clarion Capital ING Clarion Realty Services When standards of excellence are instilled throughout an organization, a tradition of success is established. For more than 2 years, ING Clarion has delivered excellent results to its real estate investment clients. With a distinguished long-term record of performance, ING Clarion has achieved investment success for clients of the firm s three chosen market sectors: private equity real estate, publicly traded equity real estate securities and real estate debt securities. ING Clarion s success reflects the four key elements that follow. Philosophy ING Clarion applies fundamental real estate research to investment decision making in both the public and the private markets. People ING Clarion is distinguished by a stable team of experienced professionals working together in a collaborative environment. Process ING Clarion s fiduciary culture emphasizes responsibility, teamwork and results. Performance Superior investment performance is ING Clarion s driving goal. 24 SPONSOR PROFILE

2 An Overview of the ING Clarion Organization Since 1982, ING Clarion has focused exclusively on managing real estate investments in both the public and private markets. The ING Clarion organization is composed of three investment management affiliates that are linked by an integrated management structure and a shared investment philosophy. ING Clarion relies on in-depth market research to shape portfolios that meet client objectives. Growth of assets under management (in billions) $12.7 $1.6 $2.4 $15B With more than 575 employees nationwide, ING Clarion is owned by the ING Group, a global financial services organization based in the Netherlands. ING Group has operations in 6 countries and $55 billion in assets under management from activities in banking, insurance and investment management. $ Q 23 ING Clarion Partners Private Equity ING Clarion Real Estate Securities Equity Securities ING Clarion Capital Debt Securities Distinguishing characteristics 3 Fully integrated, proprietary research Market fundamentals are the basis of successful real estate investment decisions. ING Clarion s research generates market-level data that is shared across the organization. Multidiscipline real estate expertise ING Clarion offers a range of structures, strategies and risk profiles in both the public and private sectors. Uniquely qualified investment team ING Clarion s 35 senior investment professionals average 22 years of real estate experience and 8 years with the firm. Fiduciary culture ING Clarion has been a registered Investment Advisor since Global capability ING Clarion s parent, ING Group, provides a global platform. 2 THE INSTITUTIONAL REAL ESTATE LETTER

3 ING Clarion Performance History ING Clarion Partners 9/3/3* 15% ING Clarion Partners NCREIF Equivalent % 7.44% 7.84% 9.91% 9.18% 7.87% 12.32% 11.8% 9.47% 12.48% 11.31% 9.73% 8.97% 8.78% 7.33% Composite (leveraged) ING Clarion Partners NCREIF Equivalent Composite (delevered) NCREIF Property Index 3 1 year 3 years 5 years 1 years Since inception (3Q84) ING Clarion Real Estate Securities 9/3/3* 3% ING Clarion Real Estate % 26.9% Securities Composite Wilshire RE Securities Index % 14.15% 12.75% 12.25% 11.36% 1.8% 11.19% 8.77% 1 year 3 years 5 years 1 years Since inception (4Q84) ING Clarion Capital 9/3/3* 15% ING Clarion Capital CMBS Composite % 8.3% 9.16% 9.1% 12.7% 11.6% 13.54% 11.68% Lehman Brothers CMBS Index 3 AAA, AA, A BBB BB B *Please refer to Notes to Performance on the reverse side of this page. 24 SPONSOR PROFILE 3

4 Notes to Performance ING CLARION PARTNERS 1. ING Clarion Partners NCREIF Equivalent Composite consists of the firm s fee-paying, discretionary and nondiscretionary portfolio investments whose characteristics would qualify for inclusion in the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index. Returns are presented beginning the third quarter 1984, the composite s inception date. The composite was created in 21 and is presented in US dollars. 2. Asset values are evaluated quarterly by the firm, and periodically appraised by an independent MAI appraiser in accordance with each Investment Management Agreement. 3. Investment income is based on accrual accounting. 4. Returns are calculated on an investment level basis and include cash balances and interest income from short-term cash investments. 5. Whenever possible, returns are based on audited operating results. 6. Returns are presented net of leverage and on a delevered basis for NCREIF comparison purposes. 7. Cash available from operations is generally distributed quarterly. 8. Annual time-weighted returns are calculated by linking quarterly returns, using the formula below: Investment Income + Appreciation (Depreciation) Weighted Average Equity (Beginning Net Asset Value + Time-Weighted Contributions Time-Weighted Distributions) 9. For annualized returns, the sum of the return components may not equal the total gross return due to the chain-linking of quarterly returns. 1.Capital expenditures, tenant improvements and lease commissions that are capitalized and included in the cost of the property, are not amortized and are reflected in the appreciation component of the return. 11.Returns presented reflect transaction costs but are gross of investment management fees, which vary by client and will reduce actual investment returns. ING Clarion Partners base management fees are generally charged as a percentage of assets under management or a percentage of net operating income ranging from effective rates of.42% to.92%, as described in Part II of Clarion Partners Form ADV. Under certain circumstances, ING Clarion Partners charges a performance-based fee, calculated in part as a percentage participation in excess cash flow over a stated hurdle rate. Had both the highest base management fee of.92% of assets annually and the highest performance fee of.17% annually (based on a blended 15% participation in excess cash flows over a 7% real rate of return hurdle) been applied to the returns presented, net average annual returns would have been as follows: Since 1 year 3 years 5 years 1 years inception Leveraged (net of fees) 6.92% 8.82% 11.23% 11.39% 7.88% Delevered (net of fees) 6.3% 8.7% 9.98% 1.22% 7.69% 12.The NCREIF Property Index (NPI) benchmark is based on published sources. The NPI is unleveraged, includes various real estate property types, excludes cash and other nonproperty related assets and liabilities, income and expenses. 13.The above presentation does not present Composite Dispersion. 14.Clarion Partners is a registered investment advisor under the Investment Advisors Act of Past results are not necessarily indicative of future performance and there exists the possibility of loss. ING CLARION REAL ESTATE SECURITIES 1. ING Clarion Real Estate Securities performance is the composite return of all portfolios over $1 million (i.e., those large enough to be representative and managed with the approach proposed for new accounts) before management fees (including predecessor firms, Audit Investments and Campbell-Radnor Advisors). Composite returns are audited yearly by Ernst & Young, LLP, and presentation conforms to Level II of AIMR Presentation Standards. 2. Past results are not necessarily indicative of future performance and there exists the possibility of loss. 3. Composite returns include performance of many accounts which have elected to reinvest dividends. 4. Gross performance figures are net of transaction costs but do not reflect the deductions of investment advisory fees. Actual investment returns will be reduced by the advisory fees, which vary across clients but are generally consistent with the fees described in Part II of the CRA Form ADV, plus any other costs a client may incur directly. Performance net of investment advisory fees charged for the 1-year, 3-year, 5-year, 1-year and since-inception periods was 24.69%, 13.38%, 12.27%, 1.82% and 1.64%, respectively. ING CLARION CAPITAL ING Clarion Capital Composite Performance by Rating Class The ING Clarion Capital Composite (the Composite ) is calculated in accordance with the Association for Investment Management and Research Performance Presentation Standards ( AIMR-PPS ) and is based on an aggregation of all feepaying, discretionary portfolios of commercial mortgage-backed securities (CMBS) managed by ING Clarion Capital. The investments across all portfolios are aggregated based on the rating class of the investment at the time it was acquired by ING Clarion Capital. In the event of a split rating, the investment is assigned the lower rating. Composite returns by rating class are calculated from the later to occur of ING Clarion Capital s first investment in the rating class, or the inception of the benchmark (Lehman Brothers CMBS Index). Returns presented for the Composite reflect transaction costs but are gross of management fees, which vary substantially based on client investment mandate and will reduce actual investment returns. Net returns are presented below by assuming that the Composite returns, as to each rating class, are assessed the highest annual management fee that is typically charged on an unleveraged, unhedged portfolio comprised of such securities (25 basis points for investment grade securities and 1 basis points for noninvestment grade securities). Additional information regarding advisory fees charged by ING Clarion Capital is set forth in Part II of its Form ADV. These average annual returns are as follows: Composite AAA, AA, A BBB BB B 6/3/97 to 7/31/97 to 12/31/96 to 12/31/96 to 9/3/3 9/3/3 9/3/3 9/3/3 Gross 8.86% 9.16% 12.7% 13.54% Net of maximum 8.61% 8.91% 11.7% 12.54% management fees The Composite includes all CMBS acquired by ING Clarion Capital for all clients, as well as CMBS that were included in client portfolios that were previously managed by other parties and subsequently transferred to ING Clarion Capital for ongoing management. The Composite includes both fixed-rate and floatingrate CMBS. The Composite excludes distressed CMBS that were transferred to ING Clarion Capital for special servicing or other workout management. Calculation of Returns Total return includes realized and unrealized gains as well as income. The Composite is asset-weighted using beginning-of-period weightings and the trade date of assets acquired or sold. Composite returns are calculated for monthly periods and periodic returns are geometrically linked. Periodic returns are timeweighted using the Modified Dietz method. Past results are not necessarily indicative of future performance and there exists the possibility of loss. 1/4 4 THE INSTITUTIONAL REAL ESTATE LETTER

5 A Range of Real Estate Options ING Clarion has developed an array of strategies and vehicles to meet the needs of institutional investors. ING CLARION PARTNERS Private Equity ING CLARION REAL ESTATE SECURITIES Public Equity ING CLARION CAPITAL Fixed Income Securities ING Clarion Partners manages almost $9 billion in private market real estate, largely focused on the four major property types office, multifamily, industrial and retail. With a range of investment options, ING Clarion Real Estate Securities manages $2.4 billion in publicly traded real estate securities. ING Clarion Capital manages more than $1.6 billion in fixed income securities, primarily commercial mortgage-backed securities (CMBS). Individual separate accounts Individual portfolios specifically structured to meet client objectives, including core, core-plus, value-added and opportunistic strategies Individual separate accounts Individual portfolios tailored to investor objectives, including core, focused and hedged strategies Individual separate accounts Individual strategies tailored to investor requirements with respect to return targets, credit quality, diversification and other factors Commingled funds Lion Properties Fund Open-end commingled fund implementing a core investment strategy Lion Industrial Trust Core-plus/value-added open-end fund specifically focused on the industrial property sector Clarion Development Ventures Value-added/opportunistic investments in developmental joint ventures and properties to be repositioned ING Residential REIT Private REIT acquiring upscale residential complexes in highincome submarkets Commingled funds Clarion CRA Hedge Fund Limited partnership using a long/short strategy ING Real Estate Fund Mutual fund investing in real estate securities, available to institutional and individual investors ING Global Real Estate Fund Mutual fund investing in real estate securities of North America, Europe and Asia Pacific IDEX Clarion Real Estate Securities Mutual fund investing in real estate securities with an income focus ING Clarion Real Estate Income Fund Closed-end fund investing in real estate securities and high yield CMBS Commingled funds Total Return Fund Open-end institutional fund that invests primarily in investmentgrade CMBS in order to outperform the Lehman Aggregate Index CMBS Value Fund Open-end institutional fund that invests primarily in high-yield CMBS Gramercy Fund Moderately leveraged fund using hedging techniques to mitigate changes in portfolio value due to interest rate changes 24 SPONSOR PROFILE 5

6 Investment Research, Vision Applied Focused real estate market research is essential to investment success in every market sector. The cash flow generated by each property ultimately determines the results of all real estate investments, whether the ownership is directly in the property, in real estate securities holdings or a position in CMBS assets. Investors rely on comprehensive analyses of local markets, including demographic projections, rent and occupancy trends, as well as the regional economic outlook, to set strategy and evaluate a property s performance potential. At ING Clarion, the research process is interactive so that research recommendations are continuously evaluated through the lens of real-time, market-level observations across the public and private markets. ING Clarion adds value not simply by collecting statistics but by analytically applying an overlay of knowledge to the raw data. The insights gained through the experience of the firm s professionals are an added element of ING Clarion s research edge. Representative clients Alaska Electrical Trust Funds Alliant Techsystems BellSouth Pension Fund Building Investment Trust California State Teachers Retirement System Campbell Soup Company Caring for Colorado Foundation City of Lansing (MI) Retirement System Coca-Cola Enterprises Colorado PERA Cornell University Guggenheim Partners Real Estate HVB Capital Markets, Inc. IAM National Pension Fund Legacy Health Care Systems Massachusetts Laborers Benefits Fund New York State Common Retirement Fund New York State Teachers Retirement System Oregon Public Employees Retirement Fund Oregon State University Foundation Pennsylvania State Employes Retirement Fund Qwest Communications Pension Trust School Employees Retirement System of Ohio State of Hawaii Employees Retirement System State of Michigan Retirement System State Universities Retirement System of Illinois Tennessee Consolidated Retirement System Texas A&M University System UMWA Health & Retirement Funds Unisys Corporation United Parcel Service Virginia Retirement System Specific product inquiries: Private market real estate William Krauch Director of Marketing bill.krauch@ingclarion.com Public real estate equity securities Jarrett B. Kling jarrett.kling@ingclarion.com Real estate debt securities David Drinkwater david.drinkwater@ingclarion.com Or contact: Richard Cohen Eastern U.S richard.cohen@ingclarion.com Drew Fox Closed-end funds drew.fox@ingclarion.com Louis Jug Western U.S lou.jug@ingclarion.com Lynn Kehoe U.S. public markets lynn.kehoe@ingclarion.com Lori Pachelli Mutual funds lori.pachelli@ingclarion.com Leigh Starling Fixed income funds leigh.starling@ingclarion.com Joanne Vitale Eastern U.S joanne.vitale@ingclarion.com Principal offices: New York 23 Park Avenue New York, NY 1169 Philadelphia 259 North Radnor-Chester Road, Suite 25 Radnor, PA 1987 Sacramento 299 Lava Ridge Court, Suite 23 Roseville, CA The Hague Schenkkade 65 P.O. Box LL, The Hague The Netherlands Copyright 24 by Institutional Real Estate, Inc. Material may not be reproduced in whole or in part without the express written permission of the publisher. 6 THE INSTITUTIONAL REAL ESTATE LETTER