City of Baltimore Fire & Police Employees' Retirement System

DIVERSIFIED REAL ASSETS MANAGER SEARCH

CITY OF BALTIMORE FIRE & POLICE EMPLOYEES’ RETIREMENT SYSTEM

September 2019

Kristin Finney-Cooke, CAIA, Senior Consultant Kevin Leonard, Partner Andrew Brett, Director of Real Asset Research

• NEPC recommends the following investment pacing model to achieve the target allocations: – 2019: Committed $30 million to a LaSalle Income & Growth Fund VIII; commit $40 million to a diversified real assets fund(s) and redeem $20 million from core real estate

• NEPC has provided four managers that have been profiled in the book to be interviewed as finalists – Landmark, Private Advisors, Brookfield and JLC

• NEPC recommends two managers be selected for the 2019 diversified real asset fund mandate, each receiving ~$20M – Landmark or Private Advisors – Brookfield or JLC

• Landmark and Private Advisors are both multimanager real asset strategies focused primarily on investing through secondaries and co- investments – Landmark will have a infrastructure focus – Private Advisors will focus across the real assets spectrum (e.g. energy, infrastructure, metals and agriculture)

• Brookfield and JLC are both high quality infrastructure funds

2 REAL ASSETS

• “Real assets” refers to the ownership of a hard asset and/or access to a natural resource – There are many sub-strategies within real assets, and most can be accessed through public or private markets

• Hard asset sub-strategies can include: – Real Estate – Infrastructure – Timber – Agriculture

• Natural resource sub-strategies can include: – Energy (extraction and/or transportation) – Metals (extraction and/or transportation) – Commodities

• Real assets are typically included in a portfolio for diversification benefits, to offer a partial hedge against inflation, and/or to maximize total return – Investor objectives (which vary) can inform sub-strategy allocation targets – Some investors include inflation-linked securities (such as TIPS) in a real assets portfolio due to the inflation sensitivity

3 REAL ASSET MARKET AND 2019 VIEWS

General Market Thoughts • Select opportunities remain for Energy private equity • Attractive opportunities in Infrastructure and related operating businesses – Focus on “buy-fix-sell” strategies and managers with operating expertise – High valuations for large transactions create poor entry points for core exposure – Higher yielding opportunities may exist in niche sectors (e.g., aviation leasing) • Improving Metals & Mining fundamentals but implementation is challenged • Agriculture fundamentals interesting but limited manager universe • Limited opportunities in Timber given low yields and liquidity

Implementation Views Strategy Outlook Commentary Continue to see select attractive private equity opportunities; small Energy Positive players can be more nimble; large allocators can be strategic with acquisitions Continue to find attractive opportunities and a need for capital outside of Infrastructure Neutral/ core assets; favor managers with operating expertise who can drive asset (core/non-core) Positive cash flow growth and/or managers targeting yield-oriented niche assets Renewables Neutral Favorable macro tailwinds supportive, but regulatory risks remain Focus on managers with geological and technical expertise; limited Metals & Mining Positive implementation options Agriculture Positive Slowing appreciation creates attractive entry point; difficult to implement Timber Negative Less attractive due to low yields and illiquidity

4 INFRASTRUCTURE OVERVIEW

NEPC, LLC INFRASTRUCTURE OVERVIEW

Infrastructure assets are generally defined as physical facilities or networks that provide essential goods or services to a broad range of users ➢ Infrastructure assets may be owned privately or through publicly traded securities

• Infrastructure assets may generate a return through a combination of current income and/or capital appreciation

• Characteristics of Infrastructure Assets – Long duration assets with stable cash flows typically tied to inflation – Monopolistic or quasi-monopolistic assets with significant barriers to entry – Operate in regulated environments – Capital intensive assets with high replacement costs

• Large infrastructure investable universe – Over $69 trillion of global infrastructure investment required by 2035 – Over $580 billion of total capital raised by closed-end fund managers since 2005 – Publicly traded infrastructure equities account for over 350 companies globally, with a combined market cap in excess of $3 trillion

• Investments can be made across the asset lifecycle – Greenfield, brownfield, and operating assets

6 INFRASTRUCTURE SUB-SECTORS

Energy & Transportation Communication Social Utilities

Renewable Wireless Education Toll Roads Power Towers Facilities

Electricity Broadcast Healthcare Bridges Generation Satellites Facilities

Electricity Cable Tunnels Courthouses Transmission Networks

Water & Fiberoptic Airports Waste Lines

Oil & Gas Seaports Pipelines

Rail

7 INFRASTRUCTURE SECTORS

Holding Typical Primary Return Sector Asset Focus Period Returns Drivers • Toll Roads • Bridges 10-15 years 5-7% Current Income • Tunnels Transportation • Airports Current Income & • Seaports 10-15 years 8-10% Capital Appreciation • Rail & Transport Current Income & • Electric Generation 8-12 years 15-25% Capital Gains • Electricity transmission and Energy & Utilities distribution networks Current Income & • Water and waste 10-15 years 8-15% Limited Capital • Oil & Gas pipelines Appreciation • District energy • Renewable power

• Wireless communication towers Current Income & Communication • Broadcast satellites 8-12 years 10-15% Capital Gains • Cable networks • Communication towers

• Education facilities Current Income & Social • Healthcare facilities 10-15 years 5-7% Limited Capital • Courthouses Appreciation

Note: “Typical returns” are illustrative examples only, actual target or realized returns may vary for all sectors.

8 INFRASTRUCTURE LIFECYCLE

Prolonged Period Prior to Cash Flow Growing Income Stable Income

Greenfield Brownfield Operating

• Assets requiring • Assets that are operating • Assets that are operating development and and generating cash flow and generating cash flow construction which may • Distributions will increase • Steady distributions from introduce operational during growth/ramp up revenue generation complexity periods and level off as an • Usage typically grows at • In certain cases asset matures approximately the rate of development/construction • Longer operating histories GDP Growth risks can be outsourced to support more predictable third parties and various cash flows structural elements can be introduced to provide a greater degree of revenue certainty

9 ROLE OF INFRASTRUCTURE IN A PORTFOLIO

NEPC, LLC GOALS OF INFRASTRUCTURE ALLOCATION

Income

• Stabilized assets generate predicable cash flows meaning a significant percentage of returns can be generated from cash distributions

Inflation Protection

• Inflation-linked cash flows provide natural hedge to rising liabilities

Diversification

• Low correlation to other asset classes

Downside Protection

• Attractive total return potential with lower volatility generates attractive risk-adjusted returns and serves as downside protection

11 PORTFOLIO FIT

• Infrastructure investments fit into an overall portfolio as a standalone allocation or as part of a broader allocation – Infrastructure – Real Assets – Alternatives – Inflation-Hedging

• Depending on the sub-strategy, some infrastructure strategies share characteristics with real estate and/or private equity – Similarities to private equity: • Operationally-intensive • Portfolio company management team in charge of day-to-day operations – Similarities to real estate: • Fees for service are predictable and stable • Inflation-adjusted revenue streams • Asset location as a key consideration or advantage

• Some infrastructure investments may also be considered as part of a real estate allocation – Some infrastructure asset classes are more real estate-like than others; for example: • Senior Housing (real estate or social infrastructure) • Data centers (real estate or communications infrastructure)

12 CONSIDERATIONS

• Infrastructure is not a “one size fits all” asset class; the mix of various risk/return strategies should be customized based on client objectives

• In constructing an infrastructure portfolio there are several key considerations that impact the allocation, including: – Plan investment policy – Plan inflation sensitivity – Allocation to illiquid alternatives – Liquidity requirements of plan – Existing infrastructure investments

• A global infrastructure investment strategy may benefit from diversification as various regions are at different points in an economic cycle – Global managers tend to be large platforms with investment professionals around the world while non-US managers may be more localized in a particular region or country

• However, there are some considerations of investing in infrastructure outside of the US: – Currency risk – Geopolitical risk – Market liquidity risk – Limited inflation hedge

13 RISK & RETURN FACTORS

• There are several factors to consider when assessing the overall risk and return of an infrastructure investment

Canada, U.S. Other OECD Western Europe, Emerging Markets Geography Countries Australia

Operational Maturity Operating Brownfield Greenfield

Prolonged period Operating Income Stable Income Growing Income prior to cash generation

Predominantly Partially contracted Dependent on contracted or Revenue Model or regulated volume and price regulated

Lower Higher Risk & Return

14 DIVERSIFICATION BENEFITS

• Infrastructure is expected to perform differently than other asset classes because of the defensive characteristics of the assets that create more stable cash flow streams

• Private infrastructure has exhibited low correlation to stocks and bonds – Private infrastructure also has low correlation to other alternative asset classes

Private VA & Opp Comm- Listed Core RE Infra. Energy PE RE Timber Farmland odities Inflation REITs Infra. Stocks Bonds Core Real Estate 1.00

Private Infrastructure 0.31 1.00 Energy Private Equity 0.30 0.25 1.00 Value-Add & Opportunistic RE 0.80 0.51 0.54 1.00

Timber 0.23 0.35 0.14 0.34 1.00

Farmland 0.05 0.25 0.20 0.28 0.60 1.00

Commodities 0.18 0.31 0.56 0.34 -0.06 -0.09 1.00

Inflation 0.22 0.10 0.33 0.20 -0.19 -0.54 0.55 1.00

REITs 0.17 0.30 0.31 0.36 -0.11 -0.01 0.29 0.15 1.00

Listed Infrastructure 0.13 0.70 0.56 0.44 -0.12 -0.04 0.66 0.32 0.69 1.00

Stocks 0.15 0.49 0.33 0.36 -0.01 0.14 0.24 0.03 0.58 0.83 1.00

Bonds -0.17 -0.17 -0.21 -0.19 0.04 -0.04 -0.11 -0.25 0.02 0.02 -0.42 1.00

Sources: NCREIF, Preqin, Thompson One/Cambridge Associates, Bloomberg. Data as of September 30, 2018. Calculated using 20 years of quarterly returns except for listed infrastructure which has data since 2007 (the earliest available for the index). 15 CASH FLOW & INFLATION PROTECTION

• Infrastructure investments generate cash flows with a positive sensitivity to changes in inflation • Revenues can be more or less predictable based on the asset’s business model

• The long lives of infrastructure assets should provide a hedge against inflation

• Contractual price escalators or concessions with price inflation-indexed escalators allow income to adjust with inflation

More Predictable Less Predictable

Type Regulated Contracted Concession (Availability Model) Concession (Tolling Model) Merchant

Description Subject to Long-term Government grants exclusive right to Government grants exclusive Highly government providing pricing operate an asset and provides fixed right to operate an asset, but dependent on regulation, increases protection “availability payments” regardless of revenues are a function of market pricing for monopolistic assets usage patronage or asset usage

Asset Type • Electricity and Gas • Power • Roads • Toll Roads • Uncontracted Distribution & Generation • Bridges • Bridges Generation Transmission • Data • Tunnels • Tunnels • Energy (E&P) • Water & infrastructure • Mass Transit • Airports Wastewater • Midstream • Social Infrastructure Networks • Energy Storage

Inflation Often includes CPI- Often includes CPI- Often includes CPI-based price Often includes CPI-based toll Subject to ability Linkage based price based price adjustments to availability payments adjustment; GDP sensitive to pass along adjustments and adjustments adjustments assets are inherently hedged price increases expense pass- throughs

Source: Brookfield

16 PORTFOLIO BENEFITS AND CONSIDERATIONS

Benefits Considerations

• Infrastructure often provides a correlation to • Investments are generally illiquid, particularly inflation and the opportunity for enhanced during falling markets yield versus fixed income investments • Limited and imperfect benchmarks exist to • Infrastructure offers stable returns relative to gauge investment performance for unlisted other investments, while value-add investment infrastructure performance offers the chance for higher returns • Valuations methodologies can vary with limited • Infrastructure investments typically have long transparency, and asset appraisals can lag real- term and predictable cash flows. revenue time market valuations models differ by investment type, but cash flows can be government backed • Infrastructure assets are operationally intensive and require active asset management • Infrastructure offers diversification from other asset classes, it has been shown to have a low • Rising interest rates can effect valuations level of correlation with traditional investments • The use of leverage can amplify negative performance INVESTMENT CONSIDERATIONS

• In addition to portfolio considerations (such as liquidity and leverage), there are many market considerations as well: – Commodity prices – GDP sensitivity – Geopolitical risk and stability – Capital market risk (including debt pricing/availability, market volatility, etc.)

• Some infrastructure assets have revenues that are monitored and/or set by a regulatory body, which adds additional risk – Unpredictable regulatory change can impact margins – Deregulation of a particular market may result in an asset/business losing its status as a legal monopoly and lead to new competition – Asset managers with extensive operational experience in a particular sector tend to have strong relationships with the regulatory agencies • This should allow for ongoing dialogue with the regulators, and should result in a better understanding of potential changes to the regulatory environment

• Other risks directly associated with infrastructure investments can include: – The possibility of disruptive technologies – Environmental risk – Operating risk – Legal risk IMPLEMENTATION

NEPC, LLC MARKET OPPORTUNITY

Debt Core Non-Core

Subordinated Core-Plus Value-Add Opportunistic Senior Debt Core Equity Debt Equity Equity Equity

Target Return 3.5-5.5% 5.5-9% 7-9% 9-12% 12-15% 15-17%

Contracted Yes No Yes Yes No Varies Revenue

Income & Income & Return Driver Income Income Appreciation Appreciation appreciation appreciation

GDP Sensitivity Low High Low Low-medium High High

Greenfield vs. Both Both Brownfield Both Both Both Brownfield

Operational Intensity / Low Low Low-Medium Medium High High Complexity

Source: BlackRock

20 INVESTMENT VEHICLE STRUCTURES Infrastructure offers different investment strategies and vehicle structures with varying levels of liquidity (but not really liquid) and investor control: Investment Description Benefits Considerations Type • Equity market correlations Public market securities with • Immediate exposure dampen diversification Listed Infrastructure high transparency and • Easy to access benefits liquidity • Liquid • Overlap with equity portfolio • Semi-liquid with potential Private funds with perpetual • Attractive Fees for entrance/exit queues Open-End Fund lives, functions like core real • Broad Diversification • Limited manager universe estate funds • Quicker to build portfolio • Limited control • Much higher level of • Potential look-through diversification than primary issues Buyers of LP stakes, fund funds Secondary Fund • Limited control recap, GP transactions • Mitigated J-curve effect • Double layer of fees • Provides exposure to • Limited manager universe multiple vintage years Private equity style funds that • Illiquid make control investments • Limited to assets acquired Primary Closed-End Fund • High fee loads over a multi-year investment during investment period • Limited control period • Requires specialized investment professionals with governance to allow Direct ownership in assets • Greater control Direct/Co-Investments/SMA for quick investment alongside operator or GP • Lower fees decisions • Less liquid • Less diversification

2121 TYPICAL CLOSED-END FUND LIFECYCLE

• Fundraising, (0 – 2 years) – The time period that is used by the manager to raise sufficient funds for the strategy. – Investors make “Commitments” to fund investments over time.

• Investing (years 1 – 5) – This is time period that managers use to source investment opportunities. The Fund will make investments during the “Investment Period,” generally the first four or five years of a fund’s life. – Business plans are put into place as the manager seeks to add value. If an investment does not meet expectations the managers will take steps to mitigate the impact of losses. – Current income may be paid out during the Investment Period (depending on the strategy), though early distributions may be recalled.

• Harvesting (years 3 – 10) – The time period that managers use to exit the investments through one-off asset sales, portfolio sales, IPOs, and other exit opportunities. – The proceeds of the realizations are distributed to the fund’s investors according to a pre- determined schedule, or distribution waterfall, which includes the payment of carried interest to the manager (if applicable).

• Liquidating (years 7 – 14) – The manager uses this time to exit the remaining investments in the portfolio. – If the fund life is extended beyond its initial term (as stated in fund legal documents), management fees may be negotiated lower.

22 INFRASTRUCTURE BENCHMARKS

Underlying Benchmark Benchmark Description & Considerations Index Index Applicability Components

• Includes the largest developed market companies in the S&P Global transportation, utilities, and energy infrastructure sectors Infrastructure Listed • Includes the 15 largest emerging market companies across all Publicly-Listed Total Return Infrastructure three subsectors Equities Index • Constituents must have a market capitalization of at least $250 million and meet liquidity requirements

Preqin Quarterly • Fund-level index comprising unlisted infrastructure Open- and Open-End Infrastructure partnerships Closed-End Funds Index • Includes some private equity energy managers Funds

• Asset-level benchmark including approximately 150 assets (across 10 asset owners) MSCI Global • Performance reported quarterly including income and Quarterly Open-End appreciation return components Individual Infrastructure Funds Assets • Represents an estimated 20% of the unlisted infrastructure Asset Index market • Approximately 50% Australia

• Fund-level benchmark by vintage year Preqin Global Open- and Closed-End • Average of 14 funds per vintage year Infrastructure Closed-End Funds • Includes some private equity energy managers Benchmark Funds • Only provides median DPI figures (not quartiles)

• Fund-level benchmark including closed-end infrastructure funds only Cambridge Closed-End Closed-End • Pooled quarterly return series also available Associates Funds Funds • Limited number of observations (average of 2 funds per vintage year)

23 BENCHMARKING

• Compares fund performance to performance of peer infrastructure funds • Used to measure skill in picking top performing funds vs. peers for specific vintage Peer Group years • Metrics include IRR, TVPI and DPI • Growing data set, but limited data is available for some vintage years

• Measures returns against the opportunity cost of investing in asset class rather than public equity Public • Investors in private infrastructure seek to achieve a premium relative to the public markets for illiquidity and greater risk Markets • Private markets investments will underperform public markets for first few years due to J-curve

• Fund portfolio’s are typically designed to hedge against inflation, this method will Inflation measure returns against inflation index (CPI +3-5% often used) Index • More useful of a method during late fund life

• Measures performance against an absolute return (i.e. 6-12% net IRR) Absolute • Not as useful of a method during early fund life Return • Widely used method of infrastructure benchmarking

24 TYPICAL FUND STRUCTURE & ECONOMICS

Term Standard Term Description

The fund can only accept subscriptions Closed or Open Ended: Closed (commitments) for a defined period of time, after which, is closed to new investors. A limited partnership exists when two or more partners unite to jointly conduct a business in which Investment Vehicle: Limited Partnership one or more of the partners is liable only to the extent of the amount of money that partner has invested. The fund has a defined term with which to invest and harvest investments. If the fund still has remaining Fund Term: 12-25 years, depending on strategy investments at the termination date, the GP can request to extend the life of the fund. The GP contractually has a defined period of time with which to invest capital. The GP may be able to make Investment Period: Generally five years add-on investments to its main platforms after the investment period concludes.

Management Fee: 1.5%-2.0% In general, private equity funds will have higher fees.

Generally on committed capital during Basis of Management In general, the management fee is included in the LP Investment Period; thereafter, net Fee: commitment. invested capital The amount of gain the GP takes after paying back Carried Interest: Yes; 20% investment cost, fees & expenses. The annualized rate of return that needs to be Preferred Return: Yes; 6-8% achieved before the GP can take their share of the carry. To align interests, with investors, the GP will typically commit a certain amount of capital. The higher the Sponsor Investment Generally 2-5% sponsor investment, the greater the alignment of interests. European: Cumulative paid-in capital to date has to be returned to LPs before GP can share in the carry. Distribution Waterfall: Modified deal-by-deal or European Modified: The GP will take their carry on a deal-by- deal basis.

25 SECONDARIES

NEPC, LLC REAL ASSET SECONDARIES OVERVIEW

• Secondaries strategies acquire interests in existing funds and partnerships invested in underlying infrastructure and real assets – Acquisitions typically occur several years into a fund’s investment period, at which point underlying investments are identified and the harvesting period has begun – Provides broad exposure to multiple funds and partnerships

• Secondary transaction drivers – GP consolidation, LP staff turnover and administrative burdens, LP liquidity constraints, and portfolio rebalancing

• Benefits – Accelerated Distributions • Timing of investment to realize near-term cash flow reduces the effects of the “J-curve” – Fund Diversification • Broad variation available across strategy, geography, manager and vintage year – Favorable Pricing • Acquire investments at discount to current intrinsic value

• Considerations – Limited control – Double layer of fees – Limited manager universe – Potential look-through issues

27 REAL ASSET SECONDARIES OPPORTUNITY SET

Growing Opportunity Set • Total unrealized NAV and dry powder in the private infrastructure and real asset space reached over $1.1 trillion in 2018

• Large stock of seasoned real assets has led to growth in secondary transaction volume from $2.4 billion in 2014 to $6.5 billion in 2018

• There has been significant growth in primary and direct real assets investing over the past decade, resulting in the need for liquidity via secondary transactions

Unrealized Value Dry Powder

800 450

700 400

600 350 300 500 250 400

200 $ $ Billion $ Billion 300 150 200 100

100 50

0 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Q2 2018 2018

Source: Preqin, Evercore, Campbell Lutyens

28 FUND PROFILES

NEPC, LLC FUND PROFILE: BROOKFIELD

General Fund Information Fund Strategy GP Fees, Promote and Commitment

Fund Fund Name Brookfield Infrastructure Fund IV Infrastructure Target Strategy 10% Gross IRR Investment Brookfield Asset Management Industry Transportation, Renewable Power, Manager Focus Energy, Utilities and Data Target Gross 1.8x Multiple 181 Bay Street, Suite 300 Geographic Main Address Global Toronto, ON M5J 2T3 Focus The management fee will be 1.5% per Target Fund Target Fund Size 10% maximum at Fund level annum on committed capital during the $17 billion / $20 billion Leverage / Hard Cap Management investment period. Following the Fees investment period, the management Target Deal fee will be 1.5% per annum on Capital Raised $15 billion $500 million to $1 billion Size invested capital. Expected Final Q4 2019 Close BIF IV will be a continuation of the Preferred strategy employed by its predecessor 8% Return Fund Structure Delaware Limited Partnership funds which is to make direct investments in high-quality core Investment infrastructure assets. Brookfield Four years from the final close Period attempts to be a value buyer of these Strategy assets in geographies in which the Firm Carried 20% with an 80% GP catch-up 12 years from the date of the final Description has an operating presence, including Interest Term of Entity close, subject to two one-year North and South America, Australia/ extensions Asia and Europe. The Fund will generally seek to make investments in Minimum $10 million (GP may accept lower) transportation, renewable power, Investment GP utilities, data and energy assets/ $4.25 billion platform companies. Commitment Fund Auditor Deloitte & Touche LLP

Fund Track Record ($ in Millions)

Vintage Capital Capital Reported Amount Total TVPI DPI Investor Fund Name Fund Style Year Committed Funded Value Distributed Value Multiple Multiple IRR

Brookfield Infrastructure Fund I Infrastructure 2009 $2,655 $2,540 $3,369 $1,628 $5,325 1.8x 0.7x 10.9%

Brookfield Infrastructure Fund II Infrastructure 2013 $7,000 $6,242 $8,436 $1,435 $10,349 1.5x 0.3x 10.6%

Brookfield Infrastructure Fund III Infrastructure 2016 $14,000 $9,635 $11,225 $1,198 $12,684 1.2x 0.1x 14.1%

Track record data as of 06/30/19 and provided by the Manager. FUND PROFILE: JLC

General Fund Information Fund Strategy GP Fees, Promote and Commitment

Fund Infrastructure Fund Name JLC Infrastructure Fund I, L.P. Strategy Target 10% - 12% Net IRR Industry Utilities, Transportation, Renewable Investment MJE-Loop Capital Partners, LLC Focus Energy, Power Manager Geographic Target Net 88 Pine Street, 25th Floor United States 1.5x – 2.0x Main Address Focus Multiple New York, NY 10005 The Fund has no leverage restrictions, Target Fund Size Target Fund $1 billion / $1.25 billion but will seek to add conservative / Hard Cap Leverage leverage only to stabilized assets. The management fee will be 1.5% per annum on committed capital during the Management investment period. Following the Capital Raised $342 million Target Deal $50 million to $200 million of equity Fees investment period, the management Size fee will be 1.5% per annum on Expected Final Q4 2019 invested capital. Close The Fund is targeting an investment portfolio that is balanced with roughly Fund Structure Delaware Limited Partnership Preferred a 50/50 split between public 8% Return infrastructure assets and privately- Investment Five years from the final close owned assets/companies in the power, Period sustainable energy, transport, Carried 20% 12 years from final closing, Strategy telecommunications, civil and social Interest Term of Entity subject to two one-year Description infrastructure sectors. extensions Although the expectation is for a 50/50 Minimum split in the Fund’s assets, the Fund will $10 million (GP may accept lower) seek to maximize risk-adjusted returns GP Investment Up to $5 million for its investors which may result in a Commitment different asset mix in the Fund. Fund Auditor PricewaterhouseCoopers, LLP

Note: The JLC team does not have a transferrable track record FUND PROFILE: LANDMARK

General Fund Information Fund Strategy GP Fees, Promote and Commitment

Landmark Infrastructure Partners Fund Fund Name Real Assets Secondaries II Strategy Target 10% - 12% Net IRR Investment Industry Landmark Partners Infrastructure Manager Focus Geographic 10 Mill Pond Ln Global Target Net Main Address Focus 1.4x Simsbury, CT 06070 Multiple Not to exceed 25% at the Fund-level, Target Fund Size $1.5 billion / NA Target Fund underlying investments will have / Hard Cap Leverage leverage as determined by the GPs of those funds During the investment period, the Capital Raised $500 million management fee will be 1.0% on Target Deal Management $5 million to $50 million of equity committed capital; for the next four Size Fees Expected Final years it will be 1% on invested capital Q1 2020 Close and 1% of NAV thereafter

The Fund will focus on investing in Fund Structure Delaware Limited Partnership infrastructure and real assets Preferred secondary market transactions. The 7% Investment Fund intends to acquire interests in Return Four years from the final close Period infrastructure funds, partnerships, and Strategy other structured investment vehicles Carried Ten years from final closing, 12% Term of Entity Description that own infrastructure and real Interest subject to extensions assets-related assets. Landmark will target a broad array of sectors Minimum $10 million (GP may accept lower) including utilities, transportation, Investment GP communication, renewables, and At least 1.0% of commitments energy infrastructure Commitment Fund Auditor Deloitte Touche Tohmatsu, LLC

Fund Track Record ($ in Millions)

Vintage Capital Capital Reported Amount Total TVPI DPI Investor Fund Name Fund Style Year Committed Funded Value Distributed Value Multiple Multiple IRR

Landmark RA 1a Secondaries 2015 $253 $133 $143 $28 $171 1.3x 0.2x 17.1%

Landmark RA 1b Secondaries 2016 $202 $117 $123 $21 $144 1.2x 0.2x 12.4%

Track record data as of 3/31/19 and provided by the Manager. FUND PROFILE: PRIVATE ADVISORS

General Fund Information Fund Strategy GP Fees, Promote and Commitment

Private Advisors Real Assets Fund Fund Fund Name Real Assets Multi-Manager Target II Strategy 15% Net IRR Industry Diversified General Partner Private Advisors, LLC Focus Target Net 1.7x - 2.0x Multiple 500 West 2nd Street Geographic Main Address United States Austin, Texas 78701 Focus

Target Fund Size Credit facility no more than 15% of $350 million / NA Target Fund During investment period (years 1-3): / Hard Cap capital commitments; underlying fund Management Leverage 0.85% on committed capital, reduced managers may also incur leverage Fees by 10% per year thereafter Capital Raised $222 million Target Deal $5 million - $30 million Size Expected Final Q4 2019 Close Preferred 8% Return Fund Structure Delaware Limited Partnership The Manager will pursue a variety of underlying strategies in order to build a diversified real assets portfolio. The Investment Three years from the final close Fund is expected to be diversified Period across primary fund commitments, Carried Strategy 7.5% Twelve years from the final closing direct investments, co-investments, Interest Term of Entity Description subject to three 1-year extensions and secondary investments. The Manager intends to invest across the Minimum real assets value chain, within the $1 million (GP may accept lower) energy, metals & mining, and Investment GP agriculture sectors. 5% of total capital commitments Commitment Fund Auditor PricewaterhouseCoppers, LLP

Fund Track Record ($ in Millions)

Vintage Capital Capital Reported Amount Total TVPI DPI Investor Fund Name Fund Style Year Committed Funded Value Distributed Value Multiple Multiple IRR

Diversified Real Private Advisors Real Assets Fund I 2016 $205 $164 $194 $23 $215 1.3x 0.1x 19.6% Assets

Diversified Real Private Advisors Real Assets Fund II 2018 $222 $76 $87 $0 $87 1.1x 0.0x 29.4% Assets

Track record data as of 3/31/19 and provided by the Manager.

33 APPENDIX: DISCLAIMERS & DISCLOSURES

NEPC, LLC WHO INVESTS IN INFRASTRUCTURE

Institutional Investors in Infrastructure Investors by Type

• Institutional investors have become 11% increasingly active in infrastructure 11% 35% • The number of investors in infrastructure has grown 67% from 2013 to 2018 • Public pension funds account for the largest 17% portion of institutional investors in

infrastructure 26% • Robust fundraising in recent years with Pensions Financial Institutions significant dry-powder in search of deal flow Foundations & Endowments Family Office/HNW Other

Objective of Real Assets in Portfolio Strong Fundraising Environment

$90 Capital Raised ($B) 100 Diversification 83% $80 (LHS) 90 $70 Number of Funds 80 $60 (RHS) 70 Inflation Protection 65% 60 $50 50 $40 40 Capital Appreciation 53% $30 30 $20 20 $10 10 Income 42% $0 0

Other 7%

Note: Based on 92 plan sponsor and 18 investment consultant responders

Source: Preqin; as of September 30, 2018; Greenwich Associates

35 LONG TERM RETURNS & VOLATILITY

• Private infrastructure (green diamond) has the potential to generate higher returns with less risk than publicly listed infrastructure (green square) – In the short to medium term public infrastructure equities are subject to broad equity market volatility • Over the trailing 20 years, private infrastructure has generally delivered lower risk-adjusted returns than other private real assets (blue circles) – The chart below also shows infrastructure’s relative risk and return versus more traditional asset classes (orange circles)

16.0%

14.0% Energy Private Equity

12.0%

10.0% REITs VA & Opp. Real Estate 8.0% Farmland Core Real Estate US Large Cap Equities Private Infrastructure MSCI ACWI Timber

6.0% 60/40 Portfolio AverageReturn Core Bonds 4.0% Listed Infrastructure

2.0% Commodities

0.0% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% Standard Deviation

Average Return Average Return 16% 24% -8% 16.0% 24.0% -8.0% 0% 8% 0.0% 8.0% Private Infrastructure Had Lower Returns with Higher Volatility (vs. Other Real Assets)Real (vs.OtherHigher Had Private Infrastructure Volatility with Lower Returns Private Infrastructure Generated Better Risk Better GeneratedPrivate Infrastructure 0% 0.0% Core Real EstateCore Farmland Farmland Core Bonds Core Timber Core Bonds Core 5% 5.0% Timber Sources: Sources: NCREIF, VA VA & Opp. Estate Real Core Real EstateCore Private InfrastructurePrivate Listed Listed Infrastructure 60/40 Portfolio 60/40 Portfolio 10% 10.0% Preqin VA & VA Opp. Estate Real Standard Deviation Standard ,Thompson One/Cambridge Associates, Bloomberg. Data September as of 30, 2018. Standard Deviation Standard Energy PrivateEnergy Equity - Adjusted Returns (vs. Other Real Assets)Real Returns(vs.Other Adjusted Private InfrastructurePrivate Energy PrivateEnergy Equity 15.0% 15% REITs US Large US Cap EquitiesLarge Listed Listed Infrastructure US Large US Cap EquitiesLarge MSCI ACWI MSCI Commodities Commodities MSCI ACWI MSCI Calculatedquarterly using returns since1998. 20.0% 20% 25.0% 25% REITs PRIVATE INFRASTRUCTURE OPTIONS VARY

Direct Sourcing and Deal Complexity Presents Opportunity for Excess Returns

Buy Build/Fix Sell

Detail Summary Non-Core Core Debt Listed

NEPC View Positive Neutral Negative Neutral Long-term buy and Long-term buy and Thesis Buy-fix-sell Hold hold hold Capital Availability Moderate High High High Banks, Private SWFs, Pensions, Private funds Funds (open-ended Insurance (closed-end), and closed-end), Institutions, Companies, Open- Asset Owners Strategic Operating SWFs, Pensions, Individuals, Mutual End Private Funds, Companies Insurance Funds Strategic Operating Companies, BDC, Companies Hedge Funds Complexity High Low / Moderate Low Low /Moderate Illiquidity, Volatility, High Sourcing, Pricing, Valuation/Cost of Valuation/Cost of Equity Correlation, Risks Execution Capital, Disruption Capital Returns Lag Unlisted Potential Funds 3-5% (senior Return Expectation 12%-14% 6%-10% corporate) 6%-10% (gross) 7-10%+ (mezz)

38 RISK/RETURN PROFILE

Viewed as more risky with

higher return expectations High

Viewed as less risky with lower return expectations

Current Capital Low Income Return Driver Appreciation

Low Expected Risk High

EVOLUTION OF SECONDARY MARKET High

~$100 private equity secondary buyers

~5 dedicated real asset

secondary GPs Low

Less mature Maturity of Secondary Market More mature

Source: Setter Capital

40 ALTERNATIVE INVESTMENT DISCLOSURES

It is important that investors understand the following characteristics of non- traditional investment strategies including hedge funds and private equity:

1. Performance can be volatile and investors could lose all or a substantial portion of their investment 2. Leverage and other speculative practices may increase the risk of loss 3. Past performance may be revised due to the revaluation of investments 4. These investments can be illiquid, and investors may be subject to lock- ups or lengthy redemption terms 5. A secondary market may not be available for all funds, and any sales that occur may take place at a discount to value 6. These funds are not subject to the same regulatory requirements as registered investment vehicles 7. Managers may not be required to provide periodic pricing or valuation information to investors 8. These funds may have complex tax structures and delays in distributing important tax information 9. These funds often charge high fees 10. Investment agreements often give the manager authority to trade in securities, markets or currencies that are not within the manager’s realm of expertise or contemplated investment strategy