GLOBAL LISTED INFRASTRUCTURE MARKET COMMENTARY Q2 2016

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1 GLOBAL LISTED INFRASTRUCTURE MARKET COMMENTARY Q2 POSITIVE PERFORMANCE CONTINUES FOR GLOBAL LISTED INFRASTRUCTURE Listed infrastructure stocks continued their positive performance from the first quarter to deliver a solid 4.7% in Q2, bringing the YTD return to 14.0%. The performance in the quarter and year is well ahead of global equities (1.1% Q2 and 1.4% YTD) and global bonds (2.9% Q2 and 9.0% YTD). The strong returns have been supported by declining sovereign bond yields driving investors towards income producing securities, and by the stable underlying performance of infrastructure assets which are generally less affected by broader macro-economic turmoil. BREXIT INCREASES UNCERTAINTY FOR MARKETS BUT LITTLE DIRECT IMPACT ON INFRASTRUCTURE ASSETS JEREMY ANAGNOS, CFA CIO - Infrastructure The Brexit vote introduces a high degree of political and therefore economic uncertainty for the U.K. and its main trading partner, Continental Europe. This vote sets into a motion a political process which carries many uncertainties and will take years to fully unfold, as the U.K. finds a new economic and political path in its relationship with the EU. However, we expect limited impact to the overall regulatory environment and the on-going need for infrastructure investment in the region. Regulated assets remain a relatively safe-haven in this uncertain environment, and we are not surprised that U.K. utilities traded up after the vote. Demand sensitive assets, such as airports and toll roads, may have some sensitivity to the potential impact of weakened future economic growth as a result of Brexit. We expect the impact for most of the transport infrastructure stocks in the region to be minimal, however, as the demand drivers are more local than regional. LAUNCH OF GLOBAL LISTED INFRASTRUCTURE ORGANIZATION SIGNALS INCREASED DEMAND FOR ASSET CLASS We are proud to be one of the founding sponsors of the Global Listed Infrastructure Organization ( GLIO ), which was established in June to promote listed infrastructure companies to the global investment community. The GLIO follows in the footsteps of industry bodies in the listed real estate world (NAREIT, EPRA and APREA) that have had success over the past few decades in bringing awareness of the listed real estate asset class to investors globally. In fact, the recent GICS change to allow for a separate REIT classification is due in part to the work of those industry sponsors. The launch of the GLIO reflects the increased demand and interest for the listed infrastructure asset class. (For more information: LISTED INFRASTRUCTURE OFFERS VISIBLE TOTAL RETURN OUTLOOK IN THE FACE OF UNCERTAINTY AND WEAK GROWTH We believe that listed infrastructure offers investors a lower-risk way of gaining exposure to a slow growth global economy with macro uncertainty, than the broad equity markets. While the infrastructure market has achieved our 12-14% total return for the year, we are now expecting 8-10% total return over next 12 months. Listed infrastructure offers a 3.9% dividend yield and 7-8% dividend growth.

2 GLOBAL LISTED INFRASTRUCTURE STOCK PERFORMANCE FOR THE Q2 PERIOD 1 The Americas region continued to outperform other regions in the quarter, producing an 8.8% total return. The Midstream/ Pipelines sector led performance in both Canada and the U.S. producing double-digit returns. After lagging the first quarter, tower stocks in the U.S. enjoyed strong performance, rising 13.9%. Regulated Electric, Integrated Electric and Gas Distribution utilities generated solid returns in the region in a range of 5.5%-6.5% but below the 8.8% average. Rail stocks continued to lag, although the U.S. group outperformed the Canadian group materially (+6.4% vs -4.6%). The overall performance of the U.S. infrastructure market was supported by the U.S. 10-year treasury declining a further 30bps in the period to 1.47%, on top of the 50bps decline in the first quarter (started the year at 2.27%). U.K. infrastructure stocks produced the second best performance globally at 1.5%, which is remarkable given the 7% currency depreciation due to the Brexit vote. The regulated assets owned by the U.K. infrastructure companies proved resilient in the face of extreme uncertainty. Continental European infrastructure stocks fared poorly during the period, although with wide variation among the sectors. Overall performance for the region was negative 5.9%. The main driver of the negative return was a 30.4% decline in the Satellite sector as one of the two main companies, Eutelsat, sharply reduced guidance during the quarter. Moreover, the other communication sector, Towers, suffered a 7% decline as expected M&A/consolidation in the sector appeared to dissipate for now. Demand sensitive transport sectors such as Passenger Rail, Toll Roads and Airports were also negative as investors contemplated the impact of weaker economic growth following Brexit. As in the U.K., regulated assets held value with Gas Distribution stocks flat and Regulated Electric utilities up 2.1% Emerging markets continued to rebound following a strong end to 2015, rising 1.4%. Brazil was again the star performer, up 32.3%. The markets in Brazil rebounded on the back of political winds changing towards an assumed more market friendly leadership. The currency impact for USD investors has been the opposite of that experienced in Europe where the depreciation has reduced returns. The returns from the Brazilian stocks for U.S. investors have been boosted by a 10.6% appreciation in the Brazilian Real. In Developed Asia, the overall return was 1.1%. Australia and New Zealand led the way with 3.5% and 3.7% returns, respectively. Gas distribution and Integrated Electric stocks in Japan, as well as Ports in Hong Kong were the laggards generated negative returns. Returns of Global Listed Infrastructure Universe versus Global Equities and Global Bonds 10% 8.8% 8.9% 9.9% 8.3% 8.2% 5% 4.7% 6.1% 5.4% 5.8% 4.5% 4.4% 5.5% 5.5% 2.9% 2.8% 1.1% 1.8% 0% -5% -3.9% Q2 1 Year 3 Year 5 Year 10 Year 15 Year Global Infrastructure Global Equities Global Bonds Source: Global Infrastructure, Global Equities, and Global Bonds are represented by the UBS Global Infrastructure & Utilities Index, - Net Withholding Tax through 02/28/2015 and FTSE Global Core Infrastructure 50/50 Index from 03/01/ /30/; MSCI ACWI IMI - Net of Withholding Tax and Barclays Global Aggregate Bond Index as of 06/30/ respectively. Information is subject to change and is not intended to be a forecast of future events, a guarantee of future results, or investment advice. An index is unmanaged and not available for direct investment. This is not representative of the performance of any CBRE Clarion strategy. Past performance is no guarantee of future results. 1 All discussion of performance of infrastructure stocks refers to the UBS Global Infrastructure & Utilities Index - Net of Withholding Tax through 02/28/2015 and FTSE Global Core Infrastructure 50/50 Index from 03/01/ /30/. Global Listed Infrastructure Market Commentary Page 2

3 Global Listed Infrastructure Universe Valuation Summary (forecasts) P/E EPS Growth 2 YR CAGR 2017/2015 EV/EBITDA Dividend Yield Debt/EV Airports 23.5x 12.0% 15.2x 3.3% 24.4% Water 24.7x 6.0% 11.8x 3.1% 37.8% Communications 20.1x 9.5% 17.7x 2.6% 29.0% Midstream/Pipelines 13.5x 4.3% 14.0x 6.1% 37.2% Rail 16.2x 8.0% 9.3x 2.1% 25.0% Toll Roads 19.3x 8.8% 13.7x 4.0% 30.3% Gas Distribution 17.9x 3.8% 11.7x 3.3% 33.3% Integrated Electric 16.3x 1.8% 9.4x 3.8% 44.4% Regulated Electric 18.6x 4.1% 12.1x 3.6% 37.3% Renewable Energy 13.3x 22.5% 11.3x 5.8% 48.5% Global 17.1x 4.9% 11.9x 3.9% 36.1% Source: CBRE Clarion, Bloomberg and FactSet, as of 06/30/. Forecasts based mostly on consensus estimates. This is for informational purposes only, is subject to change, and is not intended as investment advice, or a guarantee of future results. Forecasts and any factors discussed are not a guarantee of future results. Breakdown of the Global Listed Infrastructure Investment Universe 49% United States 7% Canada 3% Latin America 16% Continental Europe 4% United Kingdom 11% Asia 7% Emerging Asia 3% Australia/NZ 22% Integrated Electric 22% Regulated Electric 19% Midstream/Pipelines 11% Rail 6% Gas Distribution 5% Toll Roads 4% Communications 3% Airports 3% Water 2% Ports 2% Renewable Energy 1% Diversified Source: CBRE Clarion and Bloomberg as of 06/30/. Percentages may not add to 100% due to rounding. CBRE Clarion s defi nition of the global listed infrastructure universe is roughly US$3.1 trillion in equity market cap and consists of 400 companies. KEY THEME AHEAD - THE U.S. PRESIDENTIAL ELECTION We are closely monitoring the U.S. Presidential election. The main parties have reached the nominations and the two candidates have strikingly different views on one of the more important aspects of the main drivers for infrastructure stocks: energy policy. The Democratic candidate, Hillary Clinton, has indicated she would enhance the existing administration s pro-renewables policy. Moreover, while Clinton has not opposed fracking, there is pressure within the Democratic Party to impose harsher regulations on fracking. The Republican candidate, Donald Trump, has said he would disband the EPA, rip up the Paris accords on climate change and roll back anti-coal regulation. He is also pro-fracking. But, Trump s proposal to build a wall at the Mexican border would likely be viewed negatively for U.S. infrastructure companies operating in that market. Global Listed Infrastructure Market Commentary Page 3

4 KEY THEMES (CONTINUED...) The implications of these differing views have significant ramifications for the growth prospects of a range of infrastructure companies. For example, the potential implications of a Trump Presidency if he acted on his statements: Utilities invested in renewable projects, natural gas pipelines, gas distribution systems could see less need for investment; utilities with coal fired generation assets could see those assets have renewed value; rail companies could see volumes for coal transport increase, after years of decline. Our positioning and views on infrastructure stocks in relation to energy have been geared towards companies with exposure to renewable and natural gas investments. We would need to significantly re-assess our renewable positioning in the event of a Trump Presidency, although we would likely be well positioned in a Hillary Presidency. The Brexit vote provided a powerful example of the limits that the media, polling and betting odds can provide in predicting the outcome of emotionally charged events. We will monitor the expectations of the market as well as any further indications from the candidates on their intentions regarding infrastructure or energy policy. CAPITAL MARKETS UPDATE The continued growth of renewable investment and demand was highlighted by the largest IPO in Europe this year. DONG Energy, a leading renewable energy company based in Denmark, completed its IPO in June raising $2.6 billion and valuing the company at $15 billion. The IPO was the only one completed in the period but its success and the continued strong performance of infrastructure may lead to more offerings. Infrastructure companies raised $6.9 billion of secondary equity and hybrid capital in Q2, roughly in-line with the amount issued in Q As was the case in Q1, the bulk of equity issuance was completed by North American Midstream/ Pipeline companies who took advantage of improved sentiment towards the energy market to reduce leverage by issuing equity. We maintain our view that equity issuance for the full year will likely exceed the $25.4 billion tallied in Global Equity and Hybrid Issuance $25.4B $25.4B US$ in Billions $7.4B $6.7B $5.5B $5.7B $11.7B $6.9B US$ in Billions $7.4B $6.7B $5.5B $5.7B $11.7B $6.9B 0 Q Q Q Q Q1 Q2 0 Q Q Q Q Q1 Q2 Americas Asia Pacfic Europe Airports Communications Diversified Gas Distribution Integrated Electric Midstream/Pipelines Regulated Electric Renewable Energy Toll Roads Water Source: CBRE Clarion and Bloomberg as of 06/30/. Information is the opinion of CBRE Clarion, which is subject to change and is not intended to be a forecast of future events, a guarantee of future results, or investment advice. Equity raised is from the time period January 2014 to June. Any factors discussed are not indicative of future investment performance. Past performance is no guarantee of future results. Global Real Estate Securities Market Commentary Page 4

5 AMERICAS Philadelphia Global Headquarters 201 King of Prussia Road Suite 600 Radnor, PA Phone EUROPE London 3rd Floor, One New Change London, EC4M 9AF United Kingdom Phone ASIA PACIFIC Hong Kong 3501, Two Exchange Square 8 Connaught Place Central, Hong Kong Phone Tokyo Kasumigaseki Common Gate West Tower 33F Kasumigaseki, Chiyoda-ku Tokyo, Japan Phone Sydney 363 George Street Level 21 Sydney NSW 2000 Australia Phone IMPORTANT DISCLOSURES AND RISK INFORMATION The views expressed represent the opinion of CBRE Clarion Securities which are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources which have not been independently verified for accuracy or completeness. While CBRE Clarion Securities believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimate, projections, and other forward-looking statements are based on available information and management s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions which may involve known and unknown risks and uncertainties. The securities discussed herein should not be perceived as a recommendation to purchase or sell any particular security. It should not be assumed that investments in any of the securities discussed were or will be profitable. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in infrastructure securities involves risks including the potential loss of principal. Infrastructure equities are subject to risks similar to those associated with the direct ownership of infrastructure. Portfolios concentrated in infrastructure securities may experience price volatility and other risks associated with non-diversification. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Yields fluctuate and are not guaranteed. Past performance is no guarantee of future results. The FTSE Global Core Infrastructure 50/50 Index provides exposure to infrastructure as defined by the Industry Classification Benchmark (ICB) and adjusts the exposure to certain infrastructure sub-sectors. Company weights are limited to 5%. The UBS 50/50 Index is an unmanaged market-weighted index which consists of infrastructure and utility companies from developed markets whose floats are larger than US $500 million. The MSCI ACWI Investable Market Index (IMI) captures large, mid and small cap representation across 23 Developed Markets (DM) and 23 Emerging Markets (EM) countries*. With 8,633 constituents, the index is comprehensive, covering approximately 99% of the global equity investment opportunity set. Barclays Global Aggregate Bond Index provides a broad-based measure of the global investment grade fixed-rate debt markets. The Global Aggregate Index contains three major components: the U.S. Aggregate (USD 300mn), the Pan-European Aggregate (EUR 300mn), and the Asian-Pacific Aggregate Index (JPY 35bn). In addition to securities from these three benchmarks (94.0% of the overall Global Aggregate market value as of December 31, 2010), the Global Aggregate Index includes Global Treasury, Eurodollar (USD 300mn), Euro-Yen (JPY 25bn), Canadian (USD 300mn equivalent), and Investment Grade 144A (USD 300mn) index-eligible securities not already in the three regional aggregate indices. The Global Aggregate Index family includes a wide range of standard and customized subindices by liquidity constraint, sector, quality, and maturity. A component of the Multiverse Index, the Global Aggregate Index was created in 1999, with index history backfilled to January 1, PA0728 Global Listed Infrastructure Market Commentary Page 5