July 6, CFA Institute Global Investment Performance Standards (GIPS ) 915 East High Street Charlottesville, VA 22902

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1 July 6, 2017 CFA Institute Global Investment Performance Standards (GIPS ) 915 East High Street Charlottesville, VA RE: Response to the GIPS 20/20 Consultation Memo (via to standards@cfainstitute.org) Dear GIPS Executive Committee: This letter represents LaSalle Investment Management, Inc. s comments in response to the CFA Institute regarding the GIPS 20/20 Consultation Memo. It is our understanding that comments received on this initial outreach will be taken into account as you work towards an exposure draft and subsequently the revised edition of the standards in We appreciate the opportunity to respond. Respondent: LaSalle Investment Management, Inc. s private equity real estate business actively participates within real estate industry organizations such as NCREIF/PREA, INREV and ANREV, and has done so for many years. These organizations promulgate reporting standards and industry guidance specifically for real estate investments and work collaboratively with industry participants to give them a voice yet to ensure adherence to more established guidance (such as local GAAP, GIPS, etc.) as their own standards are formed. LaSalle is in favor of applying industry reporting standards that are foundationally comparable and transparent within the real estate industry. Responses: LaSalle Investment Management, Inc. has specifically responded from the point of view as it relates to non-listed, private equity real estate investments. Sincerely, Diane Wild LaSalle Investment Management, Inc. Senior Vice President Performance Measurement

2 1. Structure Question 1: Do you agree with the pillars concept? If so, should there be any other pillars? Generally the pillars concept makes sense. However, we suggest: (a) Breaking out the one to many pillar into two sub-components: i. Closed-end funds, where the manager controls the timing of cash flows and, therefore, IRRs and not TWRs would be the valid measure of performance. ii. Open-end funds, where the manager does not control the timing of cash flows which would make TWRs the valid measure. (b) Defining in more detail what constitutes a real estate investment structure falling under one to many vs. one to one since there could be some overlap between these two pillars within the real estate industry. Specifically, the pillars fall short in identifying where joint venture investment(s) or club deal investment(s) would reside. This structure has very targeted and limited investor marketing and possibly already identified investments, yet could be interpreted as having more than one party investing therefore falls under the one to many pillar. However, this type of investment structure, for all intents and purposes, makes more sense intuitively to report composite performance much like a separate account and not fund performance as a commingled fund. 2. Pooled Funds Question 2: Do you agree with the proposed treatment of pooled funds? We agree with most of the proposed treatment of pooled funds. However, we also think this guidance should explicitly state application to private equity real estate as there are broadly distributed pooled funds that are non-listed REITs. These types of investments fall under the same pooled funds that are already comprehensively regulated and controlled by formal government regulation and already include the requirements in their marketing materials. These types of real estate funds should not be subjected, and at times are restricted from, providing a typical GIPS presentation that would otherwise apply. 3. Asset-Class-Specific Guidance Question 3: Do you agree that asset-class-specific guidance should be consolidated where possible? Yes, we agree with removing the asset-class specific guidance that is really related to the investment structure and not to the asset class. However, we believe there should be additional asset-class-specific guidance with respect to private equity real estate investments. For example, industry practice calculates performance on real estate investments using a simplified property level calculation that is an approximation of the Modified Dietz method but relies on rough surrogates for net asset value, time weighted contributions, and time weighted distributions. This allows for analysis of performance by individual property or for property composites grouped by, for example, location or property type. Allowing for the calculation of time-weighted returns for GIPS purposes using this method would reduce the cost of GIPS compliance and potentially widen the pool of GIPS compliant real estate investment managers.

3 4. Time-Weighted Rates of Return vs. Internal Rates of Return Question 4a: Do you agree with the proposal that firms should be allowed to choose whether to present IRRs or TWRRs for any closed-end, fixed life, fixed commitments fund where the firm controls the timing of the cash flows? Allowing firms to choose whether to present IRRs or TWRRs for closed-end funds where the firm controls the timing of cash flows is a good step forward from the former requirement to present both IRRs and TWRRs. However, we believe TWRRs are invalid for such investment structures and recommend that IRRs be required as the single measure for such funds. Question 4b: What criteria should be required for a firm to be allowed to present an IRR versus TWRR? If the investment management firm controls the timing of cash flows, IRRs should be presented. If the firm does not control the timing of cash flows, TWRRs should be presented. 5. Valuation Frequency Question 5a: For calculating TWRR, do you believe that valuing monthly and at the time of all large cash flow suffices? For private equity real estate, the benefits of valuing monthly do not justify the substantial costs. Therefore, the current requirement for quarterly internal valuations and annual independent appraisals (where the annual requirement can be as loose as triennial if specified by the investor) should remain in effect for private equity real estate. Question 5b: For calculating IRR, do you agree with the proposed valuation frequency for all portfolios regardless of the underlying investment or asset class? Yes, we agree with valuating annually or as frequently as the IRR is reported. 6. Distribution of Composite Compliant Presentations and Pooled Fund Reports to Existing Clients Question 6a: Do you agree that firms should be required to provide a pooled fund report to investors in the pooled fund on an annual basis? Question 6b: Do you agree that firms should be required to provide a compliant presentation to existing clients in the composite on an annual basis? Question 6c: Do you agree that firms should be required to make an offer to provide a composite compliant presentation or pooled fund report to existing clients or pooled fund investors on an annual basis? Relative to the three questions above, we do not believe these requirements would add value in the private equity real estate sector. Neither would they present a problem. Existing investors in separate accounts or in commingled funds would be routinely receiving information that meets the substance of these requirements under the terms of their investment management agreements.

4 7. Total Firm Assets Question 7a: Do you agree with creating a new category of assets as described above? Question 7b: Which assets should be included in this new category of assets (e.g., UMAs, models, overlay, and advisory-only portfolios)? Question 7c: Should firms be recommended or required to report this new category of assets as well as total firm assets in compliant presentations? Relative to the three questions above, LaSalle does not have any investments of this type in the US Private Equity Real Estate business, and currently has no opinion. 8. Non-Fee-Paying Portfolios Question 8a: Do you agree with no longer allowing firms to exclude non-fee-paying portfolios from composites based solely on fee-paying status? Question 8b: How should non-fee-paying portfolios be treated for net-of-fees calculations? Relative to the two questions above, LaSalle does not have any non-fee paying investments and does not foresee any in the near future within the US Private Equity Real Estate business. Therefore, we currently have no opinion 9. References to the Firm s Claim of Compliance Question 9: Do you agree that firms should have more flexibility to state that the firm complies with the GIPS standards? Yes we agree that firms should have more flexibility with stating the firm complies with GIPS standards. 10. Timeliness and Frequency of Compliant Presentations Question 10a: Do you agree with requiring firms to update compliant presentations on a timely basis? In concept, yes. The definition of timely needs to take into account the typical financial reporting cycle as driven by the investment management agreements, especially given financial audits could create changes to financial inputs of performance. Question 10b: How current should the information be required to be in a compliant presentation? The performance in the presentation should be the finalized most recent annual financial information available that is given to current clients. More than likely this would not be more than 1 year lag. 11. Estimated Trading Expenses Question 11: Do you agree with allowing firms to use estimated trading expenses? Trading expenses are transparent within the real estate industry so estimating trading expenses would not be applicable.

5 12. Compliant Presentation Numerical Information and Disclosures Question 12a: Which existing numerical information and disclosure requirements, if any, should be removed? There is not any current numerical information, nor disclosure requirements for private equity real estate that should be removed. Question 12b: Is there any information not currently required that should be required in compliant presentations? Reference was made in the consultation document regarding attribution and asset allocation information as a possibility of required information to a compliant presentation. Currently we are not in favor of including attribution and asset allocation analysis to become part of the guidance for required information in a compliant presentation. These types of analysis do not allow for any singular conclusion from the results and most times require more discussion around what drove the results. We caution adding a requirement that is not easily interpreted from the numerical results themselves. Question 12c: Are there any disclosures that can be discontinued after a certain period-of-time? Where there are disclosures with no time limits and the disclosure no longer offers informational value in that it is not related to any of the numerical performance information within the presentation itself, consideration could be given to those disclosures by setting a time limit for relevancy. 13. General Question 13: Are there other issues that are important for us to address as part of the GIPS 20/20 project (e.g., private wealth, outsourced CIO, model/hypothetical performance, carve-outs and building blocks )? None at this time.