Income Focused Real Estate Investing

Transcription

1 Black Creek Diversified Property Fund Income Focused Real Estate Investing AS OF SEPTEMBER 30, 2017 This information does not constitute an offer to sell nor a solicitation of an offer to buy securities sold by Black Creek Capital Markets, LLC. Such an offering must be preceded or accompanied by a prospectus which includes management fees, general and fund-specific investment risks and charges and expenses of the investment. Investors should carefully read and consider the prospectus before investing.

2 Risk Factors Past performance is not a guarantee of future results. Investing in real estate assets entails certain risks, including changes in: the economy, supply and demand, laws, tenant turnover, interest rates (including periods of high interest rates), availability of mortgage funds, operating expenses and cost of insurance. This investment will offer limited liquidity options to investors. Real estate investment trusts (REITs) are not suitable for all investors. Further, investing in Black Creek Diversified Property Fund (DPF) stock involves additional and substantial risks specific to DPF, including, among others, that: i. There is no public trading market for shares of DPF s common stock, and DPF does not expect that there will ever be a public trading market for its shares, so redemption of shares by them will likely be the only way to dispose of your shares. ii. DPF s redemption program imposes limits on redemptions. DPF may amend, suspend or terminate its share redemption program at any time. As a result, DPF s shares have only limited liquidity and may become illiquid. Beginning in the first quarter of 2009 through the third quarter of 2016, redemption requests for Class E shareholders exceeded the redemption limits set forth in DPF s Class E share redemption program and associated offering materials, which during that time frame was limited to a 5% per year cap and other limitations with respect to Class E shareholders and DPF conducted a number of self-tender offers to supplement this liquidity. As a result, investors who sought to redeem their Class E shares during that period only received a portion of the proceeds they requested, either through the redemption program or self-tender offers that were conducted by DPF, and were required to resubmit redemption requests periodically in order to renew their request to either have their shares tendered or purchased pursuant to a tender offer. During this time period, these Class E shareholders did continue to receive distributions on the shares they retained. iii. The purchase and redemption price for shares of DPF s common stock will be generally based on the NAV of each class of common stock and will not be based on any public trading market. DPF s NAV will not represent DPF s enterprise value and may not accurately reflect the actual prices at which DPF s assets could be liquidated on any given day, the value a third party would pay for all or substantially all of DPF s shares, or the price that DPF s shares would trade at on a national stock exchange. The board of directors may amend DPF s NAV procedures from time to time. iv. Some of DPF s executive officers and directors and other key personnel are also officers, directors, managers, key personnel and / or holders of an ownership interest in its advisor, its dealer manager and / or other entities related to its advisor. As a result, they face conflicts of interest, including but not limited to conflicts arising from time constraints, allocation of investment opportunities and the fact that the fees its advisor will receive for services rendered to DPF will be based on DPF s NAV, the procedures for which its advisor will assist its board of directors in developing, overseeing, implementing and coordinating. v. If DPF fails to maintain its status as a REIT, it would adversely affect its results of operations and its ability to make distributions to its stockholders. vi. The amount of distributions DPF may make is uncertain, are not guaranteed and may be modified at the program s discretion. DPF may pay distributions from sources other than cash flow from operations including, without limitation, the sale of assets, borrowings or offering proceeds (including the return of principal amounts invested). The use of these sources for distributions would decrease the amount of cash DPF has available for new investments, repayment of debt, share redemptions and other corporate purposes, and could potentially reduce your overall return and dilute the value of your investment in shares of DPF common stock. For each year from 2012 through 2015 and for the quarters ended June 30, 2016, September 30, 2016, December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017, distributions were funded solely from cash flow from operations. The distributions for the three months ended March 31, 2016 were funded 95.3% from cash flow from operations and 4.7% from other sources. vii. DPF s use of leverage increases the risk of loss on its investments. viii. The payment of fees by DPF to its advisor and its dealer manager will reduce the cash available for distribution and will increase the likelihood that investors are unable to recover the amount of their investment in DPF. ix. In connection with DPF s offering, it incurs fees and expenses. In particular, DPF expects to incur a dealer manager and distribution fee which are expected to reduce the amount of distributions received by certain investors and as a result will lower the overall return to such investors. Also, DPF has and expects to continue to incur organizational and offering related expenses which reduce the overall cash flow of DPF and negatively impact its NAV and could negatively impact your overall return. This material must be read in conjunction with the DPF prospectus in order to understand fully all of the implications and risks of the offering of securities to which it relates. This document must be preceded or be accompanied by a prospectus, which contains important information about DPF. This is neither an offer to sell nor a solicitation of an offer to buy the securities described in the DPF prospectus. The offering is being made only by the DPF prospectus. Neither the Securities and Exchange Commission nor any other state securities regulator has approved or disapproved of the securities or determined if the prospectus is truthful or complete. In addition, the Attorney General of the State of New York has not passed on or endorsed the merits of the offering. Any representation to the contrary is unlawful. DPF is not an investment company registered under the Investment Company Act of Please be aware that DPF, Black Creek Diversified Property Advisors LLC, Black Creek Diversified Property Advisors Group LLC, Black Creek Capital Markets, LLC and their respective officers, directors, employees and affiliates are not undertaking to provide impartial investment advice or to give advice in a fiduciary capacity in connection with DPF s public offering or the purchase of DPF s common stock and that the Advisor and the Dealer Manager have financial interests associated with the purchase of DPF s common stock, as described in DPF s prospectus, including fees, expense reimbursements and other payments they anticipate receiving from DPF in connection with the purchase of DPF s common stock. These materials are not intended as a recommendation to make an investment in DPF s common stock and investors should consult their financial advisors before making an investment decision. 2

3 Black Creek Diversified Property Fund (DPF) Why Invest in Commercial Real Estate? Historical income Low correlation to other asset classes Enhanced return potential Prospective hedge against inflation What are the Key Drivers of Demand for Commercial Real Estate? Consistent population growth GDP and employment growth What are Current Trends in Commercial Real Estate? Limited new supply Increasing allocations by institutions Favorable operating fundamentals Why Invest with Black Creek Group? Deeply invested in real estate Real estate operators with development expertise Expertise across property types Why Invest in Black Creek Diversified Property Fund? An operating history that dates back over more than ten years Disciplined portfolio construction process Existing portfolio Investor-aligned structure 3 SECOND STREET NEW JERSEY 3

4 Why Invest in Commercial Real Estate? The U.S. commercial real estate market has become a meaningful and mainstream asset class the fourth asset class in addition to stocks, bonds and cash. Investing directly in commercial real estate can potentially benefit individual investment portfolios in a number of ways. Historical Income Commercial real estate has historically delivered higher income returns than other major asset classes More than 70% of the total returns from commercial real estate were comprised of current income Low Correlation to Other Asset Classes Direct commercial real estate has exhibited historically low or negative correlation to equities, bonds and public REITs Public REITs have historically been more highly correlated to equities than direct commercial real estate 8.0% Average Annual Income Returns 1,2 20 Years Ended December 31, 2016 Direct Commercial Real Estate Correlation 1,3 20 Years Ended December 31, % 4.0% 6.6% 5.6% 4.2% Direct Commercial Real Estate Direct Commercial Real Estate Equities Bonds Public REITs % 2.2% 2.0% Equities Bonds Public REITs 1.00 Direct Commercial Real Estate Public REITs Bonds Cash Equities 4 1 Source: Bloomberg, NCREIF and NAREIT. Direct commercial real estate is represented by the NCREIF Open-End Diversified Core (ODCE) Index, an equal weighted, time weighted index representing a blended portfolio of institutional-quality real estate reported net of management and advisory fees (with the exception the direct commercial real estate income data shown, which is reported gross management and advisory fees). The term core typically reflects lower risk investment strategies, utilizing low leverage and generally represented by equity ownership positions in stable U.S. operating properties. Funds are weighted equally, regardless of size. While funds used in this benchmark have characteristics that differ from DPF (including differing management fees), our management feels that the NCREIF ODCE Index is an appropriate and accepted index for the purpose of evaluating returns on investments in net asset value (NAV) real estate investment trusts (REITs). Equities are represented by the S&P 500 Index, an unmanaged index of the 500 largest stocks (in terms of market value), weighted by market capitalization and considered representative of the broad stock market. Bonds are represented by the Barclays Capital Aggregate Bond Index, an index of securities that are SEC-registered, taxable and dollar denominated. The index covers the U.S. investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities. Bond income return is represented by the yield to worst of Bloomberg Barclays US Aggregate Bond Index. Public REITs are represented by the FTSE NAREIT All Equity REITs Index, which is a free-float adjusted, market capitalization-weighted index of publicly traded U.S. Equity REITs. Constituents of the Index include all tax-qualified publicly traded REITs with more than 50 percent of total assets in qualifying real estate assets other than mortgages secured by real property. An investment in direct commercial real estate differs from the FTSE NAREIT All Equity REITs Index in that direct commercial real estate investments are not publicly traded U.S. Equity REITs; differs from the Barclays Capital Aggregate Bond Index in that direct commercial real estate investments are not fixed-rate debt instruments; and differs from the S&P 500 in that direct commercial real estate investments are not large-cap stocks. Cash is represented by the 90-day Treasury bill rate. These indices are used in comparison to the NCREIF ODCE Index in order to illustrate the differences in historical total returns generated by direct commercial real estate, stocks and bonds. The prices of securities represented by these indices may change in response to factors including: the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates and investor perceptions. All indices are unmanaged and do not include the impact of fees and expenses. An investment cannot be made directly in any index. The returns presented are not indicative of returns to be attained by DPF. Non-traded REITs do not trade on a national securities exchange, and therefore, are generally illiquid. Early redemption of non-traded REIT shares is often very limited, and fees associated with the sale of these products can be higher than other asset classes. In some cases, periodic distributions may be subsidized by borrowed funds and include a return of investor principal. This is in contrast to the distributions investors receive from large corporate stocks that trade on national exchanges, which are typically derived solely from earnings. Investors typically seek income from non-traded REIT distributions over a period of years. Upon liquidation, return of capital may be more or less than the original investment depending on the value of assets. Distributions for all REITS that are from current or accumulated earnings and profits are taxed as ordinary income, as opposed to the tax rate on qualified distributions, which generally carries a tax rate of 15%. But that rate can be 20% for people in the highest tax bracket or 0% for those in the lowest two tax brackets. If a portion of a non-traded REIT distribution constitutes a return of capital, that portion is not taxed until the investment is sold or liquidated, at which time investors will be taxed at capital gains rates. Fixed income securities are subject to interest rate, inflation, credit and default risk. As interest rates rise, bond prices usually fall, and vice versa. Prices may decline if an issuer fails to make timely payments or its credit strength weakens. Comparisons shown are for illustrative purposes only and do not represent specific investments or the performance of DPF. Past performance does not guarantee future results. DPF has the ability to utilize higher leverage than is allowed for the funds in the NCREIF ODCE Index, which could increase DPF s volatility relative to the Index. Total returns presented assume reinvestment of distributions. Direct commercial real estate return: 7.94%; standard deviation: 6.51%. Equities return: 7.68%; standard deviation: 16.73%. Bonds return: 5.29%; standard deviation: 3.51%. Public REITs return: 9.67%; standard deviation: 20.44%. Sharpe Ratios Direct commercial real estate: 0.88; Equities: 0.33; Bonds: 0.88; Public REITs: The Sharpe ratio is calculated by subtracting the risk-free rate such as that of the 3-Month Treasury Bill from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns.

5 Enhanced Risk-Adjusted Return Potential Direct commercial real estate has historically delivered higher returns than equities and bonds while also being at the lower end of the risk spectrum (which represents volatility) than equities, making its historic risk-adjusted return more favorable than these other asset classes Prospective Hedge Against Inflation Direct commercial real estate net operating income (NOI) has historically exceeded inflation Rent escalation clauses in many leases and organic rental growth provide a strong inflation hedge Annualized Returns 1,3 20 Years Ended December 31, 2016 Real Estate Income and Inflation 4,5 Indexed, 1995=100 Higher Return 12% 10% % Direct Commercial Real Estate Equities Lower Return 6% Bonds 4% 5% 10% 15% 20% 25% Less Volatility More Volatility Standard Deviation U.S. CPI Commercial Real Estate Net Operating Income The amount of distributions DPF may make is uncertain, is not guaranteed, may be modified at the program s discretion, and is subject to board approval. DPF may pay distributions from sources other than cash flow from operations including, without limitation, the sale of assets, borrowings or offering proceeds (including the return of principal amounts invested). The use of these sources for distributions would decrease the amount of cash DPF has available for new investments, repayment of debt, share redemptions and other corporate purposes, and could potentially reduce your overall return and dilute the value of your investment in shares of DPF common stock. Because borrowed funds were used to pay distributions, the distribution rate may not be sustainable. For each year from 2012 through 2015 and for the quarters ended June 30, 2016, September 30, 2016, December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017, distributions were funded solely from cash flow from operations. The distributions for the three months ended March 31, 2016 were funded 95.3% from cash flow from operations and 4.7% from other sources. 3 Correlation measures how one investment performs in relation to another, with a coefficient of +1 being a perfect, positive correlation and a coefficient of -1 being a perfect, negative correlation. When two asset classes have a correlation of +1, they will both move up or down by the same amount in the same direction. Conversely, a correlation of -1 indicates that when one asset class moves up or down, the other moves in the opposite direction by the same amount. In general, asset classes with a correlation less than 0.70 or greater than are considered to have relatively low correlation. Research indicates that direct commercial real estate has a relatively low correlation with other asset classes, and may help reduce the volatility of a stock-and-bond portfolio. The NCREIF ODCE Index is subject to less volatility because its value is based on commercial real estate properties and not subject to market pricing forces. Volatility is measured by historical standard deviation, which is derived from historical returns. Lower volatility could result in lower returns during certain periods of time. Although DPF s stock price is subject to less volatility, DPF shares may be significantly less liquid than shares of publicly traded securities, and are not immune to fluctuations, including downward fluctuations. Additionally, the value of DPF s underlying property holdings will fluctuate and be worth more or less than the acquisition cost when sold. Investors are advised to consider the limitations on liquidity of DPF shares when also evaluating the volatility of DPF s stock price as compared to that of the stock prices of publicly traded securities. 4 Typically, if the overall returns of an asset class exceed inflation, the asset class is considered an inflation hedge. Commercial real estate net operating income (NOI) has historically provided overall returns that have exceeded inflation. There is no guarantee, however, that DPF can generate the overall returns needed to out pace inflation. 5 Source: Green Street Advisors and U.S. Bureau of Labor Statistics. As of December 31, Net operating income (NOI) growth represents the average NOI growth by year across the apartment, industrial, mall, office and strip retail sectors. NOI may not be correlated to or continue to keep pace with inflation. The Consumer Price Index (CPI) is an indicator of inflation that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food and transportation. Investors cannot invest in any index. Comparisons shown are for illustrative purposes only and do not represent specific investments or the performance of DPF. 5

6 What are the Key Drivers of Demand for Commercial Real Estate? Population Growth With the U.S. population currently growing at approximately 1.1% per year on average, there could be up to 38 million more people by 2030 and 68 million more people by million more people is approximately 15 additional cities the size of Dallas milllion people 321 milllion people 359 milllion people Estimate based on 2016 census data 7 One birth every 8 seconds One death every 12 seconds One international migrant every 33 seconds One person gained every 14 seconds GDP & Employment Growth GDP and employment growth create demand for places for people to work, shop and play 8 6.0% 6.0% 4.0% Consistent GDP and employment growth 4.0% GDP Average Percentage Change from Preceding Period 2.0% 0.0% -2.0% 2.0% 0.0% -2.0% Employment Rate 12-Month Percentage Change -4.0% -4.0% -6.0% E 2018 E 2019 E 2020 E -6.0% GDP Employment Rate 6 U.S. Census Bureau Population Division, December Census.gov U.S. and Vintage 2015 Population Estimates: Population Estimates. 7 World Population Clock, May Estimate based on 2016 census data. 8 Source: U.S. Bureau of Labor Statistics, January 2017; U.S. Bureau of Economic Analysis, January 2017; Moody s, Employment rate is calculated as percentage change of workforce receiving a paycheck. 9 Source: CoStar Portfolio Strategy, 4Q Data represents all office, retail and industrial properties available in the CoStar database. 10 Source: 2016 Institutional Real Estate Allocations Monitor. Institutional investors often invest on substantially different terms and conditions than individual investors, which may include lower fees, expenses or leverage. 11 Source: YaleNews, Investment return of 11.5% brings Yale endowment value to $25.6 billion, September 23, Source: CalPERS, Allocation & Market Value by Asset Class as of June 30, 2016; The University of Texas Investment Management Company (UTIMCO), 2016 Annual Report, Permanent University Fund and the General Endowment Fund Asset Allocation as of December 31, 2016; Dallas Police & Fire Pension System Investment Summary as of December 31, 2016; PSP Investments Asset Mix as of March 31, Source: Green Street Advisors Commercial Property Outlook, May Data represents the equal-weight average of apartments, industrial, mall, office and strip center properties in the Green Street Advisors database. 6

7 What are Current Trends in Commercial Real Estate? Limited New Supply Limited development financing continues to lead to reduced supply levels Aggregate Monthly Construction Starts 9 Increasing Institutional Allocations to Direct Commercial Real Estate On average, institutions generally have greater than 10% allocated to commercial real estate 10 while individuals tend to have limited allocation to the asset class Percentage Allocations to Direct Real Estate 20.0% 1,800 1, % 4.0% 16.0% 17.4% 1,400 1, % 3.0% 12.0% 12.0% 12.5% (MSF) 1, % 2.0% 8.0% 8.2% 9.3% % % 4.0% % Q4 1986Q4 1987Q4 1988Q4 1989Q4 1990Q4 1991Q4 1992Q4 1993Q4 1994Q4 1995Q4 1996Q4 1997Q4 1998Q4 1999Q4 2000Q4 2001Q4 2002Q4 2003Q4 2004Q4 2005Q4 2006Q4 2007Q4 2008Q4 2009Q4 2010Q4 2011Q4 2012Q4 2013Q4 2014Q4 2015Q4 2016Q4 2016Q4 Deliveries % of Total Stock % of Stock Hist. Avg. 0.0% The University of Texas Investment Management Company 12 CalPERS 12 Dallas Police & Fire Pension System 12 Yale 11 The Public Sector Pension Investment Board (PSP Investments) 12 Favorable Operating Fundamentals Commercial real estate continues to experience positive occupancy and rent growth 13 Occupancy 93% 92% 91% 90% 89% 92% 92% 92% 91% 89% 89% 90% 90% 91% 91% 91% 92% 92% 88% E 9% 7% 5% 3% 1% -1% -3% -5% -7% -9% 5% 6% 6% -2% Rent Growth 4% 3% 3% 3% 3% 3% -1% -9% 3% E 7

8 Why Invest with Black Creek Group? Black Creek Group is Deeply Invested in Real Estate Black Creek Group invests in real estate from the ground up, building by building, scrutinizing and managing every aspect of every investment, with the goal of creating value for shareholders. For more than 25 years, Black Creek Group has developed, acquired, operated, financed and sold commercial and residential real estate in North America, with two decades of experience working on behalf of institutional investors. Real Estate Operators with Development Expertise Black Creek Group takes a rigorous, hands-on approach that benefits from proximity to its real estate investments. Operating History 25 YEARS Historic Development 14 and Acquisition Volume $17.7 BILLION Offices 9 More Than 300 Employees AREAS Across North America Vertically Integrated 5 Development Acquisitions Value-add projects Asset management Leasing OF EXPERTISE Expertise Across Property Types Black Creek Group invests across the four major property types. A real estate industry professional manages each property type, and is supported by fully integrated due diligence, finance, acquisitions, asset management, accounting and reporting teams. Office Industrial Retail Multi-Family 8 14 Represents the total cost of real estate projects and loans secured by real estate acquired and/or developed by Black Creek Group, its affiliates and its direct and indirect owners, including John Blumberg, James Mulvihill and Evan Zucker, from inception through September 30, 2017.

9 655 MONTGOMERY SAN FRANCISCO Why Invest in Black Creek Diversified Property Fund (DPF)? DPF is a net asset value real estate investment trust or NAV REIT. Existing Portfolio An operating history that dates back over more than ten years $2.3 billion portfolio 15 of high-quality real estate assets Disciplined Portfolio Construction Process DPF can invest across the property spectrum, including office, retail, industrial and multi-family in a single investment vehicle Income Focused Real Estate DPF provides individual investors the opportunity to invest in income focused commercial real estate Investor-Aligned Structure DPF s advisor is compensated through management fees and a performance participating allocation based on total return. DPF s advisor is not compensated through acquisition, disposition, financing or development fees There is no guarantee that the investment objective can be achieved. Past performance is not indicative of future results. Actual results may vary. Diversification does not assure a profit or protect against loss in a declining market. 15 As of September 30,

10 Disciplined Portfolio Construction Process DPF is constructed using a clear, repeatable institutional process. Office Boutique Office Buildings in Select Submarkets Lease Terms: Medium Portfolio Role: NAV and income growth potential Retail Diversified Property Fund Industrial Highly Functional Bulk and Light Industrial Distribution Buildings in High-Barrier-To-Entry Markets Lease Terms: Medium Portfolio Role: Anchor for portfolio income and NAV growth potential Multi-Family Necessity-Based Neighborhood and Community Shopping Centers with Strong Anchor Tenants Lease Terms: Long Portfolio Role: Income and NAV stability Multi-Family Properties in Key Target Markets Lease Terms: Short Portfolio Role: Income and NAV growth potential There is no guarantee that the investment objective can be achieved. Past performance is not indicative of future results. Actual results may vary. Diversification does not assure a profit or protect against loss in a declining market. SPRINGDALE MALL GREATER BOSTON 10

11 Portfolio Overview Direct Real Estate Property Ownership 16 As of September 30, 2017 Bay Area 15% Denver 4% Greater Boston 22% Metro New York / New Jersey 17% Philadelphia 7% Washington D.C. 9% Dallas 3% % of Total Real Properties Fair Value Austin 7% South Florida 8% Existing Portfolio (as of September 30, 2017) $2.3 billion portfolio 53 properties 20 geographic markets Approximately 8.6 million net rentable square feet Diversified tenant base approximately 500 customers Total portfolio approximately 89.5% leased 5.0-year average portfolio lease term by annualized base rent Debt to asset ratio: % Weighted average interest rate: 3.4% Diversified by Geography 18 Northeast 46% Pacific 15% Southwest 13% Mid-Atlantic 12% Southeast 8% Mountain 5% Midwest 1% Total 100% Select Corporate Tenants 19 Alliant Techsystems Nordstroms Amazon.com Novo Nordisk Apple, Inc. Procter & Gamble Bank of America Publix Super Markets Charles Schwab & Company, Inc. Seton Healthcare Network CVS Starbucks Flextronics International USA, Inc. Stop & Shop Home Depot The TJX Companies, Inc. WeWork Whole Foods Market Property Type Allocation 18 Office Multi-Tenant 46% Retail Grocery 27% Retail Other Open Air 17% Office Single-Tenant 6% Industrial 4% Total 100% There is no guarantee that the investment objective can be achieved. Past performance is not indicative of future results. Actual results may vary. Diversification does not assure a profit or protect against loss in a declining market. 16 Based on fair value, real property only. Markets shown comprise greater than 2% of the total fair value of DPF s real property portfolio. 17 Total principal outstanding under DPF s total borrowings divided by the fair value of DPF s real property and debt investments. 18 Measured by fair value, real property only. 19 None of the tenants named have endorsed Black Creek Diversified Property Fund or its public offering. The names are included only for purposes of your evaluation of the quality of the tenant base of the properties owned and operated by Black Creek Diversified Property Fund. 11

12 Select Properties Property: Amazon Location: Greater Louisville, KY Type: Industrial Size: 727,000 Sq. Ft. Major Tenant: Amazon.com Property: 655 Montgomery Location: San Francisco, CA Type: Office Size: 263,000 Sq. Ft. Major Tenant: WeWork, Telmate, Redfin Corporation Property: Shiloh Road Location: Dallas, TX Type: Industrial Size: 318,000 Sq. Ft. Major Tenant: Flextronics Property: Chester Springs Location: Chester, NJ Type: Retail Size: 225,000 Sq. Ft. Major Tenants: Shoprite, Marshalls, Staples Property: 1st Avenue Plaza Location: Denver, CO Type: Office Size: 262,000 Sq. Ft. Major Tenants: Madison Street Company, The Denver Foundation, Stewart Title Co. Property: Suniland Shopping Center Location: Miami, FL Type: Retail Size: 82,000 Sq. Ft. Major Tenants: Nicklaus Children s Hospital, CVS 12

13 Performance Since NAV Inception (September 30, 2012) DPF seeks to deliver competitive performance Returns Summary as of September 30, ,21 DPF Class I Share DPF Class D Share DPF Class T / S Share 22 with Sales Charges DPF Class T / S Share 22 at NAV One-Year Trailing 12-Month 4.56% 4.06% 0.44% 3.54% Three-Year Annualized 6.63% 6.11% 4.56% 5.59% Since NAV Inception Annualized % 6.87% 5.72% 6.34% Volatility and Risk-Adjusted Performance Summary as of September 30, 2017 DPF Class I Share DPF Class D Share DPF Class T / S Share 22 with Sales Charges DPF Class T / S Share 22 at NAV Standard Deviation (annualized) % 1.70% 1.70% 1.70% Sharpe Ratio (since NAV inception) 21, Distribution Summary as of September 30, 2017 DPF Class I Share DPF Class D Share DPF Class T / S Share 22 with Sales Charges DPF Class T / S Share 22 at NAV Annualized % 4.58% 3.85% 3.99% There is no guarantee that the investment objective can be achieved. Past performance is not indicative of future results. Actual results may vary. Diversification does not assure a profit or protect against loss in a declining market. 20 Performance is measured by total return. Total return represents the compound annual rate of return assuming reinvestment of all distributions. Beginning and ending values used to calculate total returns after August 31, 2017 are the transaction price(s) for the month indicated. Past performance is not a guarantee of future results. Performance data quoted above is historical. Current performance may be higher or lower than the performance data quoted. The performance data does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the sale of fund shares, as applicable. The NAV is based on estimated values. Please see the NAV Methodology page at blackcreekdiversified.com for more detailed information. 21 NAV inception is September 30, The historical returns presented show share performance since September 30, 2012, which is when DPF first sold Class A, W and I shares after converting to an NAV REIT on July 12, Subsequently, as a result of a share restructuring effective as of September 1, 2017, DPF s outstanding Class A, W and I shares changed to Class T, Class D and a new version of Class I shares, respectively. DPF also created a new Class S share, with the same NAV per share and class-specific expenses as Class T shares. Accordingly, in this table; the returns of Class T and Class S shares reflect the performance of Class A shares since NAV inception through the restructuring date; the return of Class D shares shown reflects the performance of Class W shares since NAV inception through the restructuring date; and the return of the new version of Class I shares reflects the performance of the prior Class I shares since NAV inception through the restructuring date. In connection with the restructuring, DPF also revised its fee structure with its advisor and dealer manager and its NAV methodology, which will affect returns going forward. Please see DPF s definitive proxy statement filed with the Securities and Exchange Commission on June 7, 2017, for more information about the fee changes and our pro forma estimates of how those fee changes would have affected returns on DPF shares in the years Investors in DPF s fixed price offerings prior to NAV inception on September 30, 2012 are likely to have a lower return. 22 The Class S share and Class T share are offered with an up to 3.5% up-front sales loads to investors through registered broker / dealers, which will affect the above returns and future returns depending on the investor s hold period. 23 Standard deviation is a measurement of the variability (volatility) of a security, derived from the security s historical returns. The higher the standard deviation, the greater potential for volatility. The Sharpe Ratio is a measure for calculating risk-adjusted return, and is calculated by subtracting the risk-free rate such as that of the 3-Month Treasury Bill from the rate of return for a portfolio and dividing the result by the standard deviation of the portfolio returns. 13

14 Summary of Fund Terms 24 Fund Type Perpetual life, non exchange traded real estate investment trust (REIT) Generally, equal to most recently published net asset value (NAV) per share for each share class, plus applicable selling Offering Price 25 commissions and dealer manager fees NAV published within 15 days of month end, and available on blackcreekdiversified.com and in prospectus supplements Subscription / NAV Frequency Subscription agreements accepted throughout the month Purchases effective as of the first calendar day of each month (subscription requests must be received at least five business days prior to the first calendar day of the month) Distributions 26 Monthly Distribution Reinvestment Plan 27 Monthly-Automatic Minimum Initial Investment 28 $2,500 $1 million for Class I (unless waived) Eligibility Standards 28 Either (1) a net worth of at least $250,000 or (2) a gross annual income of at least $70,000 and a net worth of at least $70,000 Certain states have additional suitability standards. See the prospectus for more information Redemption Program Monthly redemptions will be made at the transaction price, which is generally equal to prior month s NAV Shares not held for at least one year will be redeemed at 95% of the transaction price Overall limit on net redemptions equal to 5% of aggregate NAV per calendar quarter Redemption requests must be received in good order by the second to last business day of the applicable month DPF is not obligated to redeem any shares and may choose to redeem only some, or even none, of the shares that have been requested to be redeemed in any particular month in its discretion The redemption program is subject to other limitations, including class-specific limits, and DPF s board may modify, suspend or terminate the plan If the program limits are imposed and any portion of a redemption request is not honored, a new redemption request must be submitted in the next month Tax Reporting Form 1099-DIV Share-Class Specific Fees Class T 29 Class S 29 Class D Class I Availability Through transactional / brokerage accounts Through fee-based (wrap) programs, registered investment advisors and other institutional and fiduciary accounts Up-front Selling Commission Up to 3.0% Up to 3.5% None None Up-front Dealer Manager Fee Up to 0.50% None None None Annual Distribution Fee (trailing compensation) 0.85% 0.85% 0.25% None Advisor Fees Management Fee Performance Participation Allocation 1.10% per annum of NAV, payable monthly 12.5% of the annual total return, subject to a 5% hurdle amount and a high-water mark 24 Terms summarized are for informational purposes and qualified in their entirety by the more detailed information set forth in the DPF prospectus. 25 DPF may offer shares at a price that it believes reflects the NAV per share of such stock more appropriately than the prior month s NAV per share, including by updating a previously disclosed offering price, in cases where it believes there has been a material change (positive or negative) to DPF s NAV per share since the end of the prior month. 26 The amount of distributions DPF may make is uncertain, is not guaranteed, may be modified at the program s discretion, and is subject to board approval. DPF may pay distributions from sources other than cash flow from operations including, without limitation, the sale of assets, borrowings or offering proceeds (including the return of principal amounts invested). The use of these sources for distributions would decrease the amount of cash DPF has available for new investments, repayment of debt, share redemptions and other corporate purposes, and could potentially reduce your overall return and dilute the value of your investment in shares of DPF common stock. Because borrowed funds were used to pay distributions, the distribution rate may not be sustainable. For each year from 2012 through 2015 and for the quarters ended June 30, 2016, September 30, 2016, December 31, 2016, March 31, 2017, June 30, 2017 and September 30, 2017, distributions were funded solely from cash flow from operations. The distributions for the three months ended March 31, 2016 were funded 95.3% from cash flow from operations and 4.7% from other sources. 27 Stockholders will automatically become a participant in DPF s distribution reinvestment plan unless the stockholder is a resident of a state that prohibits automatic enrollment, is a client of a participating broker dealer that does not permit automatic enrollment in the distribution reinvestment plan, or the stockholder elects not to become a participant by noting such election on their subscription agreement. If a stockholder is a resident of a state prohibiting automatic enrollment, or a client of a participating broker dealer that does not permit automatic enrollment in the distribution reinvestment plan, the stockholder may choose to enroll as a participant in DPF s distribution reinvestment plan. As a participant, the cash distributions attributable to the class of shares that the stockholder owns will automatically be reinvested in additional shares of the same class. The cash distributions the stockholder receives will be reinvested in shares of DPF s common stock at the transaction price in effect on the distribution date. However, DPF s board of directors may determine, in its sole discretion, to have any distributions paid in cash without notice to participants, without suspending the plan and without affecting the future operation of the plan with respect to participants. DPF s board of directors may amend, suspend or terminate the distribution reinvestment plan in its discretion at any time upon 10 days notice to stockholders. DPF may provide notice by including such information (a) in a Current Report on Form 8-K or in its annual or quarterly reports, all publicly filed with the Commission or (b) in a separate mailing to the participants. Following any termination of the distribution reinvestment plan, all subsequent distributions to stockholders would be made in cash. Investors in the distribution reinvestment plan will experience immediate dilution of the net tangible book value of their shares. 28 Select broker / dealers may have different suitability standards, may not offer all share classes, and / or may offer DPF at a higher minimum initial investment. 29 With respect to Class S shares and Class T shares, the amount of up-front selling commissions and dealer manager fees may vary at select broker-dealers, provided that the sum will not exceed 3.5% of the transaction price. 14

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16 NOT A DEPOSIT l NOT FDIC INSURED l NOT GUARANTEED BY THE BANK l MAY LOSE VALUE NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY Black Creek Capital Markets, LLC, Distributor Member FINRA th Street, 17th Floor Denver, CO REIT (7348) blackcreekdiversified.com blackcreekgroup.com BCDPF-RET-OB-NOV17