Portfolio composition has evolved over the past years in response to the needs of investors and changing market conditions, including volatility, yield expectations and correlation risks. Commercial real estate may serve an integral role in diversifying* investor portfolios while providing a source of income and attractive risk-adjusted returns.

Strong Historical Performance

Real estate’s strong historical performance may provide a measure of reassurance to investors who consider adding this asset class to their portfolios. Commercial real estate has outpaced traditional asset classes over the past 20 years, delivering a 9.2% annualized total return and surpassing the returns on stocks and bonds over the same period.

HistoricalPerformance 2.0% 6.2% 7.2% 9.2% HISTORICAL RETURN COMPARISON 1 1997-2017 RealEstate(Private) CorporateBonds Stocks T-Bills


Commercial real estate has historically delivered higher income returns and those returns are typically derived from a diverse* portfolio of properties, tenants of various sizes, in multiple industries and with staggered lease expirations.

Income 4.0% 5.5% 6.3% AVERAGE ANNUAL INCOME RETURNS 2 1997-2017 RealEstate(Private) PublicREITs Bonds 2.0% Equities SeniorWholeLoans 6.7%

Lower Correlation

By including lower-correlated assets in a diversified* portfolio such as CRE securities, CRE debt and CRE equity, investors may be able to reduce portfolio risk compared to a portfolio exclusively comprised of correlated assets such as stocks and bonds.

CorrelationChart Direct RealEstate S&P500 SeniorWholeLoans US BarclaysAggregate Barclays IGCMBS 1.00 0.79 0.80 0.11 (0.08) 0.79 0.80 0.11 (0.08) 1.00 0.10 0.26 1.00 0.20 1.00 Senior Whole Loans 3 US Barclays Aggregate 4 Barclays IG CMBS 5 Direct Real Estate 6 S&P 500 7

Inflation Hedge

Hard assets such as commercial real estate have generally performed well during periods of high inflation. Floating rate loans and overall property rental growth may provide a strong inflation hedge.

Inflation Chart REAL ESTATE INCOME AND INFLATION 8 1995 - 2017 200 175 150 125 100 75 1995 1997 1999 2001 2003 2005 2007 2009 2011 2013 2015 2017 Real estate net operating income U.S.CPI

Risk-Adjusted Returns

Allocations to commercial real estate and real estate-related investments have historically generated attractive returns and may lower return volatility in a multi-asset portfolio.

Risk-adjusted chart ANNUALIZED RISK AND TOTAL RETURN 9 1997-2017 Return 10% 9% 8% 7% 6% 5% 4% 0% 5% 10% 15% 20% 25% Risk (measured by standard deviation) High Low Equity Real Estate Senior Whole Loans CMBS U.S. Stocks Equity REITs Corporate Bonds Government Bonds


Although CCREI is a “non-diversified” investment company within the meaning of the 1940 Act, the fund seeks to invest in a variety of asset types, property types and geographic locations.


NCREIF, Standard & Poor’s, Citigroup, Federal Reserve. Real Estate (Private) is represented by the NCREIF ODCE gross total returns. NCREIF ODCE data reflects the returns of diversified, core, open-end funds including leverage and fund expenses, but excluding management and advisory fees. Stocks are represented by the S&P 500 Index and are subject to market risk. Corporate Bonds are represented by the Citigroup Broad Investment Grade Corporate Bond Index and are subject to credit risk. T-bills are represented by the U.S. Government 90-day T-bill and are subject to interest rate risk. Government bonds and Treasury Bills are guaranteed as to the timely payment of principal and interest. Indices are meant to illustrate general market performance; it is not possible to invest directly in an index. The indices presented represent investments that have material differences from an investment in non-traded investment programs such as real estate investment trusts, business development companies and closed-end funds (including interval funds), including those related to investment objectives, risks, fees and expenses, liquidity and tax treatment. Past performance is no guarantee of future results.


Source: Bloomberg, NCREIF and NAREIT. Life Comps for Fixed Rate Whole Commercial Mortgages. Private real estate is represented by the NCREIF Open-End Diversified Core (ODCE) Index, an equal weighted, time weighted index representing a blended portfolio of institutional-quality real estate reported net of management and advisory fees (with the exception the commercial real estate income data shown, which is reported gross of management and advisory fees). Public REITs are represented by the FTSE NAREIT All Equity REITs Index, which is a free-float adjusted, market capitalization-weighted index of publicly traded U.S. Equity REITs. Constituents of the Index include all tax-qualified publicly traded REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property. Bonds are represented by the Barclays Capital Aggregate Bond Index, an index of securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. Bond income return is represented by the yield to worst of Bloomberg Barclays US Aggregate Bond Index. Equities are represented by the S&P 500 Index, an unmanaged index of the 500 largest stocks (in terms of market value), weighted by market capitalization and considered representative of the broad stock market. An investment in commercial real estate differs from the FTSE NAREIT All Equity REITs Index in that commercial real estate investments are not publicly traded U.S. Equity REITs; differs from the Barclays Capital Aggregate Bond Index in that commercial real estate investments are not fixed-rate debt instruments; and differs from the S&P 500 in that commercial real estate investments are not large-cap stocks.


LifeComps Commercial Mortgage Loan Index was created in 1997 for the US life insurance industry to serve as a benchmark for privately held commercial mortgage whole loans. The LifeComps portfolio consists of commercial mortgages owned by the nine major life insurance companies: Allstate Life Insurance, AXA Equitable, CIGNA, John Hancock, TIAA, Northwestern Mutual, Principal Financial, Prudential Insurance Company of America, Sun Life. As of 30 September 2017 the index encompassed 5,278 loans with a total balance of US$126.701 billion. LifeComps data is released quarterly, 60 days after the end of each quarter.


The Barclays U.S. Aggregate Bond Index represents securities that are U.S. domestic, taxable, dollar-denominated. The index covers the U.S. investment fixed-rate bond market, with index components for government and corporate securities, mortgage pass-through securities, and asset-backed securities.


The Barclays CMBS Index measures the performance of commercial mortgage-backed securities, which are classes of securities that represent interests in pools of commercial mortgages. The index includes only CMBS that are Employee Retirement Income Security Act of 1974, which will deem ERISA eligible the certificates with the first priority of principal repayment, as long as certain conditions are met, including the requirement that the certificates be rated in one of the three highest rating categories by Fitch, Inc., Moody’s Investors Services or Standard & Poor’s.


National Council of Real Estate Investment Fiduciaries (“NCREIF”) is a non-partisan collector, processor, validator and disseminator of real estate performance information. NCREIF produces three primary real estate indices, of which the NCREIF Property Index is one. The index is a quarterly times series composite total rate of return measure of investment performance for institutional grade real estate held in a fiduciary environment in the United States.


The S&P 500 is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries in the U.S.


Sources: Bureau of Labor Statistics, NCREIF. NCREIF data reflects the returns of a blended portfolio of institutional-quality real estate and does not reflect the use of leverage or the impact of management and advisory fees. Inflation is represented by the Consumer Price Index for all urban consumers. Real Estate Income is the same-store NOI series of quarterly real estate income change. It is based on properties included in the NCREIF Property Index.


Source: Life Comps for Fixed Rate Whole Commercial Mortgages; S&P 500 for U.S. stocks; Barclays US Aggregate Credit Index for Corporate Bonds; Bloomberg Barclays U.S. Treasury Index for government bonds; NFI-ODCE for Equity Real Estate; Barclays CMBS Investment Grade Index for CMBS; FTSE/NAREIT All Equity Reit Total Index for Equity REITs.