San Joaquin County Employees Retirement Association a G E N D A

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San Joaquin County Employees Retirement Association A G E N D A

REAL ESTATE COMMITTEE MEETING SAN JOAQUIN COUNTY EMPLOYEES RETIREMENT ASSOCIATION BOARD OF RETIREMENT FRIDAY, JULY 24, 2015 AT 8:30 AM Location: SJCERA Board Room, 6 S. El Dorado Street, Suite 400, Stockton, California.

1.0 ROLL CALL 2.0 APPROVAL OF MINUTES 2.01 Approval of the Minutes for the Real Estate Committee meeting of June 26, 2015 2 2.02 Committee to approve minutes 4.0 REAL ESTATE INVESTMENT OPPORTUNITIES 4.01 Courtland Follow-Up Memo regarding Crow Holdings Realty Partners VII, L.P. 4 4.02 Courtland Partners’ Evaluation of a Potential Investment in Crow Holdings Realty 6 Partners, VII, L.P. 4.03 Committee to consider investment opportunity and give direction to staff and consultant as appropriate 5.0 CLOSED SESSION - CONSIDERATION OF INVESTMENT TRANSACTIONS, PURCHASES, SALES; GOVERNMENT CODE SECTION 54956.81 (1) 6.0 REPORTS 6.01 Report on Colony Realty Partners Annual Partners Meeting - June 25, 2015 27 7.0 COMMENTS 8.0 ADJOURNMENT

6 South El Dorado Street, Suite 400 • Stockton, CA 95202 SJCERA Real Estate Committee Meeting • 07/24/2015 • Page 1 (209) 468-2163 • (209) 468-0480 • www.sjcera.org San Joaquin County Employees Retirement Association M I N U T E S

REAL ESTATE COMMITTEE MEETING SAN JOAQUIN COUNTY EMPLOYEES RETIREMENT ASSOCIATION BOARD OF RETIREMENT FRIDAY, JUNE 26, 2015 AT 8:15 AM Location: SJCERA Conference Room, 6 S. El Dorado Street, Suite 400, Stockton, California.

1.0 ROLL CALL 1.01 MEMBERS PRESENT: Cindy Garman, Lawrence Mills, Raymond McCray, Alternate Member J.C. Weydert and Michael Restuccia presiding MEMBERS ABSENT: None STAFF PRESENT: Chief Executive Officer Annette St. Urbain, Assistant Chief Executive Officer Patricia Pabst, Chief Investment Officer Nancy Calkins, Retirement Financial Officer Lily Cherng, Management Analyst III Greg Frank, and Senior Office Assistant Mercy Tayabas OTHERS PRESENT: Deputy County Counsel Jason Morrish, David Sancewich and John Linder of PCA and via telephone Michael Murphy of Courtland Partners and Matt Brody and Doug Welker of Walton Street 2.0 APPROVAL OF MINUTES 2.01 Approval of the Minutes for the Real Estate Committee Quarterly meeting of June 4, 2015 2.02 Committee unanimously approved the Minutes of the Real Estate Committee Meeting of June 4, 2015. 3.0 WALTON STREET DUE DILIGENCE MEETING 3.01 Presentation via telephone by Matt Brody and Doug Welker, Principal from Walton Street and Mike Murphy, Senior Consultant from Courtland Partners regarding Walton Street Summary of Funds V & VI 3.02 Due Diligence Questions and Answers 3.03 Walton Street - Courtland Office Visit February 2015 (for reference) 3.04 Presenters provided an update on current assets, anticipated transactions and timing, and projected return on equity for Funds V and VI, and answered questions from the Committee members, consultants and staff. The Committee thanked the presenters for the update. 4.0 REAL ESTATE ROUNDTABLE 4.01 Courtland Partners - Real Estate Roundtable Summary June 2015 4.02 Summary of Evaluations by Board, Staff, Consultants, and Managers 4.03 Board accepted and filed reports. 5.0 CLOSED SESSION - CONSIDERATION OF INVESTMENT TRANSACTIONS, PURCHASES, SALES; GOVERNMENT CODE SECTION 54956.81 (1)

6 South El Dorado Street, Suite 400 • Stockton, CA 95202 SJCERA Real Estate Committee Meeting • 6/26/2015 • Page 1 (209) 468-2163 • (209) 468-0480 • www.sjcera.org 5.01 The Chair convened a Closed Session at 8:52 a.m. The Chair adjourned the Closed Session and reconvened the Open Session at 8:56 a.m.

Counsel noted there was nothing to report from closed session regarding this subject. 6.0 COMMENTS 7.0 ADJOURNMENT 7.01 There being no further business, the meeting was adjourned at 8:57 a.m.

Respectfully submitted:

______Michael Restuccia, Chair

SJCERA Real Estate Committee Meeting • 6/26/2015 • Page 2

COURTLAND PARTNERS, LTD. INSTITUTIONAL REAL ESTATE SERVICES

127 PUBLIC SQUARE 10866 WILSHIRE BOULEVARD SUITE 5050 SUITE 830 CLEVELAND, OH 44114 LOS ANGELES, CA 90024 TELEPHONE: (216) 522-0330 TELEPHONE: (310) 474-3040 FAX: (216) 522-0331 FAX: (310) 474-3002

DATE: JULY 7, 2015

FROM: COURTLAND PARTNERS LTD. (“COURTLAND”)

TO: SAN JOAQUIN COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION (“SJCERA”)

SUBJECT: CROW HOLDINGS REALTY PARTNERS VII, L.P. (“CROW VII”) FOLLOW-UP

On June 4, 2015 Crow Holdings Capital-Real Estate (“Crow”) presented Crow VII to the SJCERA Real Estate Committee (the “Committee”). Courtland provided a due diligence report on Crow VII discussing its investment merits, including recommending a potential allocation of up to $25 million. The Committee appeared interested in moving forward with an allocation. However, there were a few items raised during the discussion that put moving forward with a potential allocation on hold.

Ø SJCERA’s Texas Exposure. SJCERA’s current Texas real estate exposure is approximately 16%. The NCREIF Property Index (the “NPI”) currently has approximately 11% Texas exposure. Notably, a significant portion of SJCERA’s Texas exposure is concentrated in one asset. This investment, the JW Marriott Resort in San Antonio, is expected to be sold within the next year. SJCERA’s Texas exposure is reduced to approximately 11% without the JW Marriott, which is right in line with the industry benchmark.

SJCERA has unfunded commitments that make it relatively difficult to project how much exposure SJCERA will have in Texas moving forward. Crow estimated that it would likely invest up to 30% of Crow VII in Texas. The overall impact on SJCERA’s Texas exposure would likely be an increase of 1%-2%. This would not occur immediately and most of the increase would occur after the JW Marriott is sold. Assuming that the JW Marriott is sold within the next year, SJCERA’s expected Texas exposure would be approximately 12%-13%. This would be slightly above the NPI’s 11% exposure, albeit very reasonable given the current desirability of the region.

Ø Crow’s public pension fund exposure and California client exposure. Crow currently has ten California-based clients consisting of foundations, family offices, private pensions, financial institutions, and an endowment. Crow currently has eleven public pension fund clients and two more that will close into Crow VII within the next month. Public pension funds in North Carolina, Illinois, New Mexico, Colorado, Missouri, Rhode Island, Louisiana, and Texas are Crow investors. Public pension investors made up 24% of Fund V and 31% of Fund VI. Crow expects that 25%- 30% of Crow VII will be public pension investors.

Ø Crow Headline Risk. There were some concerns expressed regarding Harlan Crow’s political views and activities. Mr. Crow serves as the Chairman and Chief Executive Officer of Crow Holdings. However, Mr. Crow is not involved in the day-to-day management of Crow VII, does not sit on Crow VII’s Investment Committee, and is not included in Crow VII’s Key Person language. Courtland continues to believe that Crow VII represents an excellent fit for SJCERA. As an investment consultant, we base our opinion about the suitability of an opportunity for SJCERA’s portfolio upon our due diligence of the people, philosophy, process, strategy, and performance of that manager. As far as any headline risk or other non-investment related concerns, it is up to each client to determine how comfortable they may be. We are not currently aware of any negative Courtland Partners, Ltd.

Crow VII Follow-Up impact that Mr. Crow’s personal and political relationships have had on any of Crow’s realty funds. In addition, we are not aware of any other interested investors walking away from an opportunity with Crow due to these other, non-investment related issues.

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SAN JOAQUIN COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

EVALUATION OF A POTENTIAL INVESTMENT

CROW HOLDINGS REALTY PARTNERS VII, L.P.

MAY 2015

COURTLAND PARTNERS, LTD.

CLEVELAND | LOS ANGELES | LONDON

SJCERA CROW VII

SAN JOAQUIN COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION

CROW HOLDINGS REALTY PARTNERS VII, L.P.

MAY 2015 ______

TABLE OF CONTENTS

I. EXECUTIVE SUMMARY…………………………….………………………………..2

II. COURTLAND RECOMMENDATION SUMMARY……………………………………….3

III. ADVANTAGES AND RISKS/CONCERNS SUMMARY………………………….....……..4

IV. DUE DILIGENCE ACTIVITIES………………………………………………….……6

V. FIRM OVERVIEW………………………………………………………………....…7

VI. INVESTMENT STRATEGY……………………………………………………………9

VII. TRACK RECORD…………………………………………………………………….14

VIII. FEE COMPARISON……………………………………………………………..……15

IX. MARKET CONDITIONS…………………………………………………………..….16

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I. EXECUTIVE SUMMARY

Courtland Partners, Ltd. (“Courtland”) prepared the following evaluation of Crow Holdings Realty Partners VII, L.P. (the “Fund” or “Crow VII”) in consideration of a potential investment by the San Joaquin County Employees’ Retirement Association (“SJCERA”). The table below summarizes the principal terms of the Fund.

SUMMARY OF FUND INVESTMENT TERMS/STATUS Crow Holdings Realty Partners VII, L.P. (the “Fund” or “Crow VII”), a Delaware Investment: limited partnership. Crow Holdings Realty Advisors VII, L.P., a Delaware Limited Partnership (the General Partner: “GP”). A majority of interests in the GP is ultimately owned by Crow Family Holdings. Manager: Crow Holdings Capital Partners, L.L.C. d/b/a Crow Holdings Capital-Real Estate (“Crow” or the “Manager”), a Delaware limited liability company. Fund Size: Targeting $1.0- $1.5 billion with a $1.6 billion hard cap. Term: Ten years with up to two additional one-year periods at the GP’s discretion. Investment Period: Four years from December 10, 2014. Closings: Initial closing in November 2014. Final close by November 2015. GP Co-Investment: 0.5% from the management team plus a minimum of $100 million from Crow Family Holdings. As a limited partner, Crow Family Holdings will pay the same management fees and carried interest as the other partners in the same position. Leverage: No more than 65%. Investment Seek to create a diversified portfolio of domestic real estate that may include: Strategy: multi-family, industrial, retail, office (& medical), hotels, land and private real estate operating companies. May include providing both equity and debt. Investment No more than 10% will be invested in any single investment. No more than 10% Restrictions: will be invested in land for which there is no plan to develop improvements within twelve (12) months. No investments in publicly traded securities. No more than 10% outside the U.S. and Canada. Risk Value-Added. Categorization: Expected Returns: 13%-15% gross IRR; 10%-11% net IRR. Management Fees: 1.5% on committed/invested capital. Investors over $100 million pay 1.25%. Other Fees: None. Preferred Return: 9%. Incentive Fees: After a return of capital and a 9% preferred return to limited partners, 50/50 to the GP until it has received 20% of total distributions, thereafter, 20% to the GP. Fund-level promote. Clawback: Yes. Advisory The GP will establish an Advisory Committee of at least four LPs. Committee: Key Person: Any two of Anne Raymond, Robert McClain, Daniel Feeney, Carlos Rainwater and J. Dodge Carter. Termination The GP may be removed by a majority of LPs in the event of cause and 75% in the Rights: absence of cause. Placement Agent: HFF Securities, L.P. No amounts will be charged to the Fund.

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II. COURTLAND RECOMMENDATION SUMMARY

Courtland recommends that SJCERA consider an investment in Crow Holdings Realty Partners VII, L.P. after consideration of the relative Advantages and Risks/ Concerns in an amount to be no greater than $25 million. Courtland has identified the following positive attributes pertaining to potential investment by the SJCERA in the Fund:  Flexible investment strategy;  Proven sellers/disciplined investors;  Alignment of interests;  Organizational strength and continuity;  Current income return;  Unique strategies/early mover advantages;  Consistently solid track record;  Diversification of funds; and  Debt structuring.

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III. ADVANTAGES AND RISKS/CONCERNS SUMMARY

ADVANTAGES 1. Flexible Investment Strategy. The Fund will seek to create a diversified portfolio of domestic real estate that may include warehouses, retail centers, retail convenience store and gas station assets, multi-family housing (including rental and for-sale housing), office buildings, medical office buildings and hospitals, hotels, land, and private real estate operating companies. Crow believes that regardless of the stage in the cycle, there will always be quality investments in the real estate asset class for those with real estate expertise and a disciplined investment strategy. For example, Crow invested heavily in multifamily in its prior two funds (over 50%). However, due to the changing market environment Crow expects to include approximately 25% exposure to the multifamily sector in the Fund. In particular, Crow prefers to focus on assets that are not as capital intensive and/or terminal value driven.

2. Proven Sellers/Disciplined Investors. Crow is always evaluating whether or not to exit its investments. Crow’s basic investment premise is to be able to “fix” an asset within a year and then double its equity. While many other managers claim to be “sellers and not asset gatherers,” Crow is able to back its claim up. Fund III was formed in 2003, and owned property in major markets throughout the country comprised of 3.5 million square feet of retail, 1,729 hotel rooms, 9.3 million square feet of Class A industrial properties, 3,141 multi-family units, 350,000 square feet of office, 1,879 acres of prime, single family development sites, 160 acres of industrial land sites and various development projects, including (for sale) office condominiums and ski-in/ski-out resort townhomes and condominiums. Crow completed a sale of the entire fund portfolio to an institutional investor in January 2007 at a 40% gross IRR. This fund was less than four years old, yet Crow determined that the market was right for a portfolio exit even though Crow was in line for up to nine more years of asset management fees.

3. Alignment of Interests. Crow Family Holdings has been a large investor in each of the prior Crow funds and will continue this trend by committing $100 million to the Fund. This investment will be made as a Limited Partner; therefore, Crow Family Holdings will pay the same management fee and carried interest as the other partners as well. In addition to this investment, each of the six members of the Investment Committee will be personally (no parental loan) investing into the Fund. Finally, there are seventeen members of the investment team that will be sharing in the Fund’s incentive fees.

4. Organizational Strength and Continuity. The six members of the investment committee have a diversified history of real estate experience and have been with Crow-affiliated entities an average of 22 years. The shortest tenured investment committee member has eleven years at Crow. In addition, the six product leaders average 19 years with Crow-affiliated entities. There are fifty total professionals in Crow’s real estate group. Crow has a low asset per professional ratio of 2 to 1.

5. Current Income Return. Crow anticipates that approximately 50% of its expected return will be in the form of current income. Crow has a preference towards assets with less terminal value dependence and lower ongoing capital costs. As a result, the target allocation is over-weighted towards multi-family apartments, retail shopping centers, and warehouses as these product types have lower capital costs and stable, predictable cash flow during the hold period.

6. Unique Strategies/Early Mover Advantages. Crow began pursuing a convenience and gas strategy in Fund V as a continuation of its retail strategy. Crow identified a unique buying opportunity as Exxon was seeking to exit owning this real estate in 2009 and 2010. Crow was able to quickly understand the market and concluded that it was an attractive real estate play due to the location of the underlying real estate. This strategy has proven to be quite successful. Crow was able to generate returns in excess of 20% on these investments, which will be harder to locate going forward due to the

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increase in capital that has subsequently entered the space. In Fund VI, Crow began pursuing an opportunity developing medical office/hospital campuses with an operating partner. While medical office has become institutionally accepted, the hospital component does not appear in many other institutional investment vehicles. These private-pay, pre-leased (75% before construction commences) to a physician-owned operator hospitals have been an attractive partnership opportunity for Crow. Crow is able to take a stake in the hospital operating company with control over major decisions. Crow’s presence helps legitimize the strategy with lenders. The hospital component was built at a 14% cap rate and exited at a 9% cap rate, resulting in gross IRRs of nearly 30%.

7. Consistently Solid Track Record. Crow just finished up its investment period for Fund VI at the end of 2014; therefore it is too early to provide a meaningful comparison to its peers. For Funds I-V, every Crow fund is either currently a first or second quartile performer. Crow’s best performing fund, Fund III, generated a 29% net IRR. Crow’s worst performing fund (Fund IV), which was invested in the notoriously difficult 2006 vintage year, is a second quartile performer. Unlike other managers, which mix great successes with large failures, Crow has been able to consistently outperform its peers. The typical Crow fund can reasonably expected to generate a low teen net return to investors, which is exactly what a value manager should do.

8. Diversification of Funds. Crow invests across the property type spectrum and in major markets across the United States. Prior Crow funds have averaged 52 separate investments, which creates a diversified portfolio. Crow anticipates the Fund containing over 60 investments. The average equity investment size has been around $15 million. In its worst performing fund (Fund IV), there were a few poor investments. However, due to the size of each investment and number of investments within that fund, no single investment can drag a fund down as has been often seen with other managers.

9. Debt Structuring. Crow typically finances each asset separately on a non-recourse basis in order to avoid cross-collateralization and recourse beyond the equity invested in any single asset or portfolio. This minimizes the possibility of a mistake creating a domino effect on other holdings within a fund.

RISKS AND CONCERNS 1. Competition in Major Markets. The Fund is expected to focus on investments predominantly located within the major U.S. markets (approximately 75% of the prior three Crow funds have been invested in major markets). Real estate values have been driven up by investors chasing yield in these relatively “safe” markets. While the Fund will pursue a value-added strategy, which has not seen the inflow of capital that core strategies have, it remains possible that as more investors become comfortable moving out on the risk-return spectrum that they will also seek value-added properties in these markets. This could potentially have an adverse impact on Crow’s ability to successfully execute its strategy. Mitigation: There should be plentiful capital for the stabilized assets upon completion of the value- added strategy in these major markets.

2. Crow Name Creating Confusion. The Crow name has a long history in real estate and many immediately associate it with the Trammell Crow Company. Notably, Trammell Crow was sold to CBRE Richard Ellis in 2006 and is no longer owned by anyone affiliated with the Crow Family. There are other businesses with the Crow name such as Trammell Crow Residential, Crow Holdings Industrial, and Crow Holdings Investment Partners. This can often be confusing when trying to determine which groups are involved in managing the institutional real estate investments. Mitigation: Crow Holdings Investment Partners does not invest in real estate. Trammell Crow Residential and Crow Holdings Industrial are managed by completely separate professionals and the Crow real estate funds do not utilize these groups in any way.

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3. Institutional Demand for Certain Investments. There are not nearly as many institutional buyers for convenience and gas stations and hospitals as there are for the traditional types of property (e.g., office). While these strategies have been successfully executed by Crow in the past, there is a less readily identifiable buyer pool for these assets once they have been developed or improved. Therefore, it is possible that the Fund encounters more difficulty exiting these specialty investments, especially if economic conditions deteriorate. Mitigation: The stabilized cash flow on these investments is typically very high (e.g., 12% on hospitals), therefore the Fund will be in an acceptable position should it have to hold onto certain assets longer than anticipated. In addition, the typical fund equity investment in a hospital is $8-$10 million, which minimizes the overall exposure to such a unique strategy.

4. Retail Fund. Crow is also offering a single strategy retail fund targeting domestic retail real estate assets with a $17.5 million purchase price or less, which could potentially detract from the focus of investment personnel. Mitigation: Any potential retail investment above this threshold will be considered for the Fund. Retail is one of many strategies that Crow anticipates pursuing for the Fund. In addition, only two members of the investment team will be spending most of their time on this product.

5. Leverage. The Fund will utilize leverage up to 65% at the fund level. It is anticipated that most investments will be leveraged anywhere from 60%-70%. The addition of leverage to an investment increases the risk with respect to adverse economic factors, including rising interest rates, economic downturns, or the deterioration of investment cash flow. Mitigation: Leverage will only be undertaken in situations where the fundamentals support the use of leverage and where it is accretive to returns.

6. Development. The GP currently anticipates that the Fund could be comprised of up to 25% development across product types, with the majority of development projects being focused in the multi-family, industrial, and medical office sectors. Development increases investment risk due to the entitlement, construction, and lease-up risk. In addition, the development of hospitals is certainly riskier than the development of an apartment complex. Mitigation: The Fund does not take on entitlement risk, which helps to reduce the risk somewhat as entitlement and permits are already in place prior to Crow’s involvement.

IV. COURTLAND DUE DILIGENCE ACTIVITIES

Courtland has completed the following due diligence activities for the evaluation of the Fund:

 Reviewed Crow’s response to the Courtland Due Diligence Questionnaire as well as database information completed by Crow;  Reviewed presentation materials, investment terms, and Private Placement Memorandum for the Fund;  Conducted on-site due diligence in Crow’s Dallas office and conducted property tours on February 26, 2015;  Analyzed the track record of Crow’s previous fund offerings; and  Reviewed relevant real estate market conditions against the appropriateness of the Fund’s stated investment strategy.

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V. FIRM OVERVIEW

Crow Family Holdings was formed as a family office to own and manage the capital of the Trammell Crow family. Today, Crow Family Holdings has a substantial stake in the ownership of various businesses, both real estate and non-real estate related, with a level of involvement in the management of these businesses that ranges from active to passive. Its holdings also include significant, diversified positions in financial investments. While Crow Family Holdings has interests in numerous diversified investment activities, real estate is its foundation. Trammell Crow began a career of real estate development at the end of World War II. Since that time his family has had a prominent role as developers and investors in the U.S. and international real estate markets and has always embraced long-term partnerships. Crow Family Holdings does not provide investment advisory services to any persons other than Crow family members and their affiliates.

Crow is owned, indirectly through intermediate subsidiaries, by select members of its management team and various affiliates of Crow Family Holdings. Beginning in 1998, Crow sponsored the first of six real estate private equity funds. Crow is currently the investment manager to four other private equity real estate funds (Fund I, IV, V & VI). Crow currently has over $2.1 billion of net assets under management.

Crow is managed and directed by a six member investment committee that has worked with Crow-affiliated entities for an average of 22 years. These six individuals have spent the majority of their careers in the real estate industry and collectively have spent over 134 years with Crow-affiliated entities in a broad range of real estate related disciplines, including acquisitions, development, dispositions, financing, leasing, and management. They will be supported by an experienced team of real estate professionals. Crow has 50 dedicated real estate professionals and a low asset to professional ratio of 2 to 1.

Below are the biographies for the six members of the Crow Investment Committee (the “Investment Committee”):

BIOGRAPHIES OF KEY PERSONNEL Anne Raymond Ms. Raymond is a member of the Investment Committee and has overall responsibility at Crow for the capital markets and portfolio management groups, as President well as hotel investments. Ms. Raymond has been associated with Crow Holdings- affiliated entities for 31 years. Prior to re-joining Crow in September 2000, Ms. Raymond was the Executive Vice President and Chief Financial Officer of Wyndham International, Inc. for five years. Previously, she spent 12 years with Crow Holdings- affiliated entities in various real estate investment and financial capacities. Before joining Crow Holdings-affiliated businesses, Ms. Raymond was with Arthur Andersen & Company. Ms. Raymond has a B.S. degree in Business Administration from the University of Missouri. Ms. Raymond is a member of the National Council of the American Enterprise Institute and the Real Estate Roundtable, and serves on the board of directors and the investment committee of Trammell Crow Residential. Kevin Bryant Mr. Bryant has overall responsibility for Crow’s legal matters as well as tax planning and structuring. He is also responsible for the structuring and formation of the prior General Counsel Crow Funds and Crow VII. Mr. Bryant has been with Crow Holdings-affiliated entities for over 18 years and chairs the Due Diligence Committee and sits on the Investment Committee. Mr. Bryant began his legal career at Weil, Gotshal and Manges LLP, where he focused primarily on commercial real estate, corporate finance and partnership law, and worked extensively with real estate equity funds. Mr. Bryant began his career with Arthur Andersen & Company where he became a certified public accountant. He is a graduate of Oklahoma State University and received his J.D. from Oklahoma City University where he graduated with honors. Mr. Bryant is a member of the Real Estate Roundtable Tax Policy Committee and the Real Estate Council. Additionally, Mr. Bryant serves as the chairman of Uplift

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Education, and is on the Leadership Counsel for the OSU Alumni Association. Mr. Bryant has published various tax articles and co-authored several books, including the Partnership Tax Practice and Planning Guide, the Annual Tax Planning Guide for S Corporations, Partnerships and Limited Liability Companies, Matthew Bender’s Tax Return Manual and The Depreciation Handbook, published by Matthew Bender. Bob McClain Mr. McClain is a member of the Investment Committee and has overall responsibility for the real estate investment activities at Crow. He has been with Crow Holdings- Head of Real Estate affiliated entities for 27 years. Previously, Mr. McClain was a partner in the Northeast Investment Strategies region of Trammell Crow Company. Mr. McClain’s experience includes two years with Coopers & Lybrand LLP in New York, where he obtained his C.P.A. license. Mr. McClain received a B.S. degree, summa cum laude, in Business Administration from the State University of New York at Albany and an M.B.A. from the Harvard Graduate School of Business Administration. Mr. McClain is a member of the Urban Land Institute and the International Council of Shopping Centers. Dan Feeney Mr. Feeney is a member of the Investment Committee and has overall responsibility for all of the retail investment activities at Crow. Mr. Feeney has been with Crow Head of Retail Holdings-affiliated entities for 23 years. Before joining Crow Holdings, Mr. Feeney Investment Strategy ran the Trammell Crow Company National Retail Office in Dallas, Texas. Prior to his experience at Trammell Crow Company, Mr. Feeney headed acquisitions for Combined Properties, Inc. in Washington, D.C. Prior to joining Combined Properties, Inc., Mr. Feeney was a partner in the Northeast region of Trammell Crow Company where he managed development, marketing, construction, property management and accounting for a portfolio of shopping centers in Maryland. Additionally, Mr. Feeney’s experience includes practicing law for 3 years with Frank, Bernstein, Conaway, and Goldman (Ballard Spahr) in Baltimore, Maryland. He received a B.S. degree in History from Towson University and received his law degree from the University of Baltimore. Mr. Feeney is a member of the International Council of Shopping Centers, National Association of Industrial and Office Park Owners and the Urban Land Institute. Carlos Rainwater Mr. Rainwater is a member of the Investment Committee. He has overall responsibility for all of Crow’s office and land investment activities. Mr. Rainwater Head of Office and Land has been associated with Crow Holdings affiliated entities for the past 26 years, Strategies including three years of involvement on the non-real estate business side, in addition to serving as the Controller of Trammell Crow Company DFW Office Group. Prior to joining Crow Holdings, Mr. Rainwater was with the accounting firm of Arthur Andersen & Company in Dallas, Texas for three years. Mr. Rainwater received a B.B.A. degree in Accounting from Texas Tech University and is currently a member of the Urban Land Institute. Dodge Carter Mr. Carter is a member of the Investment Committee. He has overall responsibility for all of Crow’s multi-family activities. Mr. Carter has been associated with Crow Head of Multifamily Holdings-affiliated entities for 11 years. Prior to joining Crow Holdings, Mr. Carter Investment Strategy held various positions with Lomas & Nettleton, First Gibraltar Bank, GE Capital Real Estate, and Olympus Real Estate Partners, where responsibilities included construction lending, debt and equity asset management, capital markets and business development activities. Mr. Carter received a Bachelor of Business Administration from Southern Methodist University and is an active board member of the National Multi-Housing Council.

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VI. INVESTMENT STRATEGY

The Fund will seek to continue Crow’s approach to creating a diversified portfolio of domestic real estate that may include multifamily, industrial, retail, office (including medical office), hotels, land, and private real estate operating companies. Crow believes that regardless of the stage in the cycle, there will always be quality investments in the real estate asset class for those with real estate expertise and a disciplined investment strategy. This allows Crow to pursue those product sectors offering the best risk adjusted returns available in the market at any given point in the economic cycle.

Crow will target well-located properties primarily with an in-place income stream and/or an opportunity to produce appreciation over an investment’s hold period by employing the following strategies, among others:

 Increasing net operating income: Substantial value can be created by uncovering opportunities to increase cash flow through (i) built-in rent bumps in existing leases, (ii) proactive efforts to eliminate rent concessions or roll-over of existing tenants paying below market rents to market rates, (iii) aggressive leasing of existing vacancies, (iv) expense reductions and operational improvements, and (v) converting gross leases to net.

 Redevelopment: Acquiring assets that provide the opportunity to expand under-utilized sites or redevelop functionally deficient properties can lead to substantial value creation.

 Repositioning: Repositioning under-managed or “broken assets” can provide for significant value creation by (i) re-tenanting properties with credit risk or bankrupt tenants, (ii) rebranding underperforming hotels, (iii) replacing existing managers with more efficient operators, (iv) implementing physical improvements, (v) addressing environmental issues through clean up or other efforts, and (vi) executing long term extensions of significant leases.

 Investing in recovering markets: Real estate is a local business driven by supply and demand factors that are particular to each market. Identifying the appropriate asset in a given submarket can create opportunities for value enhancement as sub-market fundamentals improve.

 Buying below replacement cost: Crow seeks to acquire assets at discounts to replacement cost in markets that have exhibited consistent appreciation over time or in sub-markets with significant barriers to entry.

As the competition for income producing assets has increased, development projects in markets with strong job growth or in supply constrained sub-markets increasingly attract investor capital. Crow intends to target development opportunities with strategic local operating partners.

In general, Crow’s strategy has remained the same across funds, but the weightings of any particular product type have been adjusted to fit the prevailing economy, business conditions, and opportunities that presented themselves. The Fund is being created to continue the real estate investment activities of Crow’s management team, and its proposed investment strategy is in line with the strategy of prior Crow funds. Overall, the strategy is to remain flexible so that the Fund can pursue those product sectors offering the best available risk adjusted returns. While the composition of the prior Crow funds shifted based on market conditions, each fund was well-diversified among different property types.

The Fund will seek quality investments across the U.S. Crow focuses on investments in primary markets and submarkets with strong job and population growth, as these locations tend to offer the optimal risk-adjusted returns in the commercial real estate investment market. While there are no specific U.S. geographic restrictions, each of the prior Crow funds was diversified geographically in various markets throughout the U.S. In addition, these funds targeted investments in markets that consistently attract institutional capital, which generally provide the opportunity for greater liquidity upon exit.

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SJCERA CROW VII

The Fund will seek to create a diversified portfolio of domestic real estate that may include warehouses, retail centers, retail convenience store and gas station assets, multi-family housing (including rental and for-sale housing), office buildings, medical office buildings and hospitals, hotels, land and private real estate operating companies. The Fund’s strategies may include providing both equity and debt for the acquisition of existing assets and investments in new development, redevelopment and assets under development.

Crow has a preference towards assets with less terminal value dependence and lower ongoing capital costs, tenant finish, and commissions. As a result, the target allocation shown below is over-weighted towards multi-family apartments, retail shopping centers, and warehouses as these product types have lower capital costs and stable, predictable cash flow during the hold period. As office buildings and hotels often have high capital requirements that result in less predictable cash flow, the target allocation to these product types is underweighted. The ultimate make-up of the portfolio will be determined by the opportunities with the best risk adjusted returns during the Fund’s investment period. The Fund has no allocation restrictions in terms of asset classes.

Source: Crow

The following table provides a snapshot of the product allocation amongst prior funds:

Source: Crow

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SJCERA CROW VII

Within the various sectors, Crow intends to pursue the following opportunities:

Retail

Crow intends to focus on grocery-anchored shopping centers and shopping centers with little exposure to e- commerce competition. In addition, Crow will also seek to acquire shopping centers in cities and towns near colleges and universities. Crow generally intends to invest in three types of shopping centers:

 Grocery-anchored shopping centers with small shop space surrounding the grocer. These retail centers typically provide the necessary services to a neighborhood: family-style and take-out restaurants, dry cleaners, doctors’ offices, hair salons, etc.

 Strip retail centers primarily comprised of small shops in highly affluent neighborhoods. These centers are designed to provide convenient services to affluent communities.

 Community centers, which are similar to grocery-anchored centers, but typically include one or more “junior” anchors, such as TJ Maxx, Office Depot, etc.

Industrial

Crow will typically seek to invest in the following type of industrial assets:

 Acquisition of existing multi-tenant warehouse distribution space that currently offers stable un- leveraged yields.

 Selective development of warehouse and industrial parks. In this arena, Crow’s relationships are critical. The development process necessitates local development partners, and such developers prefer a capital partner they know and who understands the development process. Crow intends to consider development where the anticipated yield premium is great enough to compensate for the risk of development.

Multifamily

Crow anticipates focusing primarily on the following multifamily investment themes:

 The acquisition and selected repositioning of traditional garden style and urban in-fill multi-family housing. Crow intends to continue to invest in mature, well-located properties in primary and major secondary markets offering measured employment and population growth characteristics along with strong demographic profiles conducive to renting.

 The development of garden style, urban and select suburban in-fill multi-family housing. Crow believes garden style development not only offers less risk, but also typically results in a shorter development cycle.

 The development and select acquisition of purpose-built student housing communities. Crow believes that student housing initiatives will focus on proximity to campus, growing undergraduate enrollment, barriers to entry, product differentiation, and the ability to achieve substantial pre-leasing.

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SJCERA CROW VII

Office/Medical Office

Crow generally targets the following types of office opportunities:

 Acquisition of well-located, high quality, multi-tenant office buildings in major markets with stable cash flow and strong current returns. These assets have limited lease rollover in the near-term, providing stability and an opportunity to increase rental rates as leases roll. Medical office would ideally be located on campus or near a major hospital or health care provider.

 Acquisition of office buildings with either existing vacancy or near-term lease expirations in major markets where historically strong job growth continues and demand is strengthening.

 Selective development of Class A multi-story office and medical office buildings. The opportunity may exist to capitalize on the early stages of the office development cycle, yielding returns upon stabilization considerably in excess of what Crow believes are achievable through acquisition.

Hotel

Crow expects most of the hotel opportunities to have one of the following attributes:

 Acquisition of hotels where Crow can replace an existing manager with a more efficient operator.

 Acquisition of hotels where Crow can convert to a better brand.

 Acquisition of hotels where the physical asset can be changed through capital improvements.

The GP currently anticipates the Fund could be comprised of up to 25% development across product types, with the majority of development projects being focused in the multi-family, industrial, and medical office sectors. When pursuing development opportunities, Crow seeks returns upon stabilization in excess of what it believes is achievable through acquisition. Crow generally focuses on locations where demand is higher typically due to employment growth, high barriers to entry coupled with a lack of supply, as well as areas where it can develop a product below its replacement cost. The following chart details Crow’s percentage of development deals in prior funds:

Source: Crow

The average investment size is in the $13 million to $17 million range based upon prior Crow funds. At acquisition, fund assets are typically underwritten assuming exits through a private sale. Each asset undergoes a strategic plan that includes a hold/sell analysis. As assets stabilize and approach their anticipated hold period (typically 7-10 years), selling opportunities are sought and pursued through sources such as local contacts and brokers. Factors such as capital markets, local economic conditions, and real estate fundamentals impact the process and yield on exit.

Nonetheless, opportunities to sell are always monitored, both individually and as a portfolio. Asset managers continually monitor what is trading in the market across product types and locations within the U.S. Then, they compare these transactions to similar assets in the Fund’s portfolio and determine if selling properties at a comparable price is attractive. If the pricing and timing generate acceptable returns, asset managers then proceed with marketing the property to sale.

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SJCERA CROW VII

Deal Sourcing/Crow VII Deals

Crow generates deal flow through the following sources:

 Relationships – Most of Crow’s Investment Committee and senior investment team have been active in the real estate business for 20 years or more. Each Investment Committee member has numerous relationships through which Crow sources investments.

 Brokerage Community – Crow cultivates deep relationships within this community through whom Crow sources investment opportunities. Crow does not vertically integrate leasing and property management services and, therefore, does not compete with intermediaries. Crow believes this gives it a competitive advantage in accessing deal flow.

Source: Crow

The following are currently investments of the Fund, which total $111 million of closed equity commitments. Three of the deals are development projects (2 multi-family and 1 industrial). Crow indicated that it expects to primarily develop in multi-family (60% of the Fund’s development) and industrial (30% of the Fund’s development). Each investment has a projected gross IRR in excess of 13%.

Source: Crow

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SJCERA CROW VII

Current Pipeline

The following is a pipeline of potential Crow VII investments:

Source: Crow

VII. TRACK RECORD

Beginning in 1998, Crow sponsored the first of six real estate private equity funds. Crow is currently the investment adviser to the remaining active prior Crow funds. In addition, Crow sponsored a private industrial real estate investment trust, Crow Holdings Industrial Trust (the “Industrial REIT”) in 1998. The Industrial REIT was formed by raising $125 million of new capital through the sale of shares and rolling-up the ownership of an existing portfolio of industrial assets owned by Crow Holdings and its partners. A second tranche of stock was issued in 1999. Eleven institutional shareholders invested alongside Fund I in acquiring shares in the Industrial REIT. Of the total amount raised, Fund I invested $50 million to acquire 4.9 million shares of the Industrial REIT. Fund I’s returns on its investment in the Industrial REIT are included in the track record table below. In December 2002, the Industrial REIT was sold in its entirety to Clarion, a subsidiary of the ING Group.

The following table shows the performance of each of the Crow funds in comparison to all other value-added funds of the same vintage in the Courtland Partners Index (“CPI”) as of December 31, 2014. Every fund is currently a first or second quartile performer. Fund VI has just completed its investment period and therefore the return comparison for a 2012 vintage fund is not meaningful.

Vehicle Vintage Total % Current Current Courtland Commitments Realized Net Net Partners Index IRR Multiple quartile Fund I 1998 $280.1 million 96% 11% 1.4x 2nd Fund II 2000 $364.8 million 100% 17% 1.5x 2nd Fund III 2003 $595.8 million 100% 29% 1.6x 1st Fund IV 2006 $846.5 million 65% 2% 1.1x 2nd Fund V 2008 $951.5 million 57% 15% 1.6x 2nd Fund VI 2012 $1.067 billion 0% 12% 1.7x N/M Source: Crow, Courtland Partners

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SJCERA CROW VII

VIII. FEE COMPARISON

The following table shows a fee comparison of the Fund terms against other value-add equity funds. The Fund management fees of 1.50% on committed and invested are reasonably in line with market levels that are generally 1.25% to 1.50% on committed and invested capital. With respect to the incentive fee, the 9% preferred return is consistent with market levels of between 8% - 9% for value-add funds. The distribution waterfall, which includes a 50/50 catch-up, is also consistent with other offerings in the market.

Fund Preferred Fund Management Fee Distribution Waterfall Size Return 9% preferred return hurdle, 1.5% on committed and then 50/50 catch-up to the Crow VII $1B 9% invested GP, 80/20 thereafter. Fund- level promote. 9% preferred return hurdle, 1.5% on committed and 60/40 catch-up to the GP, Fund I $750M 9% invested 80/20 thereafter. Fund-level performance test. 8% preferred return hurdle, 1.0% on committed, 1.5% on then 50/50 catch-up to the Fund II $1.0B 8% invested GP, 80/20 thereafter. Fund- level performance test. 9% preferred return hurdle, 1.25% on committed and then 80% to the LPs until a invested 13% preferred return, then a Fund III $1.5B 9% 50/50 catch-up, thereafter Acquisition Fee: 50 bps on 80/20. Fund-level gross acquisition costs performance test. 0.90% during the first three 8% preferred return hurdle, years on gross asset cost, Fund IV $1.0B 8% no catch-up, thereafter 80/20. 0.60% on gross asset cost Fund-level performance test. thereafter. 9% preferred return hurdle, 1.5% on committed and Fund V $300M 9% then 60/40 catch-up to the invested GP, 80/20 thereafter. 9% preferred return hurdle, Fund VI $500M 1.25% on invested capital 9% no catch-up, 80/20 thereafter. Source: Courtland

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SJCERA CROW VII

IX. MARKET CONDITIONS

The combination of the third quarter’s gross domestic product (GDP) of +5.0% and the second quarter’s growth of +4.6%, represented the first time since 2003 that GDP growth exceeded 4% in two straight quarters. With a growth of 2.2% for the fourth quarter, the U.S. economy has been above the 10-Year Average reading of 1.6% for ten of the last twelve quarters. This is a marked improvement of the four years prior to that period when half of the quarters (i.e., eight of the sixteen quarters) were below average, with six in negative territory.

6.0% U.S. GDP - Quar ter ly

4.0%

2.2% 2.0% 1.6%

0.0% Sep-05 Sep-06 Sep-07 Sep-08 Sep-09 Sep-10 Sep-11 Sep-12 Sep-13 Sep-14 -2.0% Mar-05 Mar-06 Mar-07 Mar-08 Mar-09 Mar-10 Mar-11 Mar-12 Mar-13 Mar-14

-4.0%

U.S. GDP - Quarterly -6.0% 10 Year Average

-8.0%

-10.0% Source: Bloomberg, Courtland Partners

As with the prior quarters, the gains in the fourth quarter were again led by an increase in consumer spending. The gain in spending was in turn powered by a strong employment situation, lower oil prices, and record stock prices. The employment situation delivered much better-than-expected results, with an average of about 324,000 jobs added each month during the quarter. The unemployment rate also declined to 5.6%, a new cycle low.

During the fourth quarter the Federal Open Market Committee (FOMC) modified the language used regarding how long it would keep the fed funds rate low. The committee replaced text stating that rates would remain near 0% for a “considerable time” with language saying that it would be “patient” in determining the course of rates. Many economists continue to believe that the Fed will begin to raise rates sometime in the second half of 2015.

U.S. real estate continues to attract strong domestic and overseas investor demand benefitting from monetary policies that are putting sustained downward pressure on long-term interest rates. The lower oil prices have caused investors to evaluate the impact nationally, and not just in the “energy patch.” There could be a sharp slowdown in Houston, TX, Denver, CO, and to a lesser extent Dallas, TX, but the oil price decline should not derail all growth. Current forecasts anticipate job growth slowing in each of these metros from the 3%- 4% pace of recent years to a moderate 1.5% to 2.5% range, trending closer to the national average in 2015. In a downside scenario, the Dallas Fed estimates that should oil remain below the $55/bbl range for an

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SJCERA CROW VII extended period (two quarters), Texas’ growth will be substantively impacted, and Houston’s growth could fall towards 1%, remaining in positive territory.

NCREIF Property Index (“NPI”) returns for the fourth quarter were 3.0%, consisting of 1.8% appreciation and 1.3% of income return. This is an increase from the prior quarter (2.6%) and is the highest quarterly return since third quarter 2011. The five year annualized return for NPI through fourth quarter 2014 was 12.1%. Although much of the recent performance was driven by cap rate compression, fundamentals are having an increasingly positive impact: NOI growth was 1.7% for the quarter and over 6.5% for the year. The pace of new supply of institutional-quality real estate has been below average since the financial crisis, even as demand has picked up in recent years. Industrial had the highest return among the four major property types for the quarter (3.9%) and the year (13.4%).

NCREIF Property Index – Returns 4Q14 3Q14 2Q14 1 Year Total 3.0% 2.6% 2.9% 11.8% Appreciation 1.8% 1.3% 1.6% 6.2% Income 1.3% 1.2% 1.5% 5.4% Property Type Apartment 2.8% 2.5% 2.6% 10.3% Hotel 4.3% 2.9% 2.6% 11.1% Industrial 3.9% 2.9% 3.3% 13.4% Office 3.1% 2.8% 2.9% 11.5% Retail 2.7% 2.3% 3.2% 13.1% Source: NCREIF, Courtland Partners

The strong returns for NCREIF are tied to the limited amounts of new supply being introduced across the board, which has led to declining availability (8.1%). Vacancy for Industrial (5.8%) is currently at its tightest level for the past ten years. The one sector where new supply has come online is the Apartment sector, and the vacancy rate (6.7%) has moved off the lows of two and a half years ago (5.0%). Very little new supply is underway in the Retail space and vacancy (7.1%) has dropped 80 basis points from the year ago period.

NCREIF Vacancy Rate Ranges: 10 years ending 4Q14 14.0% 13.0% 12.0%

10.0%

8.0% 8.1% 7.1% 6.7% 6.0% Average 5.8% Current Prior 4 Qtrs 4.0% All NPI Apartments Industrial Office Retail

Source: NCREIF, Courtland Partners

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SJCERA CROW VII

US CMBS issuance of $94.1 billion in 2014 is 9.2% ahead of the issuance of 2013 though the fourth quarter’s $25.2 billion was slightly behind the fourth quarter 2013 issuance. REITs raised $63 billion in 2014, down from $77 billion in 2013, with the decline coming from a reduction in equity offerings as unsecured debt issuance in 2014 was the highest amount in history, with $30.9 billion raised.

Apartments

Despite active supply, performance in the Apartment sector remains strong. Across 62 major markets, apartment vacancy declined from the previous year in 56 markets, and increased slightly in 4 markets (including Austin, TX and New York, NY). Markets with the largest active construction pipelines are located in the South and West, including Austin, Houston and Dallas, TX, Charlotte and Raleigh, NC, Seattle, WA, and San Jose, CA; these markets are forecasted to increase supply by more than 3% through 2016.

The robust pace of job growth, rising consumer confidence, a still-floundering for-sale housing market and long-term demographic trends continue to propel apartment demand. Vacancies, however, have climbed for five consecutive quarters. The oft-mentioned supply surge is to blame for rising vacancies despite solid demand. Deliveries over the last two years have been well above the long-term average. Demand has fallen short of the supply surge for the second consecutive year, putting upward pressure on vacancies. So far though, rising vacancies have had no discernible impact on rents which are at nominal highs. Economic expansion and demographics will continue to be major tailwinds for solid performance for the apartment sector even as supply levels peak in the near future.

Apartment cap rates are about 40 basis points above their lows of the prior cycle and at 4.6% are 30 basis points inside of the NPI All Property level of 4.9%. Nationally, NOI growth for Apartments was 8.9% for the four quarters ending fourth quarter 2014.

Hotels

Preliminary data showed that the hotel sector outperformed expectations in 2014, with record revenues driven by solid occupancy gains in all “Top 25” markets. Group demand, which has been missing from the recovery, surged in 2014, pushing the sector to new peak occupancy levels. On a 12-month trailing basis, occupancy is now 0.5% above its previous peak, average Daily Room Rate is 7.7% above previous peak and Revenue Per Available Room is 11.8% above previous peak.

ADRs at upper-tier hotels were up a very strong 4.5% year-over-year in the fourth quarter and RevPAR increased by 8.9%. New construction is starting to become a small concern in a few metros, but new supply is generally showing up in the markets that need it most, and much of it is merely replacing older, razed properties.

Industrial

The industrial market recovery kicked into high gear in 2014, with availability below pre-recession levels. Although construction is beginning to ramp up, absorption is outpacing new deliveries by a healthy two-to- one margin. Occupancy improvement is widespread, as 52 of 60 markets have shown gains, and average rents were up almost 5% for the year. Near-term challenges are posed by the strong dollar negatively impacting manufacturing, and congestion-related delays at West Coast ports; these headwinds are mitigated by improving consumer fundamentals and the anticipated recovery in single family housing. Among the major markets, Riverside County, CA, Atlanta, GA, Chicago, IL, and Houston, TX continue to capture the lion’s share of tenant demand. These four markets accounted for over one-third of the total 2014 absorption, though Houston likely faces a speed bump in the pace of absorption in 2015 due to declining energy prices. The strongest rent growth is forecasted in the San Francisco, CA, Seattle, WA, and Atlanta, GA metropolitan areas.

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SJCERA CROW VII

Positive net absorption in fourth quarter 2014, at 64.4 million square feet, was the strongest posting this year and the second strongest quarter so far in this recovery. Annual net absorption, at 224.1 million square feet, was 7% off of 2013 levels but was still a very impressive posting and led to a 90 bps decline in availability for the year. At 10.3%, availability is the lowest it has been since the beginning of 2008. Development continues to escalate but so far is in response to solid demand.

Investor interest in the Industrial sector has moved cap rates to a ten year low of 5.3%. One of the reasons that Industrials have been the best performing sector within NPI is the fact NOI growth for Industrial has been strong, with a current average of 5.0% for the four quarters ending fourth quarter 2014. The current level is 140 basis points above the NOI growth level for fourth quarter 2013 (3.6%).

Office

A widespread recovery in the U.S. office sector continues to build momentum, with most areas outside of the gateway markets arriving later to the recovery than the other NCREIF property types. Average asking rents have been rising at a slow but steady pace for more than three years on limited amounts of new construction and new supply is expected to deliver at less than half the pace of forecasted demand. Vacancy continues to decline in the nation’s leading technology centers, including Austin, TX, Boston, MA, Denver, CO, Seattle, WA, and Raleigh, NC. In contrast, Houston, TX is beginning to feel the effects of a near-term supply/demand imbalance in the Energy Corridor, manifesting in a 0.4% quarterly increase in office vacancy after an already modest rise in the third quarter.

After lagging the other major property types, the national office market is clearly accelerating. Positive net absorption in 2014, at 52.5 million square feet, is over 45% greater than volumes seen in 2013 and represents the highest level of annual net absorption since 2007. Vacancy, at 13.9%, is down 100 bps from a year ago and is the lowest it has been since 2008. Beyond the gateway and tech/energy markets, metros such as Nashville, Salt Lake City, and St. Louis saw 100 bps or greater declines in vacancy in fourth quarter 2014. The U.S. economy has accelerated and companies are gaining more confidence to hire and invest in growth plans. Also, tech markets like San Francisco and Austin continue to see strong activity and rent growth.

Retail

Improving labor markets and falling energy prices are boosting consumer sentiment, which have contributed to strong gains for the retail sector. Through 2014, retail real estate occupancy gains maintained a modest trajectory while availability rates declined a slight 0.1% in the fourth quarter to 11.4%, with half of the nation’s 60 major markets showing improvement. The fourth quarter included a spectacular November- December holiday sales performance. According to the U.S. Census Bureau, total retail and food services sales during the two-month holiday period grew 3.8% on a year-over-year basis. Same-store sales for many retailers gained 4.9% during the holidays, making it their strongest season since 1999.

The ICSC Retail Chain Store Sales Index is back to pre-crisis levels and net absorption is on pace to eclipse 30 million square feet this year, the strongest year since 2007. However, retail availability rates are over 300 bps above 2005 lows.

Retail cap rates are at a 10 year low for NPI (5.3%). Four quarter average NOI growth for the Retail sector in fourth quarter 2014 (4.5%) has dropped below the reading of fourth quarter 2013 (5.3%).

Housing

Despite low inventory conditions and a sluggish year for the U.S. housing market, existing-home sales bounced back up by 2.4% in December from the month prior, to more than 5 million sales. This is the sixth time out of the last seven months for breaking this 5 million mark. Comparing December sales from a year

PAGE 19

SJCERA CROW VII ago, they were 3.5% higher year-over-year for the third straight month. Median home prices rose in 2014 to their highest level since 2007, although total sales for the entire year fell by 3.1% from 2013.

The inventory of existing homes remained relatively tight, with 5.1 months of supply. Existing-home prices in November were down slightly from October, but remain up +5.6% from year-ago levels. In the new- home segment, the NAHB Housing Market Index, a measure of homebuilding activity, ended the quarter at a level of 57, down slightly from the previous quarter’s reading of 59. Despite the modest decline, the index is hovering near the highest levels in nine years, signaling the housing recovery remains on course.

COURTLAND PARTNERS, LTD.

PAGE 20

COURTLAND PARTNERS, LTD. INSTITUTIONAL REAL ESTATE SERVICES

127 PUBLIC SQUARE 10866 WILSHIRE BOULEVARD SUITE 5050 SUITE 830 CLEVELAND, OH 44114 LOS ANGELES, CA 90024 TELEPHONE: (216) 522-0330 TELEPHONE: (310) 474-3040 FAX: (216) 522-0331 FAX: (310) 474-3002

DATE: JUNE 29, 2015

FROM: COURTLAND PARTNERS LTD. (“COURTLAND”)

TO: SAN JOAQUIN COUNTY EMPLOYEES’ RETIREMENT ASSOCIATION (“SJCERA”)

SUBJECT: COLONY REALTY PARTNERS (“CRP”) ANNUAL MEETINGS

SJCERA is an investor in Colony Realty Partners III (“CRP III”) and Colony Realty Partners IV (“CRP IV”) through commitments of $20 million into each fund. Michael Murphy of Courtland attended the June 25, 2015 CRP Annual Meetings telephonically. A summary of the items discussed is below.

There was an introductory real estate markets discussion and organizational update. CRP briefly discussed the impact of its recently modified structure with Colony Capital. Whereas CRP was essentially in a joint venture type arrangement with Colony Capital before, it is now effectively a division within Colony Capital. The day to day management of the funds remains the same and that group remains stable.

CRP IV

CRP raised $111 million for CRP IV and has called $69.2 million to date. The fund has eight investments in six major markets with 55% industrial, 24% multifamily, and 19% office exposure. CRP IV remains in its investment period and it recently acquired a multifamily property in Orlando, which is projected to generate a 13% gross IRR. CRP IV also includes the pending acquisition of a suburban office property in Denver, which is projected to generate a 13% gross IRR. As a result, CRP will be issuing a capital call of $24.1 million in July. CRP IV has approximately $40 million remaining acquisition capacity, which will likely be used in the office sector. There will likely be one or two more investments, which are expected to be made in 2015. CRP is projecting a gross IRR of 13%-15% and a net IRR of 11%-12% for CRP IV, which is modestly higher than at the end of 2014. CRP is also projecting income distributions in excess of $4 million for 2015.

CRP III

CRP raised $368 million for CRP III and that capital has been fully called. CRP III has realized eight dispositions to date at a gross IRR of 33%. CRP III currently has 25 investments in 9 major markets with 50% industrial, 39% office, and 11% multifamily exposure. CRP III has been making regular cash flow distributions to investors and anticipates that continuing with $19 million projected in 2015, including an approximately $5 million distribution scheduled for June 30th. CRP is projecting a gross IRR of 12%-14% and a net IRR of 9%-11%, which remains consistent with projections of the past few years.

Please contact us if you have any questions, comments, or require additional information.

Courtland Partners, Ltd.