real assets, real returns: global real estate ... · real assets, real returns: global real estate,...

REAL ASSETS, REAL RETURNS: Global Real Estate, Infrastructure and Farmland

CFA Society Toronto & CAIA Association

June 16, 2015 1

REAL ASSETS, REAL RETURNS

Global Real Estate, Infrastructure and Farmland

Catherine Marshall, CFA Vice Chair

Risk Management & Alternative Investments

CFA Society Toronto

Jon Brorson, CFAManaging Director

Mesirow Financial

Agriculture Management

Jim Clayton, Ph.D.Head of Investment Strategy & Analytics

Cornerstone Real Estate Advisers

Ryan Bisch, CAIADirector, Private Markets

Ontario Power Generation

Real Assets, Real Returns: Global Real Estate, Infrastructure and Farmland

Catherine Ann MarshallCFA, M.A. (econ)

Real Assets Investment Consultant



June 16, 2015 2

Canadian Real Estate – Yield in all Markets

Global Infrastructure - Yield in all Markets



June 16, 2015 3

Agricultural Total Returns – Never a Negative Year

5

Comparative Return Performance

6

Source: NCREIF, MSCI



June 16, 2015 4





CFA Society Toronto


Mesirow Financial






Presented to:

CFA Society Toronto & CAIA June 16, 2015

Jim ClaytonHead of Investment Strategy & Analytics

Setting the Stage …

Real Assets, Real Returns:

Global Real Estate,

Infrastructure & Farmland



June 16, 2015 5

Real Estate in a Mixed Asset Portfolio

Stocks

Real Estate

Bonds

T-bills

Private REREITs

Focusing on Real Estate (Private and REITs)

Expected Return

RiskRISK

Asset Class and “Risk Buckets” Approaches to Asset Allocation

Liquidity Inflation

HedgeIlliquid Market Risk

TIPs

Real Assets

Confidential

The Expanding & Evolving Global Real Estate Universe

MSCI/IPD Coverage of “Private/Unlisted” Real Estate

4.9%



June 16, 2015 6

1 Year and 5 Year Annualized Country-Specific Real Estate Index Returns (%)

Real Estate Performance Around the World

Source: Cornerstone, MSCI/IPD (April 2015).

0

2

4

6

8

10

12

14

16

18

20 2014 annual total return 5 year annualized total retun

Agriculture Management: Compelling Benefits and Key ChallengesPresentation to CFA Society Toronto & CAIA Association

June 16, 2015

Jon D. Brorson, CFAManaging DirectorHead of Portfolio Management



June 16, 2015 7

13

Income and Appreciation Contribute to Return

*Performance information is based on National Council of Real Estate Investment Fiduciaries (“NCREIF”) data. Inception for the NCREIF Farmland Property Index is Q4 1990.

Annualized Performance Since Inception – 24 Years*

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

Total Farmland Annual Cropland Permanent Cropland

Income

Appreciation

14

Low or Negative Correlation to Financial and

Other Real Assets

* Equities represented by the S&P 500 Index. Farmland represented by the NCREIF Farmland Index. U.S. bonds represented by the BarCap US Aggregate Bond Index. Hedge funds represented by the HFRI Equity Hedge (Total) Index. U.S. Dollar is the price-adjusted, broad dollar index from the Federal Reserve System. Real estate represented by the NCREIF Total Property Index. For the 20-year period ended December 31, 2014. Please refer to the disclaimer page at the end of this presentation for important additional information.

Correlation of Farmland to Other Financial Instrume nts 1994-2014 *

-0.3 -0.2 -0.1 0.0 0.1 0.2 0.3 0.4 0.5 0.6 0.7 0.8 0.9 1.0

Equities Bonds Hedge Funds U.S. Dollar Real Estate



June 16, 2015 8

15

Attractive Risk/Return Profile

*Based on quarterly data for the 20-year period from December 31, 1994 to December 31, 2014. Equity performance represented by the S&P 500 Index. Farmland represented by the NCREIF Farmland Index. U.S. bonds represented by the BarCap US Aggregate Bond Index. Timberland represented by the NCREIF Timberland Index. Hedge funds represented by the HFRI Equity Hedge (Total) Index. Real estate represented by the NCREIF Total Property Index. Risk based on standard deviation for the same period. Past performance is not indicative of future results. Please refer to the disclaimer page at the end of this presentation for important additional information. Sources: NCREIF, Bloomberg, Hedge Fund Research, Inc.

Farmland

Bonds

Stocks

Cash

Timberland

Real Estate

Hedge Funds

0%

2%

4%

6%

8%

10%

12%

14%

0% 1% 2% 3% 4% 5% 6% 7% 8% 9%

Ret

urn

Risk

Risk/Return 1994-2014*

16

Farmland Sales Illinois Central Region A Quality

October 2013 – March 2014 *

Inefficient Farmland Market Provides

Attractive Opportunities� Properties can be acquired at steep discounts to market value and sold at a premium

*Represents 37 transactions. Source: Illinois Land Sales Bulletin

6,000

8,000

10,000

12,000

14,000

16,000

Oct-13 Nov-13 Dec-13 Jan-14 Feb-14 Mar-14

Pric

e P

er A

cre



June 16, 2015 9

17

Key Risk Factors for Agriculture Management

� Operational Risks– Soils

– Climate

– Water

– Pests & Disease

– Labor & Machinery

– Transportation

– Storage & Handling

� Economic Risks– Financing

– Currency

– Capital Controls

� Political Risks

– Legal/Contractual Obligations

– Regulatory

– Title

– Stability

– Environmental

� Investment Risks– Land Costs

– Interest Rates

– Fixed Costs

– Crop Insurance

– Tax Structure

18

Disclosure

Mesirow Financial Agriculture Management (“MFAM”) is an unregistered investment management division of Mesirow Financial Holdings, Inc. MFAM serves as an unregisteredinvestment advisor for limited partnerships. Partnerships, which MFAM serves as the investment manager, are only open to accredited investors.

Strategies referred to herein are offered through Mesirow Financial Agriculture Management, Mesirow Financial Alternative Investments, LLC (“MFAI”), Mesirow FinancialCommodities Management, LLC or Mesirow Financial Currency Management, all subsidiaries of Mesirow Financial Holdings, Inc.

The information contained herein is intended for accredited investors and is for informational purposes only. This information has been obtained from sources believed to bereliable, but is not necessarily complete and its accuracy cannot be guaranteed. Any opinions expressed are subject to change without notice. It should not be assumed that anyrecommendations incorporated herein will be profitable or will equal past performance. Performance information that is provided gross of fees does not reflect the deduction ofmanagement and/or incentive fees. Client returns will be reduced by such fees and other expenses that may be incurred in the management of this account. Mesirow Financialdoes not render tax or legal advice. Nothing contained herein constitutes an offer to sell or a solicitation of an offer to buy an interest in any Mesirow Financial investmentvehicle(s). Any offer can only be made to accredited investors and through the appropriate Offering Memorandum. The Memorandum contains important information concerningrisk factors and other material aspects of the investment and should be read carefully before an investment decision is made. This communication may contain privileged and/orconfidential information. It is intended solely for the use of the addressee. If this information was received in error, you are strictly prohibited from disclosing, copying, distributingor using any of this information and are requested to contact the sender immediately and destroy the material in its entirety, whether electronic or hardcopy.

Performance referenced herein prior to June 2011, the date that the Agriculture Management team of AgraShares, LLC joined Mesirow Financial, occurred at prior firms.Performance referenced is based on the weighted average comprised of AgraShares Fund I, II and III.

eVestment Alliance provides web based investment information and analytic technology.

Comparisons to any indices referenced herein are for illustrative purposes only and are not meant to imply that a strategy’s returns or volatility will be similar to the indices. Thestrategy is compared to the indices because they are widely used performance benchmarks.

The NCREIF Farmland Index is a quarterly time series composite return measure of investment performance of a large pool of individual agricultural properties acquired in theprivate market for investment purposes only. All properties in the Farmland Index have been acquired, at least in part, on behalf of tax-exempt institutional investors - the greatmajority being pension funds. As such, all properties are held in a fiduciary environment. The S&P 500 is widely regarded as the best single gauge of the U.S. equities market,this world-renowned index includes 500 leading companies in leading industries of the U.S. economy. The Barclays Capital Aggregate Bond Index covers the USD-denominated,investment-grade, fixed-rate, taxable bond market of SEC-registered securities. The NCREIF Property Index is a quarterly time series composite total rate of return measure ofinvestment performance of a very large pool of individual commercial real estate properties acquired in the private market for investment purposes only. All properties in theNCREIF Property Index have been acquired, at least in part, on behalf of tax-exempt institutional investors - the great majority being pension funds. As such, all properties areheld in a fiduciary environment. The HFRI Equity Hedge (Total) Index is an equal-weighted index including over 2000 constituent funds. All funds are reported net of fees on amonthly basis and have at least $50 million under management or have been actively trading for at least 12 consecutive months. The NCREIF Timberland Index is a quarterlytime series composite return measure of investment performance of a large pool of individual timber properties acquired in the private market for investment purposes only.

The Seventh Federal Reserve District encompasses the northern portions of Illinois and Indiana, southern Wisconsin, the Lower Peninsula of Michigan, and the state of Iowa.Quarterly, the Federal Reserve Bank of Chicago surveys over 200 agricultural banks within this district to determine the value of “good” farmland for the region.

The fund referenced in this document is not yet formed. The list of potential terms is designed to convey current manager consideration of potential terms and to seek potentialinvestor input into the terms which investors may be interested in investing. These terms are not finalized and may be materially different when the Fund is offered to investors,including target returns. Furthermore, the Summary does not contain all of the information and risk factors that would be important to an investor in making an investmentdecision and is not an offer to sell a security or the solicitation of an offer to buy a security. Investors should not make the decision to invest in the Fund until receiving andreviewing the official offering memorandum and subscription documents. If there is a conflict between the terms set forth above and the official Fund offering memorandum andsubscription documents, the offering memorandum and subscription documents will control. This summary and its contents are strictly confidential.

Mesirow Financial refers to Mesirow Financial Holdings, Inc. and its divisions, subsidiaries and affiliates. The Mesirow Financial name and logo are registered service marks ofMesirow Financial Holdings, Inc., © 2015, Mesirow Financial Holdings, Inc. All rights reserved. Investment management services provided through Mesirow Financial InvestmentManagement, Inc., a SEC-registered investment advisor.



June 16, 2015 10

19

353 North Clark Street

Chicago, Illinois 60654

Investment Management Global Markets Insurance Services

Consulting

mesirowfinancial.com





CFA Society Toronto


Mesirow Financial






real assets, real returns: global real estate ... · real assets, real returns: global real estate,...

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