CPREIF Clarion Partners Real Estate Income Fund
INVESTMENT PRODUCTS: NOT FDIC INSURED. NO BANK GUARANTEE. MAY LOSE VALUE. Important Information
Note: The impact of the outbreak of COVID-19 on the economy and the Fund's properties infectious disease, pandemic or any other serious public health concern, war, terrorism, labor and operations is highly uncertain. Valuations and incomes may change more rapidly and strikes and telecommunication failures). Some force majeure events may adversely affect the significantly than under standard market conditions. Please see additional information ability of a party (including an investment, a tenant of an investment, a customer of a tenant of an regarding the risks of investment and inherent subjectivity and assumptions of appraisals investment, a counterparty of an investment or a counterparty of a Clarion Vehicle) to perform its below. obligations until it is able to remedy the force majeure event. Such a party may also claim force majeure for nonperformance of its contract obligations. Certain force majeure events (such as an Business Disruption. Clarion’s investment vehicles (“Clarion Vehicles”) and their investments are outbreak of an infectious disease) could have a broader negative impact on the world economy vulnerable to damages from any number of sources, including computer viruses, unauthorized and international business activity generally, or in any of the countries in which a Clarion Vehicle access, energy blackouts, acts of God, fire, flood, earthquakes, outbreaks of an infectious may invest specifically. Additionally, a major governmental intervention into industry, including disease, pandemic or any other serious public health concern, war, terrorism, labor strikes and the assertion of control over an investment, could result in a loss to the applicable Clarion telecommunication failures. In December 2019, a novel strain of coronavirus was reported to Vehicle. Any of the foregoing would therefore adversely affect the performance of such Clarion have surfaced in Wuhan, China. As of March 2020, the outbreak has been declared to be a Vehicle and its investments. pandemic by the World Health Organization, and the Health and Human Services Secretary has declared a public health emergency in the United States in response to the outbreak. Many Uncertainty of Net Asset Values. The Net Asset Value of each Clarion Vehicle is based on countries, states, municipalities and other jurisdictions have instituted quarantines, curfews, appraisals that are inherently subjective in certain respects and rely on a variety of assumptions, prohibitions on travel and closure of offices, businesses, schools, retail stores and other public including assumptions about projected cash flows for the remaining holding periods for such venues, including certain infrastructure facilities. Businesses are also implementing similar investments. Furthermore, appraisals are based in large part on information as of the end of a precautionary measures. Such measures, as well as the general uncertainty surrounding the given calendar quarter, and market, property and other conditions may change materially dangers and impact of COVID-19, are creating significant disruption in supply chains and thereafter. Furthermore, real estate assets generally cannot be marked to an established market economic activity and are having a particularly adverse impact on transportation, hospitality, or readily tradable assets. Accordingly, such appraised values may not accurately reflect the tourism and entertainment, among other industries. As COVID-19 continues to spread, the actual market values of a Clarion Vehicle’s investments, and, thus, prospective investors and potential impacts, including a global, regional or other economic recession, are increasingly Limited Partners may make decisions as to whether to invest in or redeem Interests without uncertain and difficult to assess. Given the ongoing and dynamic nature of the circumstances, it complete and accurate valuation information. In particular, the outbreak of COVID-19 and the is difficult to predict the impact of the coronavirus outbreak. The extent to which the coronavirus economic impact arising from both the virus and actions taken to mitigate its spread may impact impacts a Clarion Vehicle’s results will depend on future developments, which are highly the value of a Clarion Vehicle’s assets and availability of debt, and the current appraisals may uncertain and cannot be predicted. These include: new information which may emerge not take such factors into account. concerning the severity of the coronavirus; the duration and spread of the outbreak; the actions to contain the coronavirus or treat its impact; its impact on our tenants, our tenants’ customers, Updates. Information in this presentation is as of the presentation date and is subject to further employees and vendors; and governmental, regulatory and private sector responses to the revision. coronavirus. A Clarion Vehicle’s financial condition and results of operations could be adversely affected, including such Clarion Vehicle’s ability to complete in-process real estate transactions Liquidity considerations and developments, to collect rent from existing tenants, to lease units in its properties to new tenants, to make distributions to investors or to satisfy redemption requests in a timely manner. The Fund should be viewed as a long-term investment, as it is inherently illiquid and In addition, the operations of Clarion, any Clarion Vehicle and its investments may be suitable only for investors who can bear the risks associated with the limited liquidity of significantly impacted, or even halted, either temporarily or on a long-term basis, as a result of the Fund. Limited liquidity is provided to shareholders only through the Fund's quarterly government quarantine and curfew measures, voluntary and precautionary restrictions on work, repurchase offers for no more than 5% of the Fund's shares outstanding at net asset travel or meetings and other factors related to a public health emergency, including its potential value. There is no guarantee these repurchases will occur as scheduled, or at all. Shares adverse impact on the health of any such entity’s personnel. will not be listed on a public exchange, and no secondary market is expected to develop. Force Majeure. The investments of any Clarion Vehicle may be affected by force majeure events (i.e., events beyond the control of the party claiming that the event has occurred, including, without limitation, energy blackouts, acts of God, fire, flood, earthquakes, outbreaks of an
2 CPREIF Overview
CPREIF allows investors to gain direct exposure to a diversified portfolio of income-producing commercial real estate and real estate-related securities.
Access Transparency Simplicity
Direct investment in a portfolio of private commercial real estate and real estate related securities • Clarion’s institutional real estate investment expertise • A portfolio of institutional-quality commercial real estate investments1 • Attractive potential income and risk-adjusted returns
An innovative, easy-to-use, continuously offered closed-end fund designed with the investor in mind • Simplified ownership in a client-friendly structure with quarterly share repurchases2 • Daily purchase • Low investment minimums • 1099 tax reporting • Daily valuation3
1” Institutional-quality real estate” refers to commercial real estate properties whose scale and balance sheet quality meet the standards typically applied by institutional investors. 2 The Fund will target quarterly repurchases of 5% of shares outstanding at Net Asset Value. 3 Daily valuation applies to the Fund itself, and not to the underlying properties, which are not priced daily. 3 The Benefits of Adding Real Estate to Your Portfolio
4 Potential benefits of private real estate in a portfolio
1 An Essential Asset Class
Stable Income with Potential for 2 Capital Appreciation
3 Potential Tax Advantaged Income
5 An Essential Asset Class, Generating Income and Return
U.S. commercial real estate, valued at $10.7 trillion 2 overall, is the third-largest asset class in the U.S. Durable Income after fixed income and equities and represents an Private real estate has provided investors with a relatively enormous investment opportunity. 90% of all U.S. stable and durable income stream and consistent returns in recent years, while helping diversify portfolio risk. commercial real estate is privately held.1 • Attractive yields in today’s near-zero-rate environment • Resilient cash flows backed by the long-term commercial lease contracts
Capital Appreciation
Private real estate’s offers the potential for capital gains as properties increase in value over time, driven by:
• Property improvements • Capital restructuring, capital repositioning, or both • Market rent growth
1. Source: Securities Industry and Financial Markets Association, Urban Land Institute, NAREIT, NCREIF and Clarion Partners Investment Research. Annual data and estimates are as of December 31, 2018. U.S. commercial real estate includes private and public equity investments. Estimates are based on a comparison to U.S. debt and U.S. equity. U.S. debt includes corporate securities, asset-backed securities, Treasury debt, Federal agency debt including mortgage-backed securities, money market funds, and municipal bonds. U.S. equity is the total market value of publicly traded domestic companies. 2 Source: Clarion Partners Investment Research, NCREIF, REIT.com, S&P, Bloomberg. As of September 30, 2019. Distributions may consist of a return of capital. For more detail slides 34-36. Past performance is no guarantee of future returns. Dividends and income can fluctuate, and are not guaranteed.
6 Institutional Investors: A Structural Shift to Alternative Asset Classes
Alternative asset classes include: private equity, real estate, hedge funds, private debt, infrastructure, and natural resources.
Allocations Across Asset Classes, 1999-2019 Real Estate as % of Institutional Investor Target Allocations 100% 3% 2% 2% 3% 3% 6% 12% 90% 13% 10.5%10.6% 20% 10.1%10.4% 23% 23% 9.6% 9.9% 80% 10% 9.3% 30% 8.9% 70% 29% 8% 60% 33% 29% 29% 5.6% 50% 6% 5.2% 4.5% 40% 3.7% 4% 3.2% 30% 61% 2.9% 57% 2.1% 20% 45% 44% 45% 2% 10% 0% 0% 1999 2004 2009 2014 2019
Equities Bonds Alternatives Cash
Source: Willis Towers Watson. Global Pension Assets Study 2020.February 2020. Clarion Partners Investment Research, June 2020. Notes: 1) Asset class allocations are based on a survey of global pensions in seven countries: U.S., UK, Switzerland, Netherlands, Japan, Canada, and Australia. 2) Past performance is not indicative of future performance and risk of loss exists.
7 Potential Tax Advantages of REIT Distributions
CPREIF has elected to be taxed as a REIT1. A REIT has special tax advantages that can help maximize after-tax distributions. Investing in a REIT may increase after-tax distributions and lower an individual’s effective tax rate, compared to an investment in taxable bonds.
Illustrative Example $5,000 Pre-Tax Annual Distribution on $100,000 initial investment REIT income is taxed only once, at 1 Taxable Effective Income Tax After-tax the shareholder’s marginal tax rate After-tax- 1 Income From Rate On Taxable Distribution Distribution Distribution Distribution(2) Yield
REIT ordinary income distributions Taxable Bonds $5,000 37% $3,150 3.15% 2 may benefit from a maximum 20% tax reduction on the marginal rate2 REITs with No $5,000 29.60% $3,520 3.52% Return of Capital (4) Return of Capital (ROC) reduces REITs with 50% the taxes on distributions paid to (4) $2,500 29.60% $4,260 4.26% 3 Return of Capital investors in the current year3 This document is provided for informational purposes only. Investors should refer to Form 1099 for definitive tax information. Legg Mason, Inc., its affiliates, and its employees are not in the business of providing tax or legal advice to taxpayers. These materials and any tax-related statements are not intended or written to be used, and cannot be used or relied upon, by any such taxpayer for the purpose of avoiding tax penalties. Tax-related statements, if any, may have been written in connection with the “promotion or marketing” of the transaction(s) or matter(s) addressed by these materials, to the extent allowed by applicable law. Any such taxpayer should seek advice based on the taxpayer’s circumstances from an independent tax advisor.
1 Internal Revenue Code of 1986 permits Real Estate Income Trusts (REITS) as pass-through vehicles, that do not pay corporate income tax to the extent they distribute their taxable income. CPREIF’s Board of Directors is authorized to revoke this REIT election, which may cause adverse consequences to our stockholders. 2 This deduction, created by the 2017 Tax Cuts and Jobs Act, allows non-corporate taxpayers to deduct up to 20 percent of their Qualified Business Income, plus 20% of qualified real estate investment trust (REIT) dividends and qualified publicly traded partnership (PTP) income. The 20% deduction is currently set to expire after 2025. 3 Return of capital is not provided to shareholders for tax reporting purposes until after the close of the taxable year. 4 The actual ROC may be larger or smaller than that assumed in the above illustrative scenario. The analysis does not consider 3.8% net investment income tax, tax on capital gains or state and local taxes. After-tax distribution equals the differences between distribution paid and tax payable. The effective tax rate equals tax payable divided by distribution paid.
8 Meet Clarion Partners
The real estate investment landscape is becoming increasingly dynamic based on changes in the way people live, work and play. By focusing on the big picture, Clarion Partners is able to identify potential that others may overlook and seize opportunities that others can’t always see. “ - David Gilbert, Chief Executive Officer and Chief Investment Officer, Clarion Partners ”
9 One of the largest pure-play real estate investment managers providing:
Long-Term Stability Decades of experience managing assets through multiple market cycles on behalf of private and public clients globally
Fully-Scaled Platform Well positioned to source and execute investments, leveraging an international platform and a strong local market presence
Industry Expertise Deep understanding of macro trends and fundamental real estate dynamics forms thematic investing approach
10 Clarion by the Numbers
39 YEARS
DEDICATED REAL ESTATE INVESTMENT MANAGER WITH PARTNERSHIP CULTURE
$25.6 Billion2 $11.3 Billion2 Industrial Portfolio Multifamily Portfolio $59.1 857 Properties / 46 Markets 179 Properties / 39 Markets BILLION1
ASSET UNDER MANAGEMENT
1,3001 PROPERTIES
ACROSS THE UNITED STATES AND EUROPE $12.3 Billion2 $6.8 Billion2 Office Portfolio Retail Portfolio 106 Properties / 17 Markets 144 Properties / 33 Markets
As of March 31, 2021. 1 Reflects Gross Asset Value (GAV). 2 Gross of fees reflects Gross Real Estate Value (GRE). Gross Asset Value GAV, Gross Real Estate Value (GRE) and AUM are defined at the end of this presentation. Please refer to the important disclosures above and at the end of this presentation.
11 Global Platform with Local Execution
UNITED STATES EUROPE $59.1 AUM ($bn) London Berlin NLD
Boston JERSEY GER CZE 1,376 New York SVK ASSETS Paris FRA Washington, DC 9 ESP OFFICES
Los Angeles
295 Dallas EMPLOYEES
Headquarters AUM Statewide Regional < $500 M $500 M - $1,500 M $1,500 M+
INVESTMENT RESEARCH ACQUISITIONS ASSET MANAGEMENT
9 TEAM MEMBERS 35 TEAM MEMBERS 75 TEAM MEMBERS
Personnel data as of April 13, 2021. All other data as of December 31, 2020. Geographic information represents GRE; compared to Firm-level GAV. Please see Important Legal Information at the end of this presentation.
12 Firmwide collaborative investment process
Top-down Portfolio Investment Underwriting Final Portfolio investment strategy sourcing and and decision management themes review due diligence
Investment research Portfolio management Acquisition group Asset management Investment committee
13 Is Clarion Partners in Your Neighborhood?
Clarion Partners has developed a significant presence across the United States, with investments across most property types including warehouse, office and apartments.
Scan to see if Clarion is in your neighborhood
Source: Clarion Partners. As of April 2019. For illustrative purposes. Not an exhaustive list. The provided information is for properties owned and/or managed by Clarion Partners and is not specifically representative of Clarion Partners Real Estate Income Fund.
14 Properties Managed By Clarion Partners
Total Investment Value* : $2.8 Billion Boston, MA Total Properties** : 26
Metrics Property Highlight Warehouse 1,290.157 sq.ft. Multifamily 1,645 units Office 1,774,521 sq.ft. Retail 1,182,175 sq.ft.
Number of Properties
Watermark Seaport Warehouse 4 Sector : Multifamily Multifamily 7
Office 12
Retail 3
0 2 4 6 8 10 12 14 Source: Clarion Partners. For illustrative purposes. Not an exhaustive list. The provided information is for properties owned and/or managed by Clarion Partners and is not specifically representative of Clarion Partners Real Estate Income Fund. *Total investment value represents the dollar value of Clarion Partners holdings in the specified metropolitan statistical area (MSA). **Total number of properties reflects Clarion Partner holdings in industrial, multifamily, office and retail property types in the specified MSA. Clarion Partners may have investments in other property types that are not included in this total.
15 Properties Managed By Clarion Partners
Total Investment Value* : $2.5 Billion Seattle, WA Total Properties** : 60
Metrics Property Highlight Warehouse 5,713,744 sq.ft. Multifamily 568 units Office 1,851,033 sq.ft. Retail 2,096,382 sq.ft.
Number of Properties Stryker Business Center Warehouse 34 Sector : Warehouse
Multifamily 3
Office 12
Ratail 11
0 5 10 15 20 25 30 35 40 Source: Clarion Partners. For illustrative purposes. Not an exhaustive list. The provided information is for properties owned and/or managed by Clarion Partners and is not specifically representative of Clarion Partners Real Estate Income Fund. *Total investment value represents the dollar value of Clarion Partners holdings in the specified metropolitan statistical area (MSA). **Total number of properties reflects Clarion Partner holdings in industrial, multifamily, office and retail property types in the specified MSA. Clarion Partners may have investments in other property types that are not included in this total.
16 Properties Managed By Clarion Partners
Total Investment Value* : $2.9 Billion Dallas, TX Total Properties** : 82
Metrics Property Highlight Warehouse 18,929,690 sq.ft. Multifamily 2,899 units Office 436,253 sq.ft. Retail 1,184,964 sq.ft.
Number of Properties One Victory Park Warehouse 58 Sector : Office
Multifamily 18
Office 1
Ratail 5
0 10 20 30 40 50 60 70 Source: Clarion Partners. For illustrative purposes. Not an exhaustive list. The provided information is for properties owned and/or managed by Clarion Partners and is not specifically representative of Clarion Partners Real Estate Income Fund. *Total investment value represents the dollar value of Clarion Partners holdings in the specified metropolitan statistical area (MSA). **Total number of properties reflects Clarion Partner holdings in industrial, multifamily, office and retail property types in the specified MSA. Clarion Partners may have investments in other property types that are not included in this total.
17 Western Asset
A globally integrated fixed-income manager, sourcing ideas and investment solutions worldwide
Mortgage and Consumer At a Glance Organizational Pillars Credit Team • Founded in 1971. Specialist Investment • Clients first • Deep and experienced team Manager of Franklin Resources, Inc. since July 31, 2020 • Globally integrated • 10 investment professionals1 • Fixed-income value investors • Team-based • 21 years average experience • $484.5 billion (USD) AUM - $428.9 billion (USD) long-term assets • Active fixed-income - $55.6 billion (USD) cash and cash equivalent assets • Integrated risk management • 804 employees
Mortgage and Consumer Credit Capabilities:
Firmwide Structured Products Dedicated Mandates Agency RMBS $40.1 billion US Agency MBS $3.9 billion Non-Agency RMBS $10.6 billion US Agency MBS Plus $2.9 billion Structured Products $2.2 billion ABS $9.3 billion Whole Loans $0.6 billion CMBS $9.5 billion Other Dedicated Mandates $0.4 billion Total AUM $69.5 billion Total AUM $10.0 billion¹
Source: Western Asset. 1As of January 31, 2021 Assets under management in USD. Data may not sum to total due to rounding. 2Included in the Firm wide AUM. Dedicated mandate AUM includes allocations from other mandates. 3Western Asset reverse inquiry created WBCMT 05-C18.
18 CPREIF Clarion Partners Real Estate Income Fund
19 Clarion Partners Real Estate Income Fund may offer the following benefits:
Access Transparency Simplicity
CPREIF allows investors to gain direct exposure to a diversified portfolio of income-producing commercial real estate and real estate-related securities.
20 CPREIF vs. Existing Offerings
Client-friendly structure • Provides simplified purchase/sale process with electronic ticketing • Daily valuation/target quarterly tender offers1 • CPREIF has elected to be taxed as a REIT2 CPREIF NON-TRADED REIT Direct Exposure to a Real Estate Portfolio Broad Investor Suitability3 Electronic Ticketing Limited Leverage4 1940-Act registered, continuously offered closed-end fund5 Daily Valuation5 Taxed as a REIT1 1099 Tax Reporting
1 The Fund will target quarterly repurchases of 5% of shares outstanding at Net Asset Value. 2. Internal Revenue Code of 1986 permits Real Estate Income Trusts (REITS) as pass-through vehicles, that do not pay corporate income tax to the extent they distribute their taxable income. CPREIF’s Board of Directors is authorized to revoke this REIT election, which may cause adverse consequences to our stockholders. 3 Suitability limitations imposed by state regulators with respect to non-traded REITs. 4 The 1940 Act limits fund leverage to 33 1/3% of total assets. The Fund may enter into investment management techniques that have similar effects as leverage, but which are not subject to the 33 1/3% limitation. Please see the prospectus for more information. 5A majority of non-traded REITs disseminate a monthly NAV. 6 Registered under the Investment Company Act of 1940 Please refer to the important disclosures above and at the end of this presentation.
21 What’s in Demand Now
Warehouse Spaces designed for e-commerce in major distribution markets and regional population centers
Apartment Live/work/play environments that appeal to both Baby Boomers and Millennials
Office Efficient, transit-oriented space in urban/walkable locations
Retail Neighborhood and community grocery-anchored centers in areas with high incomes and strong population growth
Other Sectors Includes hotel, student housing, medical office, self-storage, life sciences, etc.
Please refer to the important disclosures above and at the end of this presentation.
22 Key trends that impact private real estate investing
Demographics, technology and lifestyle trends are reshaping how we live, work and shop – and influencing demand for different property types
Live Work Shop
Young adults who postponed Technology and mobility enable Online shopping and e-commerce has having families are now seeking more flexibility in the workspace. driven up demand for warehouses. housing of their own.
Apartment Demand Flexible Office Space The Rise of the E-Warehouse
24 million Millennials still live with Flexible office space, now less than 240 million square feet of new space will family—which translates into pent- 5% of total U.S. office inventory, be needed for e-commerce by 2023.* up demand for apartments.* could rise to 30% by 2030.*
*Source: Clarion Partners.
23 How We Live: The Apartment Market
Demand for new units picked up in the second half as more states relaxed COVID restrictions; demand was strongest in the Sun Belt
• Nationally, rents declined 4% in 2020 – with San Francisco and New York City hit hardest • Yet half of US metros saw rents increase – with gains concentrated in the Sun Belt
Market Apt Unit Gain
Dallas/Ft Worth 20,000
Atlanta 16,400
Houston 12,400
Phoenix 8,900
Denver 7,700
*Source: Clarion Partners.
24 How We Work: The Office Market
Technology firms are active, helping support the market; the key is the future of work-from-home
• Some firms expanding office space to accommodate rising headcount and social distancing • Amazon leased a new building in Boston in January; Facebook is seeking a 1,000,000 square-foot facility in Austin
56% of firms expect to Reduce by more than 25% 8% need more office space in Reduce between 16 and 25% 3 years than today 11% Reduce between 5 and 15% 12% Stay about the same 14% Increase between 5 and 15% 24% Increase between 16 and 25% 18% Increase more than 25% 14%
Source: PWC Remote Work Survey, January 2021; Clarion Partners Research
25 How We Shop: The E-Commerce Market
COVID has dramatically increased e-commerce sales and shipping
• E-commerce sales were up 32% in Q4 2020 (vs. previous year) • Expected to rise another 12-15% annually after pandemic
Source: Moody’s Analytics, US Census. Note: Ecommerce sales growth forecast is from CBRE as of December 2020.
26 Portfolio Strategy
Designed to provide retail investors access to institutional-quality private real estate1:
Current Fund Target Allocation Allocation
1% PRIVATE REAL ESTATE PUBLIC REAL ESTATE 60%-90%2 SECURITIES 37% 10%-40%2,3
• Direct equity ownership • Commercial mortgage-backed securities 62% • Joint venture investments • Residential mortgages-backed securities • Originated subordinated/mezzanine • Cash and cash equivalents investments Public Real Estate Securities Private Real Estate
1 Institutional-quality real estate refers to commercial real estate properties whose scale and balance sheet quality meet the standards typically applied by institutional investors. 2 Target portfolio for illustrative purposes only, based on GAV allocation. All data is subject to change. 3 Public Real Estate Securities allocation may include: CMBS, RMBS, REITs, investments in real estate-related investment companies and cash. The 1940 Act limits fund leverage to 33 1/3% of total assets. The Fund may enter into investment management techniques that have similar effects as leverage, but which are not subject to the 33 1/3% limitation. Please see the prospectus for more information. The Fund manager does not expect to be able to achieve its target allocations until the Fund has raised substantial proceeds in this offering and acquired a broad portfolio of investments. Prior to that time (the “ramp-up period”) the Fund manager will balance the goal of achieving the Fund’s portfolio allocation targets with the goal of carefully evaluating and selecting investment opportunities to maximize risk- adjusted returns. Following the end of the ramp-up period, the manager believes that the size of our portfolio of investments should be sufficient for the Fund to adhere more closely to its allocation targets, although we cannot predict how long the ramp-up period will last and cannot provide assurances that we will be able to raise sufficient proceeds in this offering to accomplish this objective.
27 Target Sector Focus
OTHER WAREHOUSE APARTMENT OFFICE RETAIL PROPERTY SECTORS
50%
45%
40%
35% 30% 20% - 40% 20% - 40% 25%
20% 15% 10% - 30% 10% 0% - 20% 0% - 20% 5%
0%
Target Range
Percentages based on GRE. Please refer to the Important Legal Information at the end of this presentation. Target performance may not be achieved. A risk of loss exists. Past performance is not indicative of future results. The impact of the outbreak of COVID-19 on the economy and the Fund’s properties and operations is highly uncertain. Valuations and incomes may change more rapidly and significantly than under standard market conditions. Please refer to the important disclosures above and at the end of this presentation Data as of June 11, 2021
28 Investment Holding
AERTSON MIDTOWN Nashville, TN
Investment overview
Investment type Structured debt
Date of investment September 30, 2019
Purchase price at share $18.00 million
Ownership share 100%
Property overview
Property type Mixed use
Gross size 410,766 sf
Residential units 350
Hotel keys 180
Retail 37,000 sf
Investment summary Property description • Recapitalization of a recently developed Class A residential mixed-use building. • Walkable, highly amenitized asset in an urban setting. • Nashville’s economy is strong and expanding. Its job and rent growth are • Well-located near Vanderbilt University, a “main-and-main” location in Nashville. outpacing the national average. Nashville was ranked #2 nationally among cities creating the most high-paying jobs.1 • Experiential-oriented destination with best-in-class facilities.
1 Source: CBRE, Forbes. As of 2018. Source: Clarion Partners. As of May 28, 2021. This investment represents 16.0% of relative percentage of the holding of the entire portfolio (100%). Characteristics and holdings weightings are based on total portfolio, are subject to change at any time, and are provided for informational purposes only. Not to be construed as a recommendation to purchase or sell any security. There can be no assurance that any unrealized investment described herein will prove to be prove to be profitable. Please refer to the important disclosures above and at the end of this presentation.
29 Investment Holding
100 FRIARS BOULEVARD West Deptford, NJ
Investment overview
Investment type Direct Equity
Date of investment March 18, 2020
Purchase price at share $20.2 million
Ownership share 100%
Property overview
Property type Warehouse
Square footage 182,587 sf
Investment summary Property description • Accessible industrial node in strong sub-market with low vacancy rate. • Fully occupied, attractive industrial asset that is located at a prominent distribution location in Southern New Jersey near Philadelphia. • As Central and Northern New Jersey continue to experience extremely low vacancy rates and strong relative rent growth, Southern New Jersey is similarly well positioned to • The sub-market benefits from highway connectivity and has seen healthy demand from outperform other industrial markets on a national level. logistics users. • 10-year term with a durable cash flow stream, given full occupancy by a reliable tenant • Triple net lease terms free landlords of maintenance issues, facilitating the conversion of over the life of this lease. rental flows into a steady income stream.
Source: Clarion Partners. As of May 28, 2021. This investment represents 11.4% of relative percentage of the holding of the entire portfolio (100%). Characteristics and holdings weightings are based on total portfolio, are subject to change at any time, and are provided for informational purposes only. Not to be construed as a recommendation to purchase or sell any security. There can be no assurance that any unrealized investment described herein will prove to be profitable. Please refer to the important disclosures at the end of this presentation.
30 Investment Holding
456 SULLIVAN AVENUE South Windsor, CT
Investment overview
Investment type Joint Venture
Date of investment February 11, 2011
Purchase price at share $47.5 million
Ownership share 95%
Property overview
Property type Warehouse
Square footage 304,249 sf
Investment summary Property description • 100% Triple net leased thru 2030, limiting rollover risk and minimizing capital • Strategically located along I-84 and I-91, offering convenient access to the Hartford, expenditures Providence, Boston, and NYC regional distribution markets • Delivers attractive 10-year cash flow stream • The Hartford industrial market and East Hartford submarket continue to exhibit strong relative rent growth, and are well positioned to outperform other national industrial • Experienced joint venture partner with significant local market knowledge and presence markets in the near term • Built in 2012 as a build-to-suit for the tenant, who has since increased their investment into the property through significant capital improvements
Source: Clarion Partners. As of May 28, 2021. This investment represents 16.7% of relative percentage of the holding of the entire portfolio (100%). Characteristics and holdings weightings are based on total portfolio, are subject to change at any time, and are provided for informational purposes only. Not to be construed as a recommendation to purchase or sell any security. There can be no assurance that any unrealized investment described herein will prove to be profitable. Please refer to the important disclosures at the end of this presentation.
31 Investment Holding
55 MESSINA DRIVE Braintree, MA
Investment overview
Investment type Direct equity
Date of investment April 23, 2021
Purchase price at share $17.5 million
Ownership share 100%
Property overview
Property type Life Science
Square footage 58,935 sf
Investment summary Property description
• 100% triple net leased to Zimmer Biomet (S&P: BBB) thru April 2034, limiting • This newly renovated biopharmaceutical manufacturing facility, with over $30 million rollover risk and providing for a durable cash flow stream. in tenant investment, is located within Boston’s Life Sciences Corridor, a major regional hub for the life science and biotech industries. • Exposure to the Good Manufacturing Practices (GMP) sector, which appears poised for expansion throughout Boston as companies focus on access to their • The site is conveniently located near major interstate highways ( I-93 and I-95) and supply chain and a highly educated labor pool. to Boston’s mass transit network (MBTA Red Line).
• Brought to Clarion off market through broker relationships in market. • The majority of the senior-level engineering talent who oversee the manufacturing processes live within 45 minutes of the site. Source: Clarion Partners. As of May 28, 2021. This investment represents 16.1% of relative percentage of the holding of the entire portfolio (100%). Characteristics and holdings weightings are based on total portfolio, are subject to change at any time, and are provided for informational purposes only. Not to be construed as a recommendation to purchase or sell any security. There can be no assurance that any unrealized investment described herein will prove to be prove to be profitable. Please refer to the important disclosures above and at the end of this presentation.
32 Investment Holding
MOSIAC AT LARGO STATION Largo, MD
Investment overview
Investment type Joint Venture
Date of investment May 26, 2021
Purchase price at share $59.4 million
Ownership share 92.5%
Property overview
Property type Multifamily
Square footage 242
Investment summary Property description
• Class A, four-story, 242-unit mid-rise multifamily community well located in a DC • Strategic location adjacent to I-495 and the WMATA Blue and Silver Lines, providing suburb. convenient access to Downtown DC (~14 miles) and the larger metro area. • Value add strategy with planned upgrades to the mailroom, hallways and stairwells and a new pet station and dog park. • Walkable to employment, retail, and entertainment centers, including the Univ. of • Traditionally recession resistant sector with strong submarket performance through Maryland’s Capital Region Medical Center. market cycles. • Amenities include a two story-clubroom, fitness center, outdoor swimming pool, grilling • Experienced joint venture partner with significant local market knowledge and area, package service and a six-story, controlled-access structured parking deck. development experience.
Source: Clarion Partners. As of May 28, 2021. This investment represents 23.0% of relative percentage of the holding of the entire portfolio (100%). Characteristics and holdings weightings are based on total portfolio, are subject to change at any time, and are provided for informational purposes only. Not to be construed as a recommendation to purchase or sell any security. There can be no assurance that any unrealized investment described herein will prove to be profitable. Please refer to the important disclosures at the end of this presentation.
33 Biographies
Richard H. Schaupp Onay S.P. Payne Managing Director, Portfolio Manager Managing Director, Portfolio Manager
Richard Schaupp is an equity owner and Onay Payne is an equity owner and Managing Director with Clarion Partners, Managing Director with Clarion Partners and serves as the Portfolio Manager for and a member of the Firm’s Career CPREIF. He is the portfolio manager for a Management Committee. She is a Portfolio number of other commingled funds and Manager of CPREIF, and also responsible certain separate account relationships. As for several billion dollars in assets under portfolio manager, Rick has overall management for multiple separate responsibility for the management and accounts and comingled vehicles. Onay portfolio strategy of these relationships. previously served as a member of the From 2005 - 2012, Rick was the assistant Firm’s Investment Committee (2018-2020). portfolio manager for the Clarion Ventures She joined the Firm in 2003 and began series and a separate account relationship. working in the real estate and finance Rick has participated in the acquisition, industries in 1997. Onay is an active asset management, and development member of the Urban Land Institute management of over $4.0 BN of real (Commercial Retail Council, Women’s estate. He originally joined Clarion Partners Leadership Initiative Executive Committee, in 2000 and began working in the real ULINY Advisory Board), and she also estate industry in 1995. Mr. Schaupp holds serves as Vice Chair of the Robert Toigo a B.Arch from the University of Notre Dame Foundation Alumni Endowment Board, is a and an M.B.A from Yale University. member of the Harvard Alumni Real Estate Board and is a member of WX New York Women Executives in Real Estate. Onay is fluent in Spanish.
34 Key Terms of Clarion Partners Real Estate Income Fund
STRUCTURE A 1940 Act-registered, continuously offered closed-end fund
OBJECTIVE Current income and capital appreciation
PORTFOLIO STRATEGY1 The Fund targets investments in direct real estate and real estate securities as follows: 60%-90% private investments in commercial real estate (both equity and debt) 10%-40% publicly traded real estate securities and cash
INVESTMENT MANAGER/SUB-MANAGER Legg Mason Partners Fund Advisor, LLC/Clarion Partners
SECURITIES SUB-ADVISER Western Asset Management Company, LLC
SEED CAPITAL $175M seed investment by Legg Mason Partners Fund Advisor, LLC
MANAGEMENT FEES 1.25% on NAV
SHARE CLASSES S - 3.50% maximum sales load and ongoing distribution and servicing fee of 0.85% T – 3.00% maximum sales load, 0.50% dealer manager fee, and ongoing distribution and Servicing fee of 0.85% D – no-upfront load and a 0.25% ongoing service fee I – no-upfront fee and no service fee
ELIGIBILITY No restriction
SHARE REPURCHASE The Fund will target quarterly repurchases of 5% of shares outstanding at NAV
DISTRIBUTION POLICY Monthly distributions
TAX The Fund will elect to be taxed as a REIT. 1099 tax reporting
1The 1940 Act limits fund leverage to 33 1/3% of total assets. The Fund may enter into investment management techniques that have similar effects as leverage, but which are not subject to the 33 1/3% limitation. Please see the prospectus for more information.
The information provided herein with respect to CPREIF has been provided for informational purposes only and does not constitute an offer to sell securities in any existing or to-be-formed issuer. Investment in CPREIF can be made only pursuant to the prospectus and related documents and after careful consideration of the risk factors set forth therein. The information provided with respect to CPREIF is qualified in its entirety by reference to, and will be superseded by, such documents.
35 Expenses of Owning Real Estate
CPREIF Fees & Expenses1 Class I Class D Class S Class T
Fund Level Fees
Advisory Fee* 1.25 1.25 1.25 1.25
Performance Fee none none none none
Other Expenses 0.67 0.67 0.67 0.67
Distribution/Servicing Fees none 0.25 0.85 0.85
Waived Advisory Fees and/or -0.17 -0.17 -0.17 -0.17 Expenses Reimbursed
All Inclusive Advisory & Distribution Fees 1.75 2.00 2.60 2.60
Property Level Expenses
Property Level Expenses 2.12 2.12 2.12 2.12
Interest Payments on Properties 1.25 1.25 1.25 1.25
Total Annual Operating Expenses Before fees waived 5.29 5.54 6.14 6.14 and/or expenses reimbursed
Total Annual Operating Expenses After fees waived and/or 5.12 5.37 5.97 5.97 expenses reimbursed
* Effective April 1, 2021, Legg Mason Partners Fund Advisor, LLC has agreed to waive its 1.25% management fee through April 30, 2022. 1 As of December 31, 2020. Gross expenses are the Fund’s total annual operating expenses for the share class(es) shown. Net expenses for Class(es) I, D, S & T reflect contractual fee waivers and/or reimbursements, where these reductions reduce the Fund’s gross expenses, which cannot be terminated prior to Dec 31, 2021 without Board consent. Performance shown represents past performance and is no guarantee of future results. Current performance may be higher or lower than the performance shown. Investment return and principal value will fluctuate so shares, when redeemed, may be worth more or less than the original cost. For performance data including the effects of sales charges, Class S shares reflect the deduction of a maximum front-end sales charge of 3.5%. Class T shares reflect the deduction of a maximum front-end sales charge of 3% and a dealer manager fee of 0.5%. Total returns assume the reinvestment of all distributions at net asset value and the deduction of all Fund expenses. Total return figures are based on the NAV per share applied to shareholder subscriptions and redemptions, which may differ from the NAV per share disclosed in Fund shareholder reports. Performance shown excluding sales charges would have been lower, if the applicable sales charge been reflected. Had fees not been waived in various periods performance would have been lower. All classes of shares may not be available to all investors or through all distribution channels. For the most recent month-end information, please visit www.leggmasonfunds.com.Different minimums may apply to clients of certain service agents. See the Fund’s prospectus for additional information. The Fund manager does not expect to be able to achieve its target allocations until the Fund has raised substantial proceeds in this offering and acquired a broad portfolio of investments. Prior to that time (the “ramp-up period”) the Fund manager will balance the goal of achieving the Fund’s portfolio allocation targets with the goal of carefully evaluating and selecting investment opportunities to maximize risk- adjusted returns. Following the end of the ramp-up period, the manager believes that the size of our portfolio of investments should be sufficient for the Fund to adhere more closely to its allocation targets, although we cannot predict how long the ramp-up period will last and cannot provide assurances that we will be able to raise sufficient proceeds in this offering to accomplish this objective.
36 Important legal information (1/3)
This is not an offer to sell, or a solicitation of an offer to buy, securities. Investment in real estate and real Important Disclosure Relating to Clarion Partners Property Performance and Comparisons to the estate derivatives entails significant risk and is suitable only for certain qualified investors as part of an NCREIF PropertyIndex overall diversified investment strategy and only for investors able to withstand a total loss of investment. Inception date is 10/1/1984. Clarion Partners’ performance is calculated by blending the performance of This material is for distribution only to financial professionals. It may not be distributed to investors assets from all client portfolios that meet the criteria for inclusion in the NCREIF Property Index (“NPI”). If the or potential investors. This presentation is strictly confidential and is not intended for distribution without performance shown is for a subset of accounts of Clarion Partners, then all properties that would meet the the written permission of Clarion Partners. Unless otherwise indicated, returns are presented on a gross criteria for inclusion in such subset in the NPI are included. Except with respect to subsets (e.g., industrial basis and do not reflect expenses, management fees or incentive allocations. References to indexes are properties), qualifying properties include all Clarion Partners client-owned U.S. office, industrial, retail, hypothetical illustrations of aggregate returns and do not reflect the performance of any actual investment. residential and hospitality operating properties accounted for at market value, pursuant to the current Investors cannot invest in an index. Past performance is not indicative of future results and a risk of loss valuation policy applicable to the respective client. New qualifying properties are included in the first full exists. Any investor’s actual returns may vary significantly from any aggregate returns set forth in this quarter in which they reach a minimum of 60% occupancy or, for newly acquired renovation or development presentation. assets, the earlier of 60% occupancy or 1 year after completion of the renovation or development. Once a Forecasts and projections rely on a number of economic and financial variables and are inherently property is included by Clarion Partners, it remains in the track record until it is disposed or converted to a speculative. Such forecasts and projections are based on complex calculations and formulas that contain property type which does not meet NPI inclusion criteria. With the exception of subsets outside of the substantial subjectivity. There can be no assurance that market conditions will perform according to any hospitality sector, Clarion Partners includes the historical performance of 2 hotel investments managed by a forecast or that any fund or account will achieve its objectives. Investors are cautioned not to place undue Clarion Partners employee between 2002 and 2005 while working at Sarofim Realty Advisors and transferred reliance on any forward-looking statements. Clarion Partners does not assume any obligation to update to Clarion Partners in 2006 and 2007. The performance of Clarion Partners is hypothetical in that it does not any forward-looking statements as a result of new information. Such statements are believed to be track the aggregate performance of all assets held in Clarion Partners client accounts or of any individual accurate as of the date provided but are not guaranteed and are subject to change without notice. This account. No client has received the performance shown. Except as otherwise noted, Clarion Partners material does not constitute investment advice and should not be viewed as a current or past performance is shown unleveraged and gross of taxes, investment management fees, incentive fees, and, any recommendation to buy or sell any securities or to adopt any investment strategy. Clarion Partners does fund expenses, if applicable. If such fees and expenses were deducted from the assets shown, performance not provide tax or legal advice. Tax-related statements are based on Clarion Partners’ understanding of would be substantiallylower. the tax laws. Investors must seek the advice of their independent legal and tax counsel before investing. Certain information contained in this material may have been obtained or derived from independent The NPI is a primary benchmark for the commercial real estate industry calculated and maintained by the sources believed to be reliable. Clarion Partners cannot guarantee the accuracy or completeness of such National Council of Real Estate Investment Fiduciaries. The NPI is a total rate of return measure of the information and has not reviewed the assumptions on which such information is based. investment performance of a large pool of individual commercial properties that have been acquired in the private market for investment purposes. The NPI includes only U.S. office, industrial, retail, residential and Aggregated Property-Level Data hospitality operating properties owned in whole or in part by non-taxable institutional investors and Aggregated (or “Blended”) property-level return targets, capitalization rates and internal rates of return (IRR), accounted for at market value. The NPI is gross of investment management fees and is unleveraged. as applicable, are based, in part, on the value of the properties held in the portfolio. Values are assigned to Information regarding NPI’s methodology is available at http://www.reportingstandards.info/. Substantial each property using a consistent methodology that is applied in accordance with the written valuation policies. differences exist between the methodology for calculating the NPI and the Clarion Partners performance Aggregated asset-level return targets, capitalization rates and IRRs may incorporate property values data. Performance was achieved under certain economic conditions that may not be repeated. Past assigned to properties on different dates within the prior year. Such property values are estimates only. This performance is not a guarantee of futureresults. data is provided for illustrative purposes only and should not be viewed as a guarantee of current property value, capitalization rate or internal rate of return, as applicable. Neither individual nor aggregated cap rates represent a return or distribution from the portfolioitself. 37 Important legal information (2/3)
Additional Index Definitions The NCREIF Total Return Property Index (NPI). The NPI quarterly, annual and annualized total returns consist of three components of return – income, capital and total. Total Return is computed by adding the Income Return and the Capital Value Return.
NFI-ODCE Index NCREIF Fund Index – Open End Diversified Core Equity includes open-end commingled funds pursuing a core investment strategy, primarily investing in private equity real estate. This is a quarterly, capitalization-weighted, gross-of-fee, time-weighted return index with an inception date of December 31, 1977
NPI Market Value Index (MVI) The NPI MVI is simply an equal-weighted average of quarterly changes in reported market value for the properties that are not undergoing a major capital expansion. MVI is designed to reflect how property values are changing over time and be an alternative to the NCREIF capital index.
Bloomberg Barclays US Aggregate Bond Index The Bloomberg Barclays US Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).
FTSE NAREIT All Equity REIT Index The FTSE NAREIT All Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. Equity REITs. Constituents of the Index include all tax-qualified REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property.
NAREIT Equity REIT. NAREIT Equity REIT Index is an index designed to provide the most comprehensive assessment of overall industry performance,and includes all tax-qualified real estate investment trusts (REITs) that are listed on the New York Stock Exchange, the NYSE AMEX Equities or the NASDAQ National Market List.
The FTSE NAREIT Equity REITs Index contains all Equity REITs not designated as Timber REITs or Infrastructure REITs.
S&P 500 - Standard and Poor’s 500 Index The S&P 500 Index is a capitalization-weighted index of 500 large U.S. stocks. The index is designed to capture the returns of many different sectors of the U.S. economy. The total return calculation includes the price-plus-gross cash dividend return.
Standard deviation Standard deviation is a statistic used as a measure of the dispersion or variation in a distribution, or data set, from its mean, or average; it measures the volatility of an investment’s return over a particular time period; the greater the number, the greater the volatility.
38 Important legal information (3/3)
Investment risks Liquidity considerations The Fund is newly organized, with a limited history of operations. An investment in the Fund involves a The Fund should be viewed as a long-term investment, as it is inherently illiquid and suitable only for considerable amount of risk. The Fund is designed primarily for long-term investors and an investment in the investors who can bear the risks associated with the limited liquidity of the Fund. Limited liquidity is Fund should be considered illiquid. Shareholders may not be able to sell their shares in the Fund at all or at a provided to shareholders only through the Fund's quarterly repurchase offers for no more than 5% of favorable price. Fixed income securities involve interest rate, credit, inflation and reinvestment risks. As the Fund's shares outstanding at net asset value. There is no guarantee these repurchases will occur interest rates rise, the value of fixed income securities fall. High-yield bonds possess greater price volatility, as scheduled, or at all. Shares will not be listed on a public exchange, and no secondary market is illiquidity and possibility of default. The Fund's investments are highly concentrated in real estate expected to develop. investments, and therefore will be subject to the risks typically associated with real estate, including but not limited to local, state, national or international economic conditions; including market disruptions caused by Clarion Partners, LLC, Western Asset Management Company, LLC and Franklin Distributors are Franklin regional concerns, political upheaval, sovereign debt crises and other factors. Templeton affiliated companies. Asset-backed, mortgage-backed or mortgage-related securities are subject to prepayment and extension risks. The Fund employs leverage, which increases the volatility of investment returns and subjects the Fund BEFORE INVESTING, CAREFULLY CONSIDER A FUND’S INVESTMENT OBJECTIVES, RISKS, to magnified losses if an underlying fund's investments decline in value. The Fund may use derivatives, such CHARGES AND EXPENSES. YOU CAN FIND THIS AND OTHER INFORMATION IN EACH as options and futures, which can be illiquid, may disproportionately increase losses, and have a potentially PROSPECTUS, AND SUMMARY PROSPECTUS, IF AVAILABLE, AT WWW.LEGGMASON.COM. large impact on Fund performance. PLEASE READ THE PROSPECTUS CAREFULLY.
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