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CBRE Group, Inc. is the world’s largest commercial real estate services and investment firm, with 2020 revenues of $23.8 billion and more than 100,000 employees (excluding affiliate offices). CBRE has been included on the Fortune 500 since 2008, ranking #128 in 2020. It also has been voted the industry’s top brand by the Lipsey Company for 20 consecutive years, and has been named one of Fortune’s “Most Admired Companies” for nine years in a row, including being ranked number one in the real estate sector in 2021, for the third consecutive year. Its shares trade on the New York Stock Exchange under the symbol “CBRE.”

CBRE offers a broad range of integrated services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services.


CBRE Global Investors, combined with CBRE Clarion Securities and CBRE Caledon, is one of the world’s leading real asset investment managers with $122.7 billion in assets under management.

Built up over more than 40 years, our unparalleled platform is focused on real assets, giving our institutional clients access to real estate and infrastructure in the Americas, Europe and Asia Pacific. Our clients benefit from a complete range of investment solutions including equity and debt, direct and indirect, and listed and unlisted strategies.

Trammell Crow Company, founded in Dallas, Texas in 1948, is one of the nation’s oldest and most prolific developers of, and investors in, commercial real estate.The CBRE Global Investors and Trammell Crow Company platforms make up the Real Estate Investments division of CBRE Group.

The Real Estate Investments division is led by
Mike Lafitte, Global CEO, Real Estate Investments.


Regularly released content on the state of the real estate and infrastructure industry are produced by our subject matter experts and shared on their blogs. A selection of them can be found below.

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A Case for Investing
Jeremy Anagnos, CFA
Chief Investment Officer – Infrastructure

Listed infrastructure appeals to investors in many ways. It has a history ofattractive returns and volatility; providing an increased level of transparencyand liquidity versus private-market investments. Its yields support aninvestment outcome that often rises with inflation. Listed Infrastructure’s total return is anchored by predictable cashflows and attractive dividends.In a sign that investors see global infrastructure as a distinct and separateasset class that deserves an allocation within a broadly diversified portfolio, Morningstar added infrastructure as a separate mutual fund category as of April 2016.


Listed infrastructure is often part of an allocation to global equitiesor real assets. In our experience, it’s particularly popular among thefollowing types of investors:

  • Investors with an Allocation to Real Assets

Like other real assets, global infrastructure assets are tangible,physical assets that provide a real return that often rises with inflation.

  • Investors who Seek Attractive Income

The dividend yields on listed infrastructure are higher than thoseof global stocks and bonds. The dividend yield has served as ananchor to the historical total return of listed infrastructure.

  • Investors Seeking Competitive Risk-Adjusted Returns

Listed infrastructure has historically had less volatility than equities.The asset class seeks to provide investors with an attractivecombination of stability, income, and growth, which may enhancethe risk-adjusted return potential of a mixed asset portfolio.


The Benefits of Listed Infrastructure in a Mixed-Asset Portfolio

Jeremy Anagnos, CFA, Chief Investment Officer – Infrastructure, reviews how global listed infrastructure complements a mixed-asset portfolio.

Global infrastructure provides the structuresand systems that are essential for society tofunction. It consists of physical assets that arecostly and difficult to replace. Such assets oftenbenefit from monopolies and inelastic demand,which are sources of their ability to providestable cashflows over long periods of time.This means global infrastructure is less affectedby economic cycles than other investments.Government regulation and oversight often limitscompetition to global infrastructure providers.


Examples of Global Infrastucture Assets:

• Communications: Fixed-line networks, satellites, wireless towers

• Oil and Gas Transport and Storage: Gathering and processing facilities, liquid terminals, LNG facilities, long-haulpipelines

• Transportation: Airports, ports, railroads, toll roads

• Utilities: Electric distribution, electrictransmission lines, gas distributionpipelines, renewable energy facilities, water distribution systems

Global infrastructure investment needs are significant.More than $57 trillion is needed to fund global infrastructure projects in the coming years.

The wealth of global infrastructure opportunitieshas expanded greatly over the past 20 years, asgovernments have increased the private sector’srole. The core infrastructure universe identifiedby CBRE Clarion has grown from about $400billion in 1995 to $3.7 trillion in 2017 (Exhibit1). Core infrastructure companies are definedas companies that own long-duration globalinfrastructure assets with a stable demandprofile and low volatility of cashflows. Thesecompanies can be identified through an analysisof underlying assets, business models, andinvestment characteristics.

More than $57 trillion1is needed to fund globalinfrastructure projects in the coming years.This suggests that there’ll be a good supply ofattractive projects in regions that range fromdeveloped to emerging-market countries. This islikely to encourage the continued rise of globalinfrastructure as anasset class.

Exhibit 1:Listed Infrastructure Market Growth
Source: UBS Global Infrastructure & Utilities 50-50 Index as of 12/31/1995 and CBRE Clarion Investable Universe as of12/31/2017.
Attractive Historical Returns


Listed infrastructure has historically providedattractive returns with less volatility than stocks.Looking strictly at returns, it outperformed globalstocks and global bonds.

Over a 20 year period, the annualized totalreturn of listed infrastructure was 8.2% vs. 6.9%and 4.6% for global stocks and global bonds,respectively.

Historically,global infrastructure has provided attractive returns anchored by consistent and rising levels of dividend income.
Exhibit 2:Listed Infrastructure has a History of Strong Out performance

Source: CBRE Clarion as of 12/31/2017.

Attractive Yields

Listed infrastructure’s returns come partly fromappreciation from rising investment and partlyfrom dividend yields. Listed infrastructure’sdividend yields are greater than those of global

stocks and bonds. Dividends have accounted for approximately 50% of the total return of listed infrastructure over the past decade (Exhibit 3).
Exhibit 3: Dividend Yields Provide a Strong Source of Total Return

Stable Earnings

Listed infrastructure historically has generatedrelatively predictable and rising cashflows acrossmarket cycles, as in the period 2001 to the present(Exhibit 4). Listed infrastructure’s relatively stableand predictable cashflows rest partly on the long-lived contractual revenue streams that make theyields on this asset class attractive.

Moreover, demand for the essential servicesprovided by global infrastructure may remainstable regardless of economic weakness. As aresult, listed infrastructure’s cashflows are lessvulnerable tofluctuations caused by unexpectedworld events.

Global infrastructure provides investors with stable and resilient cash flows that are less vulnerable to fluctuations caused by unexpected world events.
Exhibit 4: Listed Infrastructure May Provide Stable and Rising Cash Flows

Listed infrastructure cashflows and dividendsbenefit from contractually driven, inflation-linked revenue growth, which may provide along-term hedge against inflation and risinginterest rates. For example, toll road assets mayoffer inflation protection because long-termcontracts typically tie fees explicitly to inflation.In other instances, such as regulated utilitiesin the U.K. and Italy, returns are set basedon real returns, rather than nominal returns,again allowing for a direct link to inflation.

In addition to inflation-linked revenue, globalinfrastructure companies grow revenuesand income through capital expendituresto upgrade, improve, or enhance existinginfrastructure. Such spending offers them anopportunity to earn a rate of return on theseinvestments in excess of their cost of capital,and drives cashflow growth. Regulatorstypically establish the rate of return such listedinfrastructure companies can earn on theircapital investments, which has typically beenhigher than the companies’ cost of capital.

Exhibit 5: Inflation Protection a Hallmark of Infrastructure Assets2

Source: FTSE Global Core Infrastructure Index 50/50 as of 12/31/2016.

Global infrastructure’shistorical returns look even more attractive when you look at the asset class’ historical volatility and compare it with other types of stocks.
Lower Historical Volatility than Other Major Equity Investments

Listed infrastructure’s historical returns look evenmore attractive when you look at the asset class’historical volatility and compare it with other typesof stocks. As measured by standard deviation,listed infrastructure was significantly less volatilethan other major equity investments, includingU.S. large-cap stocks (Exhibit 6).

Portfolio Diversification

Historically, listed infrastructure has contributed to portfolio diversification and portfolio-level risk-adjusted returns. The global universe oflisted infrastructure securities includes a diverse opportunity set of industry sectors that are affected by the economic conditions, regulatory trends, and supply/demand dynamics that are unique to the local markets and sectors in which they operate. As a result, there has historically been a wide disparity of returns generated across the listed infrastructure sectors (Exhibit 7). The gap between the returns for the top-performing and the bottom – performing sectors has exceeded 2500 basis points (30 percent) in the five years from 2013 through 2017. For example, airports returned 36.4 percent vs. -6.5 percent for midstream/pipelines in 2017. The range of total return out comes may further enhance an active manager’s ability to generate attractive total returns while mitigating risk.

Exhibit 6Listed Infrastructure May Provide Less Volatility than Major Asset Classes
Standard deviation is calculated for the period beginning January 1,1997 and ending December 31, 2017.
Exhibit 7: Variability of Sector Performance Enhances Portfolio Diversification and CreatesOpportunities for Active Management

Index data prior to 2015 is represented by UBS Global Infrastructure & Utilities 50/50 Index; 2015 data is representedby UBS Global Infrastructure & Utilities 50/50 Index; beginning March 1, 2015, FTSE Global Core Infrastructure 50/50Index – net of withholding tax as of 12/31/2017 in USD. Data represent annual returns for sectors defined by CBREClarion, based on constituents of the FTSE Global Core Infrastructure 50/50 Index and Alerian MLP Index.

Attractive Risk-Adjusted Returns

The combination of attractive returns and lowervolatility means that listed infrastructure mayprovide stability and reduce portfolio risk aspart of a well-diversified portfolio. Adding listed



infrastructure, while reducing the allocation toglobal equities, may enhance a global portfolio’srisk-adjusted returns (Exhibit 8)

The combination of attractive returns and lower volatility suggests that global infrastructure should be a key component of a well-diversified portfolio.
Exhibit 8: Listed Infrastructure May Enhance a Portfolio’s Risk-Adjusted Return

All data is annualized and calculated for the period beginning January 1, 2003 and ending December 31, 2017 GlobalBonds: Barclays Global Aggregate Bond Index, Global Equities: S&P Developed BMI Index, Global Infrastructure: UBS GlobalInfrastructure & Utilities 50/50 Index; beginning March 1, 2015, FTSE Global Core Infrastructure 50/50 Index. All indices arehedged to USD.


The historical combination of attractive returnsand lower volatility than other equity investmentsmeans that listed infrastructure has producedattractive risk-adjusted returns. Investoracceptance of this growing asset class is gainingmomentum due to the risk-adjusted benefits to amixed asset portfolio. Investors also appreciate

the income and diversification potential of thisasset class, along with the transparency andliquidity of listed infrastructure. We welcomethe opportunity to share our capabilities atCBRE Clarion Securities for investment into thisattractive asset class


©2018CBRE Clarion Securities LLC. All rights reserved. The views expressed represent the opinions of CBREClarion which are subject to change and are not intended as a forecast or guarantee of future results. Statedinformation is provided for informational purposes only, and should not be perceived as investment adviceor a recommendation for any security. It is derived from proprietary and non-proprietary sources which havenot been independently verified for accuracy or completeness. While CBRE Clarion believes the information tobe accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability.Statements of future expectations, estimates, projections, and other forward-looking statements are based onavailable information and management’s view as of the time of these statements. Accordingly, such statementsare inherently speculative as they are based on assumptions which may involve known and unknown risks anduncertainties. Actual results, performance or events may differ materially from those expressed or implied in suchstatements.

Past performance of various investment strategies, sectors, vehicles and indices are not indicative of future results .Investing in infrastructure securities involves risk including to potential loss of principal. Infrastructureequities are subject to risks similar to those associated with the direct ownership of infrastructure assets. Portfoliosconcentrated in infrastructure securities may experience price volatility and other risks associated with non-diversification. While equities may offer the potential for greater long-term growth than some debt securities,they generally have higher volatility. International investments may involve risk of capital loss from unfavorablefluctuation in currency values, from differences in generally accepted accounting principles, or from economic orpolitical instability in other nations. There is no guarantee that risk can be managed successfully. There are noassurances performance will match or outperform any particular benchmark. Indices are unmanaged and notavailable for direct investment.

1Dobbs, R., Pohl, H., et al. (January 2013), “Infrastructure Productivity: How to Save $1 Trillion a Year”,McKinsey Global Institute, © McKinsey & Company. http://www.mckinsey.com/insights/engineering_construction/infrastructure_productivity.

2“Explicit Inflation Pass Through” includes companies with the ability to offset higher costs through revenuesthat rise in tandem with inflation, over a relatively short timeframe. “Implicit Inflation Pass Through” applies tocompanies with revenues that rise with inflation over a longer timeframe. “Market Based Monopolistic” categoryapplies to companies who have dominant pricing power in their sectors, whereas Market Based Competitiveapplies to those with less pricing power. Companies that havefixed escalators in their contracts are grouped inthe “Escalators” category and are deemed to have the least inflation protection.

The U.S. Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urbanconsumers for a market basket of consumer goods and services.

The Barclays Global Aggregate Index provides a broad-based measure of the global investment gradefixed-ratedebt markets. The Global Aggregate Index contains three major components: the U.S. Aggregate (USD 300mn),the Pan-European Aggregate (EUR 300mn), and the Asian-Pacific Aggregate Index (JPY 35bn). In addition tosecurities from these three benchmarks (94.0% of the overall Global Aggregate market value as of December31, 2010), the Global Aggregate Index includes Global Treasury, Eurodollar (USD 300mn), Euro-Yen (JPY 25bn),Canadian (USD 300mn equivalent), and Investment Grade 144A (USD 300mn) index-eligible securities notalready in the three regional aggregate indices. The Global Aggregate Index family includes a wide range ofstandard and customized subindices by liquidity constraint, sector, quality, and maturity. A component of theMultiverse Index, the Global Aggregate Index was created in 1999, with index history backfilled to January 1,1990.

The MSCI ACWI IMI Index captures large, mid and small cap representation across 23 Developed Markets(DM) and 23 Emerging Markets (EM) countries. With 8,622 constituents, the index is comprehensive, coveringapproximately 99% of the global equity investment opportunity set.The UBS Global Infrastructure & Utilities 50-50 Index is a derivative of the UBS Developed Infrastructure & UtilitiesIndex. The infrastructure sector and the utilities sector each have a 50% weighting in terms of free-float marketcapitalization, which removes the skew towards utilities found in the UBS Developed Infrastructure & UtilitiesIndex. Constituents of the index are all listed in developed markets.

The FTSE Global Core Infrastructure 50/50 Index gives participants an industry-defined interpretation ofinfrastructure and adjusts the exposure to certain infrastructure sub-sectors. The constituent weights for theseindices are adjusted as part of the semi-annual review according to three broad industry sectors – 50% Utilities,30% Transportation including capping of 7.5% for railroads/railways and a 20% mix of other sectors includingpipelines, satellites and telecommunication towers. Company weights within each group are adjusted in proportionto their investable market capitalization.

The S&P Global BMI (Broad Market Index), which comprises the S&P Developed BMI and S&P Emerging BMI, isa comprehensive, rules-based index measuring global stock market performance. It represents the only globalindex suite with a transparent, modular structure that has been fullyfloat adjusted since its inception in 1989. TheS&P Developed BMI is a comprehensive benchmark including stocks from 25 developed markets.

Risk Statistic Definitions: Standard Deviation is a statistical measure of the historical volatility of the portfolio.Sharpe Ratio is a risk-adjusted measure calculated using standard deviation and excess return to determinereward per unit of risk. Dividend yield is the yield a company pays out to its shareholders in the form of dividends.It is calculated by taking the amount of dividends paid per share over the course of a year and dividing by thestock’s price. PA12312017