Courtland Partners, Ltd. | Institutional Real Asset Advisor
Los Angeles | Cleveland | London
Los Angeles Department of Water and Power Employees’ Retirement Plan
(“LADWP”) – Courtland Onsite Meeting
May 10, 2017
Courtland Partners, Ltd. | 1
Table of Contents
I. Courtland and LADWP Team Overview
II. Investment Philosophy and Portfolio Construction
III. Investment and Due Diligence Process
IV. Courtland Research Capabilities
Appendix: Courtland Biographies
Pg. 2
Pg. 21
Pg. 42
Pg. 53
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I. Courtland and LADWP Team Overview
Courtland Partners, Ltd. | 3
Courtland Overview
35 RETAINER
CLIENTS
$65B ASSETS UNDER ADVISEMENT*
20+ YEARS OF
EXPERIENCE
30+ EMPLOYEES
Founded in 1995 to serve as a fiduciary/advisor providing real estate consulting services with additional
competencies in infrastructure, timber, agriculture, and energy investments.
100% privately owned providing independent ownership.
Experienced leadership with diverse backgrounds (e.g., management, general consulting, research, legal,
compliance, accounting and reporting, and workout and valuation services).
A fiduciary first, no competing business lines, and minimal conflicts of interest.
Over $94 billion of investment commitments recommended since 2000.
Fiduciary First | Significant Investment Track Record | Experienced Leadership
*As of September 30, 2016.
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Professionals Located Across the U.S. and London
Los Angeles
Cleveland New York
Philadelphia
London United States
Europe
Courtland Office
Courtland Employee
San Francisco
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Courtland Organizational Chart – Consulting and PMR
*Denotes Investment Committee Member
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Courtland Organizational Chart – Administrative
Courtland Partners, Ltd. | 7
Courtland Firm Management and Ownership
Courtland has effectively managed the passing of Michael Humphrey by: • Michael Humphrey passed away on November 29, 2016.
• Senior Courtland personnel notified clients by phone on November 30th and December 1st.
• Courtland released the news to the press and others on December 1st and December 2nd.
• Steven Novick was appointed the Managing Principal of Courtland and now has decision making authority for
day-to-day operations.
• Steven Novick is supported by the Courtland Management Committee, which is comprised of Steven Novick,
Michael Murphy, Gianluca Romano, and Andrew Mitro.
Courtland has not had any changes in personnel.
Courtland has recently had its contract extended with a number of clients and Courtland
Partners Europe recently signed its first client.
Courtland was recently informed that it was selected for an international mandate after a
significant RFP process.
Courtland experienced no stoppage or delay in client service. Normal operations continued.
Courtland Firm Ownership: • Michael Humphrey’s majority share is now held by his estate, which is being advised by counsel.
• The Courtland ownership expansion plan outlined by Michael Humphrey in a November 2016 PERE article is
in the process of being implemented.
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Courtland Firm Decision Making Process
Courtland Management Committee:
• Prior to his passing, Michael Humphrey was in the process of establishing the Management Committee.
• The Management Committee has been put in place, in line with Michael Humphrey’s expectations.
• The Management Committee is comprised of Courtland’s most senior personnel: Steven Novick, Michael
Murphy, Gianluca Romano, and Andrew Mitro.
• All firm management, including human resources, corporate management, and other day-to-day
management needs are provided by the members of the Management Committee.
• Within the Management Committee, Steven Novick is the Managing Principal and has the ultimate
decision making authority for day-to-day operations.
Courtland Investment Committee:
• The Investment Committee is in charge of approving all recommendations issued to clients. The
Investment Committee ensures the consistency and quality of client recommendations.
• Prior to Michael Humphrey’s passing, the Investment Committee was comprised of Michael Humphrey,
Steven Novick, and Michael Murphy.
• The Investment Committee is now comprised of Steven Novick, Michael Murphy, Andrew Mitro, and
Thomas Hester.
• The processes and procedures have remained consistent since its inception.
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LADWP Primary Courtland Team
Name Title/ Office Location Consulting Role Experience
Thomas Hester Senior Vice President*/
Los Angeles
Co-Lead Consultant, Strategy
Development and Implementation,
Investments Due Diligence
31 Years of Real Asset and Investment Experience
Courtland Partners (1 year)
Experience: Mesa West, E&Y, and McMahan Group
B.S. San Diego University
Marc Rivitz Senior Vice President/
Cleveland
Co-Lead Consultant, Strategy
Development and Implementation,
Investments Due Diligence
14 Years of Investment and Real Asset Experience
Courtland Partners (9 years); Latin American Specialist
Experience: Tishman Speyer and Trammell Crow
B.A. Cornell University
M.B.A. University of Chicago
Jacqueline Smith
Analyst and Compliance
Associate /
Los Angeles
Investment Due Diligence,
Consulting Support
4 Years of Real Estate and Legal Experience
Courtland Partners (3 years)
B.S. Miami University of Ohio
J.D. University of Miami
Catherine Butler Senior Analyst/ Cleveland Performance Measurement
Reporting
16 Years of Investment Reporting and Accounting Experience
Courtland Partners (16 years)
B.A. Miami University of Ohio
M.A. Western Michigan University
Shilpa Manda Analyst/ Cleveland Performance Measurement
Reporting
8 Year of Investment Reporting and Accounting Experience
Courtland Partners (5 years)
LanderNorth Asset Management
B.S. Pune University (India)
M.S. Pune University (India)
M.B.A. Cleveland State Univer
*Indicates a member of Courtland’s Investment Committee.
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LADWP Additional Team Resources
Name Title/ Office Location Consulting Role Experience
Steve Novick Managing Principal*/
Philadelphia
Strategy Oversight and
Quality Assurance, Lead
Consultant Back-up
38 Years of Real Asset and Investment Experience
Courtland Partners (14 years)
Experience: Integrated Resources and Urdang
B.S. Long Island University
C.P.M. Institute of Real Estate Management
Andrew Mitro Vice President*/
Cleveland
Investment Manager
Databases, Due Diligence
Back-up
8 Years of Investment and Real Asset Experience
Courtland Partners (8 years)
B.A. The Ohio State University
M.B.A Case Western Reserve University (expected completion May 2018)
Gianluca Romano Managing Director/
London
European Investment Due
Diligence
24 Years of Investment and Real Asset Experience
Courtland Partners (3 years)
Experience: Morgan Stanley, ABN AMRO, Vision Consulting, Boston
Venture, KPMG
A.B. Duke University
Masters Miami University of Ohio and University of Amsterdam
Susan Yelin
Director of Performance
Measurement Reporting
/ Cleveland
Performance Measurement
Reporting and
Benchmarking Ad-Hoc
Requests
30 Years of Investment Reporting and Accounting Experience
Courtland Partners (9 years)
Experience: Xerox Corporation, Triumph International, Changhwa
Commercial Bank
B.B.A. National Taiwan University
M.B.A. University of Washington
Anthony Fragapane Senior Vice President/
Cleveland
Strategy Development and
Implementation,
Investments Due
Diligence
22+ Years of Investment and Real Asset Experience
Courtland Partners (1 year)
Experience: Farragut Investments, Dana Credit Corporation
B.A. University of Toledo
M.B.A. Bowling Green State University
Mitchell Bolligner Head of Research/
Cleveland
Research, Due Diligence,
and Benchmarking
12 Years of Real Estate and Finance Experience
Courtland Partners (<1 year)
Experience: KBS Realty Advisors and CMBS Advisory
B.S. Virginia Tech
M.B.A. Vanderbilt University
*Indicates a member of Courtland’s Investment Committee.
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Courtland has 35 retainer client relationships,
including both discretionary and non-discretionary
relationships.
Over $65 billion of retainer client capital under
advisory as of September 30, 2016.
In addition to the retainer clients, Courtland has
project-based relationships with CalSTRS, CalPERS,
an Asian pension fund, a Finnish pension fund, a
German pension fund, and a number of U.S.-based
pension funds.
Courtland Clients
Public Pension Plans
• CalSTRS
• CalPERS
• New York City Retirement Systems
• North Carolina Retirement Systems
• Washington State Investment Board
• State of Wisconsin Investment Board
• Los Angeles Department of Water and Power
• Pennsylvania Public School Employees’ Ret. System
• West Virginia Investment Management Board
• Illinois State Teachers Retirement System
• Hawaii Employees’ Retirement System
• Texas Municipal Retirement System
Corporate, Healthcare, Foundations, Endowments
• Fortune 100 Fund (Texas)
• Fortune 100 Fund (New Jersey)
• Fortune 500 Fund (Virginia)
Non-U.S. Clients
• French Insurance Company
• Asian Sovereign Fund
• German Pension Fund
• Finnish Pension Fund
• Australian Pension Fund
• Japanese Bank
Representative Client List
44%
27%
29%
Public Pension Fund
Union Pension Fund
Corporate Pension Fund
Retainer Client Breakdown
(number of clients)
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Courtland Client Tenure
The following chart displays the length of time each Courtland retainer client has been with the
firm.
Over 28% of the retainer clients have been with the firm for over ten years and over 68% have been
with the firm over five years.
11
14
6
4
0
2
4
6
8
10
12
14
16
0-5 Years 5-10 Years 10-15 Years 15 Years+
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Recommended Investment Profile
(Geography)
Allocation Percent
United States 52.5 Bil. 55.4%
Global & International 42.2 Bil. 44.6%
Total $94.7 Bil. 100.0%
Approximately $95 Billion of Investment Activity Since 2000
Recommended Investment Profile
(Global & International)
Allocation Percent
Global 31.4 Bil. 74.4%
Africa 0.05 Bil. 0.1%
Asia 3.1 Bil. 7.3%
Europe 5.1 Bil. 12.1%
Central and Latin
America 2.6 Bil. 6.2%
Total $42.2 Bil. 100.0%
Investment Experience
U.K.
France
Germany
Italy
Spain
Czech Republic
Poland
Russia
Hungary
Romania
Sweden
Finland
Norway
China
Australia
Singapore
Japan
Bulgaria
Turkey
South Korea
Thailand
Hong Kong
Vietnam
India
Mexico
Brazil
Colombia
Peru
Panama
Chile
Dominican Republic
South Africa
Over $42 Billion of Global & International Investment Experience
Note: Capital recommended as of February 28, 2017. Figures may not total due to rounding.
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Recommended Investment Profile
(Investment Vehicle)
Investment
Capital
Number of
Investments
Closed-End Funds 49.1 Bil. 707
Operating Companies
(REOC) 16.5 Bil. 42
Open-End Funds 11.9 Bil. 148
Separate Accounts 9.7 Bil. 43
Securities 2.9 Bil. 20
Joint Ventures 3.1 Bil. 23
Co-Investments 1.4 Bil. 23
Total $94.7 Bil. 1,006
Real estate equity and debt investment activity across a wide variety of
investment vehicles …
Investment Experience
Apartment
Office
Industrial
Retail
Medical Office
Self-Storage
Student/ Senior/ Single Family
Housing
Agriculture/ Timber
Infrastructure
Manufactured Housing
…in both traditional and non-traditional real estate sectors
Note: Capital recommended as of February 28, 2017. Figures may not total due to rounding.
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Courtland Services Summary
Serving as an extension of staff
Developing long-term strategic plans and annual
tactical plans
Constructing real estate and real asset portfolios
Developing and/or reviewing investment policy
statements
Sourcing investment opportunities
Performing investment strategy and operational
due diligence
Recommending investments
Monitoring and reporting on client investment
performance
Conducting trustee and board education
seminars
Completing special assignments
Extensive
Experience and Market Knowledge
Independent, Conflict-Free
Platform
Trusted Advisor
Over $65 billion of assets under
advisement
Over $94 billion of investment
recommendations
30+ employees in Cleveland, London,
Los Angeles, New York, Philadelphia,
and San Francisco
Fiduciary first with no new products
(e.g., fund of funds, co-investment
funds)
20+ years of serving institutional
clients as a trusted fiduciary
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Courtland Performance Measurement Team:
• Eight team members
• Firm-wide support
Performance Measurement:
• Calculate investment performance internally on a
quarterly basis, including both time-weighted
returns and IRR calculations at the investment and
portfolio level
• Currently provide approximately 30 customized
quarterly performance reports
• Reports customized based on client preferences
• Reports provide manager fee and benchmark
reviews
Performance Measurement Reporting
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Customized Performance Reporting
Courtland Performance Measurement Reporting Capabilities. Courtland has a team of financial
professionals generating approximately 30 performance measurement reports quarterly.
Customized Report Format. Courtland utilizes an Oracle Hyperion Essbase database for performance
measurement reporting. Using this Oracle Hyperion Essbase database allows Courtland to be able to
customize the performance measurement report to the individual needs of each client. The Courtland
performance measurement reports typically cover the following: investment allocation status; portfolio and
investment level dollar-weighted and time-weighted returns; risk guideline compliance review; manager fee
reviews; market conditions update; and individual investment summaries.
Portfolio Benchmarking. The Courtland performance measurement report provides a benchmark review
section, which provides comparisons to client designated benchmarks as well as other comparison
benchmarks, including the $700 billion gross asset value Courtland Partners Index.
Risk Guidelines Compliance. The Courtland performance measurement report provides a detailed
investment policy statement risk guideline compliance assessment including review of the following: sector
exposure, geographic exposure, and leverage.
Fee Review. The Courtland performance measurement report provides a review of the different manager
fees being charged to the client (e.g., management and incentive fees).
Cash Flow Statements. The Courtland performance measurement report provides cash flow statements at
the investment and total portfolio levels. These statements present the actual numbers upon which returns
are calculated.
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Courtland Competitive Advantages
Fiduciary Focus. Courtland is focused on being a fiduciary first to clients. The firm does not offer any services or products outside of
real asset investment consulting. As a result, all firm revenues are provided by firm clients. The firm does not accept compensation
from investment managers or other parties that may create potential client conflicts of interest.
Significant Investment Experience. Since 2000, Courtland has advised on over $94 billion in real asset (primarily real estate)
investments globally. Courtland has a reputation for working with clients with larger allocations utilizing many types of investment
vehicles (e.g., real estate operating company “REOCs”). As a result, Courtland has significant experience in assisting clients with a
number of direct investment structures, including separate accounts, REOCs, programmatic joint ventures, and co-investments.
Courtland also has significant experience regarding investment in public REIT securities, including preferred securities and REIT debt.
Real Estate Focus. Courtland began as a real estate advisory firm, which continues to be the firm’s primary focus. Additionally, the
firm has professionals with infrastructure, timber, and agriculture experience.
100% Privately Owned. Courtland is 100% privately owned and has been since inception in 1995. Courtland ownership will expand to
four active employees in the near term. Courtland’s ownership structure allows for the firm to focus exclusively on the consulting
clients and achieving the goals of firm clients without any concerns from shareholders or other ownership groups.
The Courtland Team. Courtland has over 30 employees with diverse backgrounds, including investment management, workout,
valuation, property management, development, legal, accounting, research, and brokerage. Senior firm professionals average over 20
years of real estate (or other real asset) and consulting experience.
Manager/Partner Sourcing. Courtland provides exposure to, and detailed evaluation of, a broad risk/return spectrum of real estate
investment opportunities and managers. Courtland annually has over 500 manager meetings and calls to review new investment
opportunities. Information provided through these meetings and other firm contacts is summarized in the Courtland Manager
Database. In addition, Courtland’s manager exposure provides an additional source of market intelligence beyond the usual research
services.
Asset-Level Focus and Multiple U.S. Locations. The Courtland team incorporates significant asset-level experience within the
senior team and underwrites investments down to the market and asset level. Courtland has senior team members located in major
markets (e.g., New York, San Francisco, London, and Los Angeles) attracting institutional investment.
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Courtland Competitive Advantages
Proprietary Tools. Courtland maintains three proprietary databases internally, including one to structure historical performance
information on real asset investment returns going back 40 plus years, as well as other comprehensive databases as summarized below.
• Courtland Partners Index (“CPI”) and Performance Measurement System. The CPI is a self-administered, proprietary database
of approximately $688 billion of real assets (mainly real estate) across 473 active investments, providing both time-weighted and dollar-
weighted gross and net performance returns dating to 1971. The CPI is updated quarterly and its returns are broken out by risk/return
profile (e.g., core, value, and opportunistic), providing the ability to assess client portfolio investments by risk/return level.
Furthermore, the CPI returns can be used to create customized benchmarks by manager, vintage year, geographic region, property
type, and investment type.
• Courtland Manager/Product Database. Courtland’s Manager/Product Database has been developed and maintained by the firm
since inception. It includes manager libraries incorporating RFP responses as well as due diligence, return performance and other
relevant market information, historical reports, marketing presentations, offering memorandums, subscription documents, and market
data.
• Courtland Investment Offerings Database. Courtland also maintains an Investment Offerings Database online, which is linked to
the Courtland website. This database includes over 650 summaries of current and historical potential client investments.
Experience With Large Institutional Investors. Courtland has provided consulting services to a number of large institutional investors,
including an Asian sovereign fund with over $300 billion of total assets, an Australian superannuation fund with over $70 billion of total
assets, a U.S. pension fund with over $100 billion of total assets, a European insurance company with over $450 billion of total assets, and
an Asian bank with over $100 billion of total assets. Courtland recently assisted a large public pension fund with the search and selection
of an investment manager to invest a separate account targeting office investments in New York, Boston, and Washington, D.C. Lastly,
Courtland is currently assisting a German pension fund with the selection of four separate account managers to invest in (i) office/retail,
(ii) multifamily, (iii) industrial, and (iv) niche property types in the United States. Note, Courtland has completed one investment level due
diligence report for NPS regarding the evaluation of a joint venture investment in an office asset in Washington, D.C.
Manager Fee Analysis. Courtland personnel have extensive experience in the analysis of investment manager fees. Courtland has
evaluated manager fee structures and negotiated manager fee agreements on behalf of clients in commingled funds, separate accounts, co-
investments, and REOCs.
Cost Effective Client Service. Courtland has been able to provide a high quality service from highly experienced, seasoned professionals
while keeping fees low for its clients.
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Courtland Competitive Advantages - LADWP
Proven Performance. LADWP has exceeded its benchmark of NCREIF + 50bps over the one-year, two-year, three-year, and five-year
periods. While every client’s return goals and risk tolerance varies, Courtland prides itself in reaching and exceeding the performance goals
set by each of its clients.
Current LADWP Real Estate Consultant. Courtland has had the privilege of serving as the real estate consultant for LADWP since
2008. Courtland’s knowledge of LADWP’s real estate portfolio would eliminate any downtime or transition period that may slow the
implementation of LADWP’s real estate portfolio.
Breadth of Engagement. Courtland strives to add value through a full range of real asset consulting services, including:
Strategic and Investment Planning
Market Review
Market Research
Benchmarking
Real Estate Operating Company Evaluations
Performance Measurement and Analysis
Portfolio Monitoring
Transaction Management
Portfolio Reporting Services
Manager/Partner Selection
Investment Due Diligence/Evaluation
Manager/Partner Fee Structuring
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II. Investment Philosophy and Portfolio Construction
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Real Estate Portfolio Construction
Courtland first determines the role and objectives of the real estate
portfolio as a whole and in the context of the total investment
portfolio. Traditional goals and reasons to invest in real estate are:
− Total Portfolio Diversification
− Current Income Return
− Capital Preservation
− Inflation Hedge
− Economic and Market Diversification
− Attractive Total Return
− Volatility Reduction
After establishing the objectives and goals of the real estate portfolio,
the investment strategy will outline the investment guidelines to be
established to construct a portfolio consistent with the stated
investment objectives.
For this strategy to be effective, it is important that it outlines the longer
term strategic direction for the real estate portfolio while allowing
sufficient flexibility to make certain tactical investment decisions as
warranted by current and anticipated market conditions.
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Real Estate Portfolio Construction
Once the objectives have been agreed, further focus is placed on developing guidelines for the real estate portfolio that
will enable the portfolio to achieve its investment objectives. These guidelines typically include the following:
• Risk/Return Mix. Guidelines set to govern the portfolio risk/return mix. Most importantly, the risk and return
mix selected by investors needs to accurately reflect the role that investors desire real estate to play within their
total investment portfolios.
• Investment Vehicles. Provide a description of the investment vehicles used to implement the real estate
investment allocation.
• Investment Structures. Real estate portfolios may include private, equity and debt investments in real estate. The
strategy will also set the preferred structure exposures with guideline ranges.
• Risk Factor Mitigation. The strategy document provides guidelines and restrictions to define risk exposures
consistent with investor portfolio objectives, including:
− Diversification (e.g., property type, geographic, life cycle, and investment size).
− Leverage
− Investment concentration (e.g., investment manager or fund concentration)
− Investment vehicles
− Liquidity
− Income vs. appreciation mix
− Investor control
− Asset lifestyle (e.g., development, stabilized)
• Benchmarking. Establish an appropriate benchmark for the real estate portfolio consistent with the investment
objectives.
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Real Estate Portfolio Construction
The investment strategy for the real estate portfolio is based first on a top-
down, macroeconomic assessment of factors driving both the domestic
and global economies. This assessment is completed through the
Courtland “house view” market condition presentations and frames our
discussion of the annual strategy.
• Macroeconomic factors addressed in the “house view” include,
but are not limited to:
− Country-specific GDP growth rates
− Total country debt-to-GDP ratios
− Current and forward-looking interest rates and yield curves
− Current and historical currency exchange rates
− Trade flow patterns
− Manufacturing output
− Inflation rates and commodity prices
− Unemployment levels and employment growth rates
• The “house view” also contains an evaluation of the real estate
market conditions, including, but not limited to:
− Vacancy rates
− Cap rates
− Capital flows
− Income yields
− Distress by property type and market
− Availability of debt financing and interest rates
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Real Estate Portfolio Construction
There is an emphasis on diversification when constructing the investment
strategy. Diversification is an important tool in reducing portfolio risk and
accomplishing superior risk-adjusted returns.
While not making investment decisions based solely on diversification
objectives, Courtland will consider the impact of investments on portfolio
diversification, risk, and targeted returns.
This diversification is reviewed across multiple portfolio guidelines,
including:
• Investment strategy risk/return (core, core-plus, value)
• Investment structure (open-end funds, closed-end funds, joint
ventures, co-investments)
• Lifecycle (development, operating)
• Property type (office, apartment, industrial, retail, etc.)
• Geography (Europe, Asia, West U.S., East U.S., South U.S., Midwest
U.S.)
• Capital structure (real estate equity, real estate debt)
• Leverage
• Investment pacing (vintage year diversification)
After developing the strategy, Courtland will work from the bottom-up to
identify specific investment strategies and managers capable of executing
the investment strategies called for in, given the current market conditions.
INVESTMENT AND PORTFOLIO
RISK/RETURN RANGES
Risk/Return
Proposed
Strategy Range
Policy
Range
Core 50%-60% 50%-
100%
Value-Add 25%-30% 0%-40%
Opportunistic 15%-20% 0%-20%
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Courtland Risk/Return Spectrum
Return Assumptions: Core: 7%, Value: 12%, Opportunistic 15%; Risk-free rate assumed at 2.5%.
Core Core Plus Value Opportunistic
% of Total Return
from Income 75%+ 50-60% 40-60% 10-20%+
Maximum Leverage Less than 40% 40-55% 50-65% 60%+
Occupancy at
Acquisition 80%+ 70%+ 50%+ 0%+
Investments
Stabilized Class A or B
buildings in good to
excellent condition.
Class A or B
buildings with
vacancy or minor
refurbishment needs.
Undermanaged or
underperforming assets with
appreciation potential
through refurbishment or
repositioning.
Assets with substantial
leasing, development,
entitlement, or
repositioning risk. Also
includes distressed assets.
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Courtland Client Risk/Return Exposures
Real Estate Portfolio Risk/Return
Large Public Pensions Core Value Opportunistic Total
LADWP 64.2% 20.5% 15.3% 100.0%
Public Pension #2 83.5% 7.7% 8.8% 100.0%
Public Pension #3 66.7% 12.9% 20.4% 100.0%
Public Pension #4 59.7% 13.9% 26.3% 100.0%
Public Pension #5 19.9% 26.3% 53.7% 100.0%
Public Pension #6 59.5% 28.7% 11.8% 100.0%
Public Pension #7 72.4% 17.3% 10.3% 100.0%
Courtland Partners Index 59.2% 18.7% 22.0% 100.0%
Data as of September 30, 2016.
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Investment Vehicle Advantages and Concerns
More Control Less Control
Direct Investing Separate Accounts Pooled Funds
Open-End Funds Closed-End Funds
Structure Advantages Concerns
Private Pooled Funds
(Traditional Open-End
Funds)
Immediate access to nationally diversified core portfolio
Historical return performance Core to Core+ strategy Quarterly Liquidity
Potential illiquidity in down markets Lack of investor control Alignment of interests Reasonableness of values (appraisal-based) Manager/ownership changes
Private Pooled Funds
(Closed-End Funds)
Access to niche strategies Incentive fees align interest with Manager Manager co-investment alongside LPs
Lack of liquidity and control Manager conflicts Investment allocation issues Style creep
Public REITs Liquidity Diversified exposures Access international markets Attractive total return/ Dividend yields
Volatility Stock or real estate? Manager talent Depth of market in certain property types
Private Separate
Accounts/ Co-
Investments
Cost effective management Control of the assets Ability to remove the Partner at any time Retention of experienced management Larger organization with established track
record
Typically not a local Partner (i.e., often a national manager with regional professionals)
Weaker alignment of interests due to minimal, if any, co-investment
Incentive fee based on cash distributions Partner offerings conflicts
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Investment Vehicle Advantages and Concerns
More Control Less Control
Direct Investing Separate Accounts Pooled Funds
Open-End Funds Closed-End Funds
Structure Advantages Concerns
Real Estate Operating
Company (Platform
Investment)
Cost effective management Retention of experienced management with
strong local market knowledge and deal access
Strong alignment of interests Ownership/control of REOC Exit flexibility and ability to capture value of
management
Investment staff intensive May be more costly in early stages of
investment Start-up manager risk Limited track record of current entity Limited REOC liquidity
Programmatic Joint
Venture
Cost effective management Retention of experienced management with
strong local market knowledge and deal access
Strong alignment of interests Control of JV assets (not Partner) Reduced start-up risk in comparison to
REOC investment Current organization and track record
No benefit from platform value creation Not the sole source of Partner’s capital Less control over key personnel Relatively less control over assets due to JV
Partner’s co-investment Partner may have competing and/or
conflicting interests (e.g., other JV partner allocations)
Given size of some prospective JV partners, may have less negotiating power regarding fees and JV terms
Secondary
Investments
Potential to buy at a discount Ability to underwrite an established portfolio
Reliance on future cash flows to make return
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Courtland Client Investment Structure Diversification
Real Estate Investment Structure
Public Pensions Private Equity Private Debt Public Equity Public Debt Total
LADWP 76.6% 11.5% 9.2% 2.7% 100.0%
Public Pension #2 95.3% 3.4% 1.0% 0.2% 100.0%
Public Pension #3 96.9% 2.3% 0.8% 0.0% 100.0%
Public Pension #4 87.0% 3.3% 9.5% 0.1% 100.0%
Public Pension #5 89.8% 8.9% 0.4% 0.8% 100.0%
Public Pension #6 85.5% 13.8% 0.0% 0.7% 100.0%
Public Pension #7 73.6% 16.5% 9.3% 0.6% 100.0%
Courtland Partners Index 87.8% 5.5% 5.9% 0.8% 100.0%
Data as of September 30, 2016.
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Geographic and Property Type Diversification
Geographic Diversification
Courtland recommends an overweight to the Eastern and Western regions in the U.S. and smaller
allocations to the Southern and Midwestern regions.
While regional diversification is important, Courtland prefers to review the individual markets of the
investment. Courtland has not established primary/secondary market target ranges with clients to date, but
emphasizes market selection during due diligence.
Courtland’s core fund metrics review tracks market-specific diversification for the NFI-ODCE and other
open-end funds tracked by Courtland.
Property Type Diversification
Property type diversification targets are established with broad guidelines that allow for diversification
minimums while still providing enough flexibility to make tactical shifts given market conditions.
Courtland recommends clients to review/adjust sector targets annually.
Courtland will recommend benchmark over/under-weightings by property type for clients. These
recommendations are based on a number of factors including supply, demand, property-type specific risks,
and demand drivers.
For example, Courtland currently recommends an over-weighting to property types with demographically
based demand drivers. Courtland’s view is that these demand drivers are more recession-resilient and will
provide investors with a more stable income return in the event of a market downturn. These property
types include multifamily housing, industrial, student housing, senior housing, medical office, and self
storage.
Courtland Partners, Ltd. | 32
Courtland Client Geographic Diversification
Data as of September 30, 2016.
Geographic Diversification
Property Type E.N.
Central Mideast Mountain
North
East Pacific Southeast Southwest
W.N.
Central
U.S.
Other Non U.S. Total
LADWP 6.8% 10.7% 5.2% 19.0% 28.6% 8.4% 9.3% 1.3% 0.0% 8.9% 100.0%
Public Pension #2 5.4% 8.0% 3.4% 25.1% 26.6% 14.0% 14.2% 0.8% 0.3% 2.4% 100.0%
Public Pension #3 12.8% 11.7% 8.0% 17.2% 24.7% 10.3% 8.2% 0.4% 0.4% 6.2% 100.0%
Public Pension #4 2.5% 8.1% 3.4% 19.5% 27.5% 12.5% 7.5% 1.0% 4.3% 13.7% 100.0%
Public Pension #5 4.4% 6.2% 3.2% 11.3% 26.5% 15.9% 8.8% 1.5% 6.9% 15.3% 100.0%
Public Pension #6 8.0% 12.7% 6.5% 12.2% 22.3% 16.6% 14.1% 3.8% 0.6% 3.2% 100.0%
Public Pension #7 7.2% 9.4% 6.7% 17.6% 27.3% 9.5% 7.4% 2.2% 2.5% 10.2% 100.0%
Courtland Partners Index 5.8% 8.2% 4.7% 15.2% 24.5% 11.1% 8.4% 1.4% 11.2% 9.5% 100.0%
NPI 7.6% 12.0% 5.8% 21.3% 32.0% 9.4% 10.5% 1.4% 0.0% 0.0% 100.0%
NFI – ODCE 8.2% 9.6% 4.8% 20.7% 35.7% 9.5% 10.1% 1.4% 0.0% 0.0% 100.0%
Courtland Partners, Ltd. | 33
Courtland Client Property Type Diversification
Property Type Diversification
Property Type Office Industrial Retail Residential Hotel Other Total
LADWP 34.8% 13.2% 16.9% 22.5% 3.3% 9.3% 100.0%
Public Pension #2 29.8% 14.6% 17.0% 26.5% 6.9% 5.2% 100.0%
Public Pension #3 33.7% 5.7% 18.1% 35.4% 5.5% 1.6% 100.0%
Public Pension #4 31.3% 6.6% 15.6% 26.4% 4.4% 15.7% 100.0%
Public Pension #5 21.8% 8.7% 12.7% 23.8% 11.6% 21.3% 100.0%
Public Pension #6 24.4% 15.7% 14.2% 33.4% 7.0% 5.2% 100.0%
Public Pension #7 31.9% 10.8% 16.9% 29.0% 3.5% 7.9% 100.0%
Courtland Partners Index 30.1% 10.8% 17.1% 25.8% 4.9% 11.3% 100.0%
NPI 36.6% 14.1% 23.4% 24.8% 1.0% 0.0% 100.0%
NFI – ODCE 37.6% 14.5% 19.9% 24.1% 0.7% 3.2% 100.0%
Data as of September 30, 2016.
Courtland Partners, Ltd. | 34
Leverage
LADWP LEVERAGE GUIDELINES
RISK LTV RANGE
Core Up to 40%
Value Up to 65%
Opportunistic Up to 75%
Total Real Estate Portfolio Up to 50%
Leverage is a significant risk factor in real estate investing, given the fact that most real estate investments
feature some degree of borrowing and the effect that leverage (both positive and negative) can have on
returns to real estate investments. In some cases, variation in returns can largely be attributed to one’s level
of leverage when compared to peers.
Expected leverage ranges by risk/return categorization are outlined.
Expected portfolio leverage is created based on the real estate portfolio’s risk/return weightings.
Courtland prefers to use leverage ranges to allow investors to tactically increase or decrease leverage, within
limitations, based on current market conditions and opportunity.
While moderate levels of debt are perfectly reasonable, it is important to understand the types of debt that
managers are using. Some managers will take on “fund-level” obligations (other than subscription facilities),
cross-collateralize two or more fund investments, or utilize instruments that require underlying assets to be
“marked-to-market”. Mismatching of debt term to the investment strategy for a particular real estate
investment can also be problematic.
Courtland Partners, Ltd. | 35
Courtland Client Risk/Return Leverage
Real Estate Portfolio Leverage
Public Pensions Core
Leverage
Value
Leverage
Opportunistic
Leverage
Total
Leverage
LADWP 23.0% 45.5% 54.6% 32.4%
Public Pension #2 29.0% 55.5% 27.0% 30.9%
Public Pension #3 36.7% 39.1% 59.1% 41.6%
Public Pension #4 33.5% 49.2% 38.4% 36.9%
Public Pension #5 30.2% 56.2% 56.4% 40.1%
Public Pension #6 38.5% 57.4% 61.5% 46.7%
Public Pension #7 17.3% 60.2% 59.3% 34.0%
Courtland Partners Index 29.2% 45.0% 47.6% 36.2%
Data as of September 30, 2016.
Courtland Partners, Ltd. | 36
Benchmarking
Desired Characteristics in a Benchmark
• According to the CFA Institute, in order for a benchmark to be valid and effective for measuring a
manager’s performance, it must be:
Market Index Benchmarks
• Based on the risk/return targets, many investors use the NFI-ODCE as their benchmark. Some
clients will also use the NFI-ODCE as the market beta and will use hurdles over the NFI-ODCE to
benchmark their non-core investments.
• Benchmarks Used: Core – NFI-ODCE, NCREIF Property Index (“NPI”), IPD, Courtland
Partners Index; Non-Core – Courtland Partners Index, Cambridge, Preqin, Burgiss Private iQ
Absolute Benchmarks
• Typically benchmarked to a hurdle over a domestic interest rate
• Most often used by investors that seek a significant portion of their overall return from current
distributable income.
• Benchmarks Used: government bond rates, Consumer Price Index, market index income returns;
and public market bond indices
Client Benchmark Strategy
• Courtland recommends benchmarks based on the client’s individual goals and acceptable risks within
the real estate allocation.
• Regional benchmarks are preferred for analysis of regionally targeted investments.
• Customized weighted benchmarks based on risk/return may also be used
• Unambiguous • Measureable
• Investable • Reflecting of Current Investment Opinions
• Appropriate • Specified in Advance
Courtland Partners, Ltd. | 37
LADWP Benchmarking Relative to Peers
Data as of September 30, 2016.
Sample of Peer Public Pension Plans Benchmark
Public Pensions NPI NPI +
50bps
NPI +
100bps NFI-ODCE
Burgiss
Private iQ Blended
LADWP X
Public Pension Fund #2 X
Public Pension Fund #3 X
Public Pension Fund #4 X
Public Pension Fund #5 X X
Public Pension Fund #6 X
Public Pension Fund #7 X
Public Pension Fund #1 X
Public Pension Fund #2 X
Public Pension Fund #3 X
Courtland Partners, Ltd. | 38
Benchmarking – Courtland Partners Index
Data as of September 30, 2016.
The Courtland Partners Index incorporates 40+ years of performance data
Includes 477 active investments representing over $700 billion in GAV
Courtland Partners, Ltd. | 39
U.S. Investment Themes
Strategies and Themes
Build out a more defensive portfolio via the inclusion of income and recession-resistant strategies.
Core equity pricing is competitive as pricing for prime location, high quality assets currently exceeds pre-GFC peak levels.
Selectively consider core-plus opportunities where the manager is focused on going-in yield and lower property cost versus fully valued
core properties.
Consider debt-oriented strategies that are protected by 25%-35% borrower equity in a first loss position.
Seek opportunistic funds that provide liquidity to sectors of the market that are most in need of capital; examples are financial institutions in
need of recapitalized balance sheets.
Retail Industrial Office Multifamily Debt Other
• Focus on necessity-
based retail as
defensive strategy.
• High street retail
pricing has increased
due to favorable urban
lifestyle demographics;
be selective due to
current pricing.
• Selectively consider
class-A malls given
current values;
historically have
provided a consistent
income return resilient
to market downturns.
• Industrial in major
coastal markets has
rebounded in pricing;
be selective given
current valuations.
• Fundamentals continue
to be strong as
companies build out
supply chain
management systems.
• Focus on infill
locations, be selective
in NY/NJ and
Southern California
due to pricing
• Monitor NOI growth
and new supply.
• New supply is coming
to market in select
cities.
• Selectively invest at
steep discounts by
focusing on properties
with significant capital
needs (e.g., leasing
costs or physical
improvements) that
cannot be met under
the existing capital
structure.
• Class B assets in
gateway markets; Class
A assets in other
markets.
• Pricing for prime class
A assets has been
pushed to record highs.
• Focus on urban infill
and development
constrained markets.
• Selectively develop if
yield to cost reasonably
exceeds current market
cap rates.
• Focus on markets that
are not likely to be
negatively affected by
new supply.
• Monitor NOI growth
and new supply.
• Avoid subordinated
portions of capital
structure which do not
provide adequate
control or protection
provisions.
• Exploit inefficiencies in
capital markets by
providing debt on
transitional assets.
• Exploit inefficiencies in
capital markets by
providing liquidity to
distressed capital
structures.
• Evaluate use of
leverage by debt
managers.
• Self storage continues
to remain a fragmented
asset type with many
inefficiencies.
• Senior housing/medical
office to take advantage
of demographics (aging
population, need for
assisted living facilities).
• Student housing: new
products provide better
amenities demanded by
incoming students.
Courtland Partners, Ltd. | 40
Global Investment Themes
Asia-Pacific Europe Latin America
• Accommodative policies and favorable yield
spreads should continue to provide modestly
attractive returns for income-producing assets.
• In Japan, the yield gap between fixed income
securities and cap rates is driving capital to
income generating assets. Demographics
remain challenging. Opportunities exist
particularly within the office, multifamily, and
hotel sectors.
• China’s growth has created warehouse and
distribution center investment opportunities.
• Income growth and consumer focus has
created the need for select retail throughout
Singapore, Korea, and China.
• Selective investment in the United Kingdom,
given Brexit and mature market.
• Distress investment opportunities in
continental Europe given capital constraints of
banks and governments.
• Italian and Spanish financial institutions may
be the next sellers of distressed assets.
• There is demand for necessity-based retail in
Germany, the Nordics, and Benelux.
• Europe has an aged/under-developed
distribution system; opportunities exist to both
develop and reposition existing industrial
assets.
• Demographics in mature economies will
continue to be challenging.
• Despite the sluggish growth, retail and
industrial may provide a reasonable investment
opportunity, depending on market supply.
• The demand for multifamily and “for sale”
housing remains strong, due to the positive
demographic trends.
• Distress investment opportunities exist given
that financial institutions are under-capitalized,
due to cross-border capital flows.
• While Latin American growth was
disappointing in 2016, opportunities may exist
as vacancies rise and prices decline or remain
flat.
• Favorable demographics may enhance market
conditions in some markets.
Region Specific Strategies and Themes
Brexit may lead to increased opportunities for “distressed” strategies. Strategies which rely upon positive economic fundamentals (e.g., trophy
office buildings) are more difficult to assess at this time.
European value-add and opportunistic strategies provide the more attractive risk/return profile compared to low-yielding core investments.
2016 Asia Pacific GDP growth projected to be over 5% as some commodity-driven economies, such as Australia, face challenges given China’s
slower growth.
Asia Pacific cap rates have compressed, driving down property yields due to negative interest rate policies versus through strong economic
fundamentals.
Much of Latin America remains challenged by slow-to-negative economic growth, albeit the pace and scope vary by country and city.
Brazil remains in a prolonged recession, while Mexico has been quite resilient and tied to the strength of the U.S. economy. Necessity-based
sector (e.g. housing and industrial) investing may be reasonable in the near term.
Courtland Partners, Ltd. | 41
LADWP Real Estate Portfolio Construction
• Tactical Initiatives - Short-Term Plan
• Continue to focus on income-oriented return investments
• Evaluate defensive opportunities including debt investments across the capital stack and niche
strategies (e.g. self-storage, senior housing, student housing, medical office)
• Selectively allocate to core-plus strategies as favorable risk-adjusted opportunities arise
• Continue to slightly overweight non-core component of portfolio, given market opportunity
set, to opportunistic investments benefitting from market dislocation and income-focused value
add investments
• Evaluate European and Asian opportunities
• Evaluate and monitor core portfolio positions
• Strategic Initiatives - Long-Term Plan
• Exceed benchmark: NCREIF + 50 basis points
• Strategic target: 70/20/10 (core/value/opportunistic)
• Maintain average commitment size of $60-90 million
• Maintain income and preservation of capital focus
• Consider follow-on funds with existing high conviction managers
Courtland Partners, Ltd. | 42
III. Investment and Due Diligence Process
Courtland Partners, Ltd. | 43
Courtland Due Diligence Process
Comprehensive due diligence process is comprised of a dual path of investment and operational due diligence
(“ODD”).
Investment due diligence reviews the appropriateness of the strategy given current market conditions.
ODD reviews non-investment risks that may impact the investment.
Investment Due Diligence Operational Due Diligence
Fund investment strategy review
Investment process
Analysis of track record on an absolute and relative basis (peer ranking to funds of similar vintage and risk/return strategy)
Assessment of current market conditions and opportunity set
Review of investment pipeline or seed investments in the fund
Review of fund terms, including, but not limited to, management fees and incentives fees
Review of alignment of interests between investors and manager
Manager stability and assets under management
Operational infrastructure and resources
Valuation policies and procedures
Cash oversight, management, and transfer controls
Technology and systems
Business continuity plans and disaster recovery plans
Legal review (past or ongoing litigation)
Compliance infrastructure (disaster recovery plan, business
continuity plan, code of ethics)
Courtland Partners, Ltd. | 44
Risk Management and Mitigation – Investment Process
Manager/Partner Selection. Courtland’s selection process has many steps, including the following:
• Preliminary Manager/Partner Databases. Courtland reviews the proprietary manager databases to assess available
offerings consistent with client needs based on risk/return objectives.
• Preliminary Manager/Partner Selection. Select a group of managers/partners for a potential allocation, while
collaborating with the client and client staff, based on preliminary manager/partner evaluations.
• Manager/Partner Due Diligence. Complete comprehensive due diligence of the manager/partner, including DDQ,
manager/partner office interviews, track record assessment, operational due diligence, senior management team and key
person review, strategy evaluation, and other due diligence (e.g., property tours, reference calls).
• Investment Committee Approval. The due diligence report is presented to the Courtland Investment Committee,
which requires unanimous approval to be presented to a client.
Fundamental Research Applied Research
• Sovereign Debt Spreads
• GDP Cycle Analysis
• Monetary Policy
• Fiscal Policy
• Flow of Funds
• Risk Premia
• Employment
• Demographics
• Capital Market Cycles
• Current Valuations
• Sources of Capital
• Leverage Levels
• Supply Factors
• Occupancy Trends
• Variations in Sectors
• Manager Fundraising
Manager Search & Selection
Courtland Partners, Ltd. | 45
Courtland Due Diligence Process
Phase 1
Collect Basic Manager Information
Collect Basic Fund Information
Review Summary Performance
Review Strategy
Review Fund Terms
Initial Manager Meeting or Conference Call
Review Investment Merits
Recommendation for Next Steps
Phase 2
Complete Courtland Due Diligence Questionnaire
Complete Courtland Track Record Questionnaire
On-Site Due Diligence Meeting
Operational Due Diligence Pre- and Post-meeting review
Reference Checks
Phase 3
Complete Investment Committee Memorandum
Investment Committee Approval
Legal Review
Documentation
Courtland Partners, Ltd. | 46
Courtland Due Diligence Process
Phase 1
Collect Basic Manager Information
Collect Basic Fund Information
Review Summary Performance
Review Strategy
Review Fund Terms
Initial Manager Meeting or Conference Call
Review Investment Merits
Recommendation for Next Steps
Online Offerings Database
Individual
Manager
Diligence File
Internal Manager Directory
Courtland Partners, Ltd. | 47
Manager Sourcing
Courtland compiles and maintains an expansive real asset database of managers and investment
opportunities.
The database houses current and historical offering memoranda and investment information.
Investment opportunities are maintained across core, value, and opportunistic strategies within real estate.
These investment opportunities are sourced through the following activities:
• Host an average 500 manager meetings and calls per year in our offices located in Cleveland, Los
Angeles, and London.
• Participate (many times as a featured speaker) in various real estate industry forums per year such as
NCREIF, NAREIT, PREA, PERE, IREI, and VIP conferences, etc.
• Proactively structure specific investment opportunities to meet the needs of individual clients (e.g.,
working with certain managers to construct a fund strategy that serves the dual needs of our union
clients – job creation and solid risk-adjusted returns).
• Courtland publishes a weekly pipeline report of all meetings that Courtland conducted over the prior
week. This deal pipeline populates our offerings database of funds currently in the market.
The following table displays meetings hosted by Courtland in its offices over the last five years.
Year # of Meetings
2016 388
2015 332
2014 386
2013 350
2012 317
Courtland Partners, Ltd. | 48
Manager Sourcing
Courtland maintains three databases internally: These databases collectively assist with the investment screening,
due diligence, and evaluation process. Courtland makes all of this data readily available to clients as the data
becomes available.
UN
DE
RW
RIT
ING
S D
AT
AB
AS
E
•Courtland's prior investment recommendations, involving reviews completed on over $94 billion of client investments
•Courtland’s proprietary due diligence questionnaires and reports
•Historical fund offering materials including PPM, legal documents, and marketing materials
IN
VE
ST
ME
NT
PE
RF
OR
MA
NC
E D
AT
AB
AS
E
• Courtland Partners Index incorporating 40+ years of performance data
• 477 active investments representing over $700 billion in GAV
• Client-specific and investment-level questionnaires
• No fees charged for inclusion in the database
INV
ES
TM
EN
T O
FF
ER
ING
S D
AT
AB
AS
E
• Database includes investments for 650+ investments from 500+ managers
• 500+ manager meetings and calls annually
• No fees charged for inclusion in the database
CO
UR
TL
AN
D R
ES
EA
RC
H T
EA
M
• Research library includes market cycle analysis, capital flows, real estate pricing, and geographic data
• Quarterly market overview
• Monthly market observations
• Weekly manager summary
• White paper publications
Courtland Partners, Ltd. | 49
Courtland Due Diligence Process
Phase 2
Complete Courtland Due Diligence Questionnaire
Complete Courtland Track Record Questionnaire
On-Site Due Diligence Meeting
Operational Due Diligence Pre- and Post-meeting Review
Reference Checks
Following a review of basic fund
information and discussions of
investment merits, Courtland requests
the Manager complete a proprietary
investment and operational due
diligence questionnaire.
Questionnaire is reviewed to develop
expanded opinions and conclusions
of the investment opportunity.
During this stage of the due diligence
process, frequent calls are conducted
with the Manager, followed by an on-
site visit to the Manager’s offices.
Due Diligence Questionnaire
Courtland Partners, Ltd. | 50
Operational Due Diligence
Operational due diligence is a due diligence review of a fund and manager that focuses on operational risks.
These operational risks can be defined most broadly as a fund's non-investment related risks.
The ODD review is intended to provide for a reasonable level of confidence in the processes and infrastructure
of the organization.
Source Investment Opportunity
Phase 1:
Basic Fund Review
Phase 2: Investment
Strategy and ODD Review
Continue Investment
Strategy Due Diligence
Phase 3: Investment
Committee Review and Approval
Source Investment Opportunity
Phase 1 Diligence and Investment Strategy Review
Parallel Track ODD Review
Generate Conclusions on
Operational Infrastructure
Make ODD is performed on a parallel track with Investment Due Diligence
Courtland Partners, Ltd. | 51
Operational Due Diligence
Common operational risks can include:
o Back office and trade operations
o Fund service providers such as custodians
and auditors
o Cash management
o Valuation policies and practices
o Legal and regulatory compliance
o Information technology and business
continuity
o Conflicts of interest
o Counterparty management
Operational due diligence is performed before
an on-site, including a review of documents
submitted and answers completed in
operational due diligence questionnaire.
On-site review is performed to meet with
professionals and review documents, as
required.
Operational Due Diligence review is concluded with a risk level assessment
Courtland Partners, Ltd. | 52
Courtland Investment Recommendation
Phase 3
Complete Investment Committee Memorandum
Investment Committee Approval
Legal Review
Documentation
Courtland’s investment recommendation culminates in a review and approval by the Courtland Investment
Committee.
• The Investment Committee is comprised of four senior professionals at Courtland with on average >20 years
of investment experience.
• Members are: Steven Novick, Michael Murphy, Thomas Hester, and Andrew Mitro
• Unanimous approval by the Investment Committee is required for the investment to be formally approved for
each individual client.
Investments are approved on an individual basis and are not added to a “Buy List or Approved List.” Investment
must be a fit for each individual client’s portfolio.
Legal and document review is performed with the client as required.
• Courtland benefits by having three licensed attorneys on staff. Our general counsel, Charlie Manak, is
supported by Michael R. Humphrey and Jacqueline Smith with respect to compliance issues, conflict reviews,
back office evaluations, and other legal matters.
Courtland Partners, Ltd. | 53
IV. Courtland Research Capabilities
Courtland Partners, Ltd. | 54
Courtland Research Team
NORTH AMERICA INTERNATIONAL
EUROPE Gianluca Romano
Place of
Birth &
Citizenship
USA
USA and Italy (pending)
Languages Italian, English
Prior
Experience
ABN AMRO Bank,
Morgan Stanley, VISION
Consulting
2016 Due
Diligence
UK, Ireland, Italy
LATIN AMERICA Marc Rivitz
Place of
Birth &
Citizenship
USA
Languages Spanish, Portuguese,
English
Prior
Experience
Tishman Speyer Brazil,
Trammell Crow
2016 Due
Diligence
Brazil, Columbia, Peru,
Uruguay
EQUITY
DEBT
LISTED SECURITIES
TIMBER
AGRICULTURE
INFRASTRUCTURE
PRIMARY
SECONDARY
CO - INVESTMENT
JOINT VENTURE / REOC
SEPARATE ACCOUNTS
Courtland Partners, Ltd. | 55
Real Estate Education
Courtland has provided clients with real estate education sessions
that have ranged from one hour to multiple days.
Courtland’s education sessions can be customized to discuss the
topics of interest for a particular client.
The typical education session covers a real estate market
overview, real estate asset class overview, review of reasons for
investing in real estate, portfolio construction, risk mitigation, and
manager due diligence.
Source: LaSalle
Courtland Partners, Ltd. | 56
Traditional Reasons for Investing in Real Estate
Attractive Total Returns Provide an efficient total return over the long term by making
investments with expected returns commensurate to or in excess of
their respective risk levels.
Current Income Focus on current income as a primary return objective.
Capital Preservation Protect investment capital through real estate investments and
investment activities that are designed to, at a minimum, preserve
investment capital.
Inflation Hedge
Allocate to real estate investments that are likely to provide a
reasonable hedge against price inflation.
Portfolio Diversification and
Volatility Reduction
Use real estate to enhance the diversification of the total investment
portfolio given the historical low-to-negative return correlations
between real estate and other asset classes.
Wide Array of Investment
Options
Allocate to investment options from risk/return perspective across
capital structure in which to custom tailor a portfolio which meets
return and volatility objectives.
Courtland Partners, Ltd. | 57
Courtland Research – Third-Party Data Sources
Courtland Partners, Ltd. | 58
Top-Down Research Approach
Research Foundation. Courtland’s risk management and mitigation practices are based on ongoing research utilizing
information provided by a number of sources globally.
Quarterly Market Conditions Reports. Courtland completes a global markets review on a quarterly basis that provides a
detailed review of the macroeconomic market conditions by region.
Quarterly Performance Measurement Reports. Courtland provides a brief market conditions update in each quarterly
report, including sector and regional return performance.
Annual Plans. Courtland incorporates a market conditions review alongside the portfolio evaluation and pacing model
sections to enhance the quality of information used in making allocation and planning decisions.
Due Diligence Reports. Courtland has a market conditions section in each report to provide further context for
evaluating the strategy being considered.
Courtland Partners, Ltd. | 59
Courtland Research – Client Deliverables and Applications
White
Papers
Quarterly Market Conditions Presentations
Market Updates
Weekly Pipeline
Report
Courtland Partners, Ltd. | 60
Courtland Research – Recent Special Requests and Projects
Courtland receives ad-hoc requests from clients on a regular basis regarding research-
based topics. Examples of recent client requests and provided analysis are listed below:
• Public REIT fund evaluation
• How a public REIT allocation fits into a private real estate portfolio
• Public Market Equivalent analysis
• Evaluation of mezzanine debt or leveraged loan funds
• Evaluation of senior real estate debt funds
• Adjusting for risk of non-traded real estate investments
• Comparing publicly traded REIT investments to private real estate investments
• Foreign currency hedging options
Courtland Partners, Ltd. | 61
Appendix: Courtland Biographies
Courtland Partners, Ltd. | 62
Steven Novick, Managing Principal, has 38 years of real estate experience in all aspects of investing from property acquisitions and dispositions to
portfolio construction. Mr. Novick’s experience is both as a direct investor as well as in the capacity of an advisor and consultant. Mr. Novick is the
Chairman of its Investment Committee. Mr. Novick began his real estate career with the United Housing Foundation where he was responsible for
various properties located throughout New York City. He then become a Vice President/ Director of Operations at Integrated Resources, where he
performed both acquisition and asset management services. At Integrated, Mr. Novick was responsible for overseeing their national portfolio of
properties. His responsibilities included establishing operating policies and procedures, developing leasing strategies and implementing national
management operations. Mr. Novick left Integrated to become an Executive Vice President/Partner/Director of Asset Management for Urdang and
Associates Real Estate Advisors. During his 11 years with Urdang, he participated in growing firm assets from 7 to 120 with a total value of $1.5 billion.
Mr. Novick received his B.S. from Long Island University and a C.P.M. from the Institute of Real Estate Management. Mr. Novick is the lead
consultant on a number of Courtland clients.
Michael Murphy, Managing Director, has over 17 years of real estate, investment, due diligence, financial reporting, financial management, audit, and
management experience. His prior experience includes over three years as a financial analyst for a hedge fund, Stark Investments, and a year as a
consultant for Enterprise Development Inc. Mr. Murphy currently serves as the lead consultant for public, corporate, endowment, and union pension
fund accounts. Mr. Murphy’s primary consulting responsibilities include developing client strategy, creating tactical investment plans, completing
investment due diligence, recommending investments, attending client board meetings, conducting research, and assisting with other special projects.
Mr. Murphy has evaluated over $25 billion of real estate investment allocations in both domestic and international markets. Mr. Murphy has also
overseen the management and disposition efforts for direct real estate holdings on behalf of clients. Mr. Murphy serves as Courtland’s Head of Client
Management and as the Manager of the Cleveland office. Mr. Murphy is a member of Courtland’s Management Committee and Courtland’s
Investment Committee. Mr. Murphy assists with the development and implementation of Courtland’s strategic initiatives. In addition, Mr. Murphy is
involved with the development of new relationships and ventures. Mr. Murphy regularly represents Courtland at various industry functions. Mr.
Murphy received his B.S., cum laude, in Business Administration from Marquette University with a concentration in Finance and an M.B.A. with dual
concentrations of Finance and Entrepreneurship from Case Western Reserve University’s Weatherhead School of Management.
Consulting and Research Biographies
Courtland Partners, Ltd. | 63
Gianluca Romano, Managing Director -- Europe, Courtland Partners, Ltd. Mr. Romano leads Courtland’s efforts in Europe and is a director of the firms
UK subsidiary, Courtland Partners Europe Ltd. In addition to overseeing operations of the London office, he is responsible for advising clients on
their European investments and developing relationships with European institutional investors looking to diversify their investments globally. Mr.
Romano has over 24 years of consulting and investment management experience. He served as a private equity real estate portfolio manager first with a
European asset management company of the Morgan Stanley Real Estate Funds and then with ABN AMRO in its Structured Real Estate Capital
group. In these roles, Mr. Romano managed distressed asset portfolios in Europe with approximately €5 billion in gross book value representing over
€1 billion of invested equity capital. Other prior experience for Mr. Romano includes serving as the COO of Vision Consulting Ltd. in the UK where
he led the firm’s internal restructuring and worked with UK and Irish clients providing services such as the valuation of a UK onshore wind farm and
reviewing the regulatory capital requirements for a UK water company. As an advisor to Boston Venture Partners, LLC in the US, Mr. Romano
developed a joint venture servicing relationship relating to the firm’s real estate opportunity fund and the financial model for the firm’s real estate debt
fund. He was also a Senior Manager with KPMG in the firm’s Milan and New York offices, and held Research Associate positions with the National
Economic Research Associates, Inc., and New Windsor Associates. Mr. Romano earned an A.B. in Mathematics and Economics from Duke
University, holds a Masters in European Integration from the University of Amsterdam, and a Masters in Economics from Miami University where he
was the Charles S. Davis award recipient. He also spent an additional year of graduate study at the London School of Economics concentrating on
microeconomics and industrial organization. He is a native English speaker, fluent in Italian, a dual citizen of the U.S. and Italy, and a London resident.
Thomas Hester, Senior Vice President, joined Courtland Partners, Ltd. in January 2016. Mr. Hester is a senior executive in commercial real estate with
30 years of institutional real estate and capital markets experience. Mr. Hester was the Director of Accounting and Financial Reporting and the Chief
Compliance Officer at Mesa West Capital from 2009-2015, and previously held Principal positions at The McMahan Group and Westwood Consulting
Group, and was a Senior Manager at Kenneth Leventhal & Company/Ernst & Young. Mr. Hester has served public and private investment vehicles
and managers, defined benefit and public pension plans, REIT’s, real estate operating companies and developers, and financial institutions. Mr. Hester
has significant experience in finance and accounting, reporting, fiduciary services, strategic planning, capital structuring, regulatory compliance, and
valuation and feasibility services. Mr. Hester holds a B.S. in Business from San Diego University, and attended the University of California, Los
Angeles, John E. Anderson Graduate School of Management.
Marc Rivitz, Senior Vice President, has over 12 years of real estate investment and development experience. Mr. Rivitz began his real estate career at
Spaulding & Slye Colliers (now Jones Lang LaSalle), where he valued office buildings and development projects with respect to property sales. He also
worked with Tishman Speyer Properties in São Paulo, Brazil, where he developed a business plan analyzing Tishman’s entry strategy into the Brazilian
residential development market. Prior to joining Courtland, Mr. Rivitz worked with the Trammell Crow Company (acquired by CB Richard Ellis) in
Washington, D.C. where he managed their investment sales group which provided valuations and offering memoranda in conjunction with asset
dispositions totaling over $1.0 billion. Mr. Rivitz received his B.A. from Cornell University and an M.B.A. from the University of Chicago.
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Andrew Mitro, Vice President, has over eight years of real estate investment experience, all with Courtland and is a member of the Courtland
Investment and Management Committees. Mr. Mitro is responsible for providing client services including, investment policy and strategy creation,
investment due diligence, financial modeling, portfolio oversight and planning, and general support for a number of Courtland clients. In addition to
client responsibilities, Mr. Mitro is the head of investment manager research at Courtland and is responsible for tracking new investment offerings
within Courtland’s investment manager databases. Furthermore, Mr. Mitro is tasked with assisting in firm marketing, including overseeing the request
for proposal (RFP) response team in the Cleveland office. Mr. Mitro received his B.A. from The Ohio State University and is currently pursuing his
Masters of Business Administration degree from the Case Western Reserve University Weatherhead School of Management.
Anthony Fragapane, Senior Vice President, has over 22 years of investment and finance experience. Prior to joining Courtland, Mr. Fragapane worked
on 76 distinct investment or dispositions transactions totaling $7.25 billion with an average size over $95 million. These transactions involved a total of
over 260 real estate assets and 150 non-real estate assets. Projects have taken the form of discretionary commingled fund raising assignments as well as
asset, stock, LLC and partnership/joint venture purchases and sales. Mr. Fragapane acted as principal, issuer advisor, buy-side and sell-side advisor in
transactions involving various types of real estate as well as equipment and project finance assets located in the U.S., U.K., the Netherlands, Canada,
Australia and Japan. He previously served as Vice President of Farragut Investments Inc., Managing Director of Farragut Capital LLC and Vice
President of Dana Commercial Credit Corporation. Mr. Fragapane received his B.B.A. degree, magna cum laude, with a concentration in Finance from
the University of Toledo and an M.B.A. from Bowling Green State University. He also served in the United States Marine Corps Reserve.
Jeremy Goldberg, Senior Vice President, has 20 years of real estate and banking experience. He has knowledge of both private and publicly traded
companies, and is an accomplished real estate finance and investor relations executive. Mr. Goldberg previously led the corporate finance and investor
relations efforts at Associated Estates Realty Corporation, a multifamily REIT. His responsibilities included developing and implementing financial and
capital market strategies, managing sell-side analyst and investor relationships, and assisting in the strategic planning of the company. Mr. Goldberg was
a key member of the management team that worked on the sale of Associated Estates to Brookfield Asset Management. Mr. Goldberg began his career
at Bank of America. He then worked at AmTrust Bank, where he focused on real estate lending. Subsequently, at AmTrust, he led the Consumer
Banking division. Mr. Goldberg holds an MBA in Finance and Entrepreneurship from Case Western Reserve University and a Bachelor Degree in
Literature, Science and the Arts from University of Michigan.
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James (Jim) McMillan, Senior Vice President, held a broad range of operating and planning positions with British Petroleum (BP) in their Downstream
business for over 23 years. Mr. McMillan gained extensive oil industry infrastructure knowledge by holding a number of positions over this period,
including Engineering & Construction Manager, Brand Manager, and Strategic Planning Manager. In these positions, he led or participated in the
internal analyses of company infrastructure facilities and related studies, including: “U.S. Energy Balance” study to develop energy and oil price
forecasts, oil industry competitive study to determine how individual company assets might be repositioned in the wake of changing market conditions,
and oversaw the analyses of fuel market product expansion in BP’s markets. Mr. McMillan was also a part of a select team of individuals that led an
infrastructure analysis of BP’s global Downstream business in response to difficult market conditions which resulted in significant asset repositioning
for BP globally. As a specific result of this study and based in London, he led an initiative to value BP’s global retail real estate investments to
determine where best to invest and/or divest in the various global markets BP competed in, resulting in a $1.0 billion asset repositioning program. Jim
also has managed several multi-million dollar projects for BP: Sohio/Gulf rebranding/reimaging to BP ($230 million), BP’s U.S. Downstream ERP
replacement project ($55 million), as well as rolled out major new products as Brand Manager. As part of Courtland, Jim has been involved in
underwriting two significant OECD infrastructure investments as well as provided prudent person opinions on major investments in overseas ports, a
U.S. wind farm, a U.S. solar plant, a U.S. natural gas fired power plant, Australian electrical transmission network, the refinancing of a group of U.S.
power plants, and bulk terminals. Mr. McMillan graduated summa cum laude with his B.A. from Adrian College, majoring in Business Administration and
Mathematics.
Mitchell Bollinger, Vice President Real Assets Research, has 12 years of real estate and finance experience and previously worked as an engineer for 7
years. Previously Mr. Bollinger started a private real estate advisory firm called Magnolia Realty Advisors which launched a private investment fund that
invested in publicly traded REITs based upon Mr. Bollinger’s proprietary research. Prior to Magnolia, he was with KBS Realty Advisors in Atlanta, GA
for 5 years where he asset managed a portfolio of commercial real estate valued at approximately $1B. From 2004 to 2008 he was a consultant to the
CMBS industry in New York City, supporting clients including Merrill Lynch and Bear Stearns. He earned an MBA from Vanderbilt University and a
BS in Industrial Engineering from Virginia Tech.
Jacqueline Smith, Analyst and Compliance Associate, has four years of real estate, legal, and investment experience. At Courtland, Ms. Smith is
responsible for providing client services and investment due diligence. Previously Ms. Smith worked as an attorney at a law firm in Cleveland, where
she was responsible for researching and drafting pleadings, discovery, and motions in commercial litigation and labor employment matters. During law
school, she clerked at a civil litigation firm in Miami, where she researched and drafted legal memoranda, and also interned at University of Miami’s
Investor Rights Clinic, where she represented investors in securities arbitration claims. Ms. Smith holds a B.S. in Finance from Miami University of
Ohio and a J.D., magna cum laude, from University of Miami School of Law. Ms. Smith is a member of the Ohio Bar.
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Kirby Freeman, Consultant, has over 25 years of financial and credit experience. Mr. Freeman began his career working as an Associate Director of
Public Finance for Standard and Poor’s Corp. in New York. While with Standard and Poor’s Corp., Mr. Freeman was responsible for analyzing the
creditworthiness of debt issued by local governments in a number of states. He then worked for KeyBank as a Senior Vice President responsible for a
team of loan underwriters analyzing potential loans on behalf of KeyBank’s Public Sector team. While at KeyBank, Mr. Freeman developed and
implemented credit criteria standards and procedures for the public sector loan portfolio. After working with KeyBank, Mr. Freeman joined
Huntington National Bank as a Vice President. At Huntington National Bank, Mr. Freeman was responsible for managing banking credit risks by
analyzing micro- and macroeconomic trends and approving loans. Most recently, Mr. Freeman was the Director of Development for the city of
Canton, OH. Mr. Freeman holds a B.A., cum laude, in Print Journalism from Howard University and an M.B.A. in Finance from the New York
University, Leonard N. Stern School of Business.
Robert “Bo” Rodgers, Senior Consultant, has over 36 years of real estate, banking and legal experience. In 1984, Mr. Rodgers was a founding principal
of Devon Properties (“Devon”), a private real estate investment and management company acting on behalf of European investors. Headquartered in
New York City, Devon invested throughout the United States and Canada in a broad variety of property types, sizes and locations. Devon invested in
office, retail, industrial, multi-family and residential land, and its investments ranged across the entire core, value-added, opportunistic and development
risk/reward spectrum. Mr. Rodgers’ principal responsibilities at Devon, in addition to being President and CEO, included investment strategy,
acquisitions, major financing and reporting to investors. The entire Devon portfolio was liquidated over the years of 2004 – 2006. Prior to Devon, Mr.
Rodgers was a Vice President at J.P. Morgan, where he worked in the real estate investment banking group; a Vice President at Lehman Brothers.,
where he worked on asset-backed financing, including real estate; and a legal associate in the New York office of Dewey Ballantine. Mr. Rodgers holds
a B.A. degree, magna cum laude, from Yale University and a J.D. from Harvard Law School.
Justin Thibault, CFA, AAMS®, Senior Analyst, has over five years in the financial industry. Prior to joining Courtland Partners, he was employed with
Charles Schwab & Co., Inc. as a senior consultant and high net worth broker in the firm's Pinnacle division, dedicated to a group of affluent clientele in
New York and the Midwest. While at Charles Schwab, Mr. Thibault provided clients with an array of portfolio and investment services, including:
equity and option trading strategies, entering and exiting large concentrated positions, portfolio performance evaluation, and risk/reward analysis. He
was also awarded the firms selective key contributor award. At Courtland Partners, Mr. Thibault is responsible for real estate performance monitoring,
reconciling data, and preparing performance measurement reports for institutional investors. Mr. Thibault holds a B.S. in Financial Management from
Indiana University. Mr. Thibault is a CFA charterholder and a member of the CFA Society of Cleveland. He has passed all three levels of the CFA
Exams on the first attempt in three consecutive years. Mr. Thibault also possesses the Accredited Asset Management Specialist, AAMS® designation.
Michael R. Humphrey, Analyst and Compliance Associate, joined Courtland Partners, Ltd. in 2015. At Courtland, Mr. Humphrey is responsible for
providing client services including, investment due diligence and analysis. During law school, Mr. Humphrey worked as a law clerk with firms in
Cleveland and North Carolina, where he was responsible for researching and drafting pleadings, motions, and memoranda regarding corporate law,
immigration, real estate, insurance issues, and corporate mergers and acquisitions. Mr. Humphrey holds a J.D., cum laude, from the University of
North Carolina School of Law at Chapel Hill and a B.A. from Washington and Lee University.
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Susan Yelin, Director of PMR Database, has over 30 years of finance and accounting experience. She started her career with Changhwa Commercial Bank based
in Taiwan. Other positions included Corporate Treasurer of Collins Co., Ltd. and VP Controller of Triumph Int’l, both in international trade and distribution
business. She was also a Financial/Accounting Analyst of Xerox Corporation's management information systems for the developing market transfer pricing
and the consolidation corporate accounting. Ms. Yelin is responsible for performance measurement reporting and database management. Ms. Yelin received
her B.B.A. from National Taiwan University and M.B.A. from University of Washington with concentration in Finance and Management Information
Systems.
Catherine Butler, Senior Analyst, has over 15 years of real estate consulting experience, primarily in performance measurement and reporting. Ms. Butler is
responsible for overseeing client accounting, performance measurement, financial statement reconciliation, benchmarking and other accounting and reporting
duties. Ms. Butler received her B.A. in Anthropology from Miami University of Ohio and an M.A. in Anthropology from Western Michigan University.
Angie Taylor, Analyst, has over 15 years of finance and accounting experience. Her most recent experience has been in the non-profit arena working as an
Accountant for Goodwill of North Georgia and as a Project /Grant Accountant for Axios Foundation. Ms. Taylor is responsible for performance
measurement reporting and other reporting duties. Ms. Taylor received her B.S. in Accounting from David N Myers College, M.B.A. from Keller School of
Management and her J.D. from Cleveland Marshall College of Law.
Shilpa Manda, Analyst, has over eight years of financial industry experience. Most recently, she was employed at ProEd Communications, where she was a
finance analyst. Her responsibilities included analyzing project budget estimates, contract approvals and client account related issues. Prior to ProEd
Communications, she worked at LanderNorth Asset Management. Ms. Manda received her B.S. and M.S. in Science from Pune University, India. Her second
Master's degree is an M.B.A in Finance, Cleveland State University.
Grant Palmer, Analyst, has over four years of experience in finance and accounting fields. Prior to Courtland Partners, he was employed with Glenmede Trust
Company as a relationship management associate. At Glenmede, he managed high net worth client asset allocations, reviewed manager performance, and
produced reporting materials. At Courtland Partners, Mr. Palmer is responsible for monitoring real estate investment performance, reviewing and reconciling
data from managers, and reporting to institutional investors.
Claude Palaganas Analyst, was an intern at Courtland during the summer of 2015. Mr. Palaganas is responsible for database management, performance
measurement reporting, and other reporting duties. Mr. Palaganas received his A.A.B. in Financial Services from Lorain County Community College and is
currently pursuing a bachelor's degree at Cleveland State University.
Brian Craighead, Analyst, joined Courtland Partners, Ltd. In 2016. He has spent time abroad in London, Paris, and Seoul gaining both perspective and
insight. Through his degree from the University of Dayton, he has exposure to economic research, international business practices, and economic modeling.
At Courtland, Mr. Craighead is responsible for monitoring real estate investment performance, validating data fund investment data, and reporting to
institutional investors.
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Charles Manak, General Counsel and Chief Compliance Officer, has experience working with private equity funds and companies investing in infrastructure
projects and real estate in European emerging markets. While Charles was a Senior Associate at Linklaters, he created and led Linklaters Central
European private equity practice group. While at Linklaters, Charles also was lead counsel to Honeywell International, Inc. and the Impression Group
in their respective European acquisitions and cross-border due diligence exercises in Central and Eastern Europe. Among other things, Charles has
structured European leveraged buy-outs, real estate investment vehicles and international joint ventures in Russia, Turkey, the Czech Republic, Poland,
Hungary, and Romania. Prior to joining Linklaters, Charles was General Counsel to an International Finance Corporation and Bank of Austria
sponsored private equity fund known as Central European Telecom Investments, LP managed in Guernsey, the Channel Islands. Charles holds a B.A.
in Economics from Wittenberg University, a J.D. from Case Western Reserve Law School and has spoken at a number of private equity seminars in
Prague, Budapest, and Bucharest.
Dan Wolnik, CPA, Director of Finance, has over 20 years of real estate experience in accounting, financial reporting, property management, and systems
experience. Prior to joining Courtland, Mr. Wolnik worked with Forest City Enterprises, a $10 billion public real estate operating company, as an
employee and consultant. While at Forest City Mr. Wolnik was the Director of Internal Reporting – Corporate Controller Group. Recent projects
completed included integrating a Strategic Enterprise Management - Business Planning and Simulation system. Prior positions held include Controller
of The Mid-America Management Corporation, a private $500 million real estate owner and manager where he was responsible for corporate policy
and procedure. Additionally, Mr. Wolnik worked in the Assurance and Business Advisory Services group at PriceWaterhouseCoopers and served as a
controller with a privately held real estate development and property management firm. Mr. Wolnik received his M.B.A. in Finance from Case Western
Reserve University and B.B.A. in Accounting from Cleveland State University. He has been an active Ohio CPA since 1994. He is a member of The
Ohio Society of CPAs and American Institute of CPAs.
Amy Stone, CPA, Fund of Funds Accountant, has over 16 years of experience in asset management and accounting. At Courtland, Mrs. Stone is
responsible for the Fund of Funds reporting and operations. She has previous experience on the investment team at Parkwood Corporation and as the
controller at FTN Equity Capital Markets.
Patricia Kleve, Controller and Director of HR, has over 17 years of real estate and accounting experience. Ms. Kleve is responsible for Courtland's internal
accounting and Human Resources. She has previous experience as the C.O.O. of The Townsend Group. Ms. Kleve received her B.S. in Business
Administration from Baldwin Wallace College in Ohio.
Accounting and Legal Biographies