Via E-Mail October 25, 2017 Mr. Edgard Hernandez Pension Administrator City of Miami GESE Retirement Trust 2901 Bridgeport Avenue Coconut Grove, FL 33133 Dear Mr. Hernandez: Enclosed please find third quarter results for the City of Miami GESE Retirement Trust account. During the quarter, your account returned -0.2% gross of fees and -0.2% net of fees versus the FTSE NAREIT Equity REITs Index return of 0.9%. Year to date the account returned 1.3% gross of fees and 1.0% net of fees versus the FTSE NAREIT Equity REITs Index return of 3.7%. As previously discussed, EII Capital Management earlier this year decided to revise the investment process from and analyst-driven, individual stock selection and concentrated portfolio focused style to a top-down investment decision-making process. The main reason is to mitigate the unintended idiosyncratic (i.e. stockspecific) risk inherent in an overly concentrated portfolio, which had hampered our investment performance. We started to implement the revised investment process during the third quarter. The first step was to expand the underlying portfolio optimized to deliver the respective index returns with a tracking error of +/-0.50%. Given the significant disparities in REIT performance our initial optimization did not achieve our tracking error goal. We have now expanded our holdings and are achieving that outcome. With continued sluggish economic growth, interest rate risk and gradually increasing supply, it is possible that commercial rent growth rates could moderate from here. Retail properties are dealing with the Amazon effect, on top or an overall excess supply of retail space per capita, which will take time to adjust, and the highend/luxury apartment sector is contending with a particularly noticeable oversupply risk. Among the sectors, retail REITs look especially attractive from a valuation point of view, through likely require a catalyst to lift he value (increased M&A activity could be just such a catalyst). Please see attached 3Q17 REIT Market Performance & Portfolio Attribution report, which describes sector and security specific performance. Please do not hesitate to contact us should you have any questions or require additional information. Regards, Richard Adler Senior Advisor cc: Hilda Thompson, Elena Valdes, John Reynolds 640 Fifth Avenue New York, NY 10019 T +1 212 735 9500 F +1 212 735 9550 www.eiicm.com
Quarterly Report City of Miami
Activity Summary City of Miami City of Miami Gross of Fees US Doll 6/30/2017 - logo.jpg Since 6/30/2017 Beginning Value 27,139,845.04 Net Contributions/Withdrawals -335,475.23 Realized Gains -252,020.20 Unrealized Gains -45,117.10 Dividend & Interest Income 245,125.01 Ending Value 26,752,357.52 Portfolio Allocation as of Portfolio Overview Gross of Fees 6/30/2017 - Change in Portfolio 40.00 20.00 Asset Class Market Value % Assets Curr. Yield 0.00 6/30/2017 7/31/2017 8/31/2017 Equities 26,109,055.24 97.6 4.0 Cash and Equiv 643,302.28 2.4 0.0 Total 26,752,357.52 100.0 3.9 Beginning Market Value Plus Flows Ending Market Value EII Capital Management, Inc.
1) Past performance does n City 2) The of index Miamiis unmanaged Gross and Net of Fees US logo.jpg Portfolio City of Miami Performance History (%) Quarter To Date Year To Date Latest 1 Year Annualized Latest 3 Years Annualized Latest 5 Years Annualized Inception To Date Account (Gross) -0.18 1.34-0.85 9.23 9.80 11.31 Account (Net) -0.18 1.00-1.36 8.54 9.08 10.52 Performance Overview Gross and Net of Fees Index NAREIT Equity 0.94 3.67 0.67 9.86 9.69 10.54 Time Weighted Return (%) Inception (1/4/1999) to Date - Net of Fees 1/4/1999 12/31/1999 12/31/2000 12/31/2001 12/31/2002 12/31/2003 12/31/2004 12/31/2005 12/31/2006 12/31/2007 12/31/2008 12/31/2009 12/31/2010 12/31/2011 12/31/2012 12/31/2013 12/31/2014 12/31/2015 12/31/2016 1) Past performance does not guarantee future performance. 2) The index is unmanaged and its performance does not reflect management fees, transaction costs, charges and taxes. EII Capital Management, Inc.
City of Miami logo.jpg Portfolio Allocation by Sector as of Top 10 Holdings Portfolio Allocation Security Country Market Value % Total Assets SIMON PPTY GROUP INC NEW COM United States 1,709,926.20 6.4 DIGITAL REALTY TRUST INC United States 1,078,104.63 4.0 PUBLIC STORAGE COM United States 1,053,686.76 3.9 WELLTOWER INC United States 882,505.96 3.3 VENTAS INC COM United States 785,207.28 2.9 ESSEX PPTY TR INC COM United States 745,832.08 2.8 GGP INC COM United States 670,974.85 2.5 MID AMER APT COMM United States 608,360.96 2.3 BOSTON PROPERTIES INC COM United States 570,777.60 2.1 UDR INC COM United States 503,783.41 1.9 Top 10 Holdings Total 8,609,159.73 32.2 Industry Group Market Value % Equity Assets Health Care 3,619,167.99 13.9 Office 3,274,171.45 12.5 Apartments 3,193,386.11 12.2 Regional Malls 3,005,171.48 11.5 Industrial 2,081,750.32 8.0 Shopping Centers 1,827,290.13 7.0 Lodging 1,805,673.27 6.9 Self-Storage 1,804,382.16 6.9 Data Centers 1,271,574.83 4.9 Diversified 1,225,102.44 4.7 Other 1,068,226.26 4.1 Manufactured Homes 732,210.36 2.8 Single Family Homes 617,783.18 2.4 Freestanding 583,165.26 2.2 Equity Total 26,109,055.24 100.0 EII Capital Management, Inc.
Portfolio Appraisal North America Unit Total Market % Curr. Quantity Security Cost Cost Price Value Assets Yield Diversified Mixed 5,238 GRAMERCY PROPERTY TRUST 29.73 155,742.50 30.25 158,449.50 0.6 5.0 11,004 LEXINGTON REALTY TRUST 9.89 108,864.77 10.22 112,460.88 0.4 6.8 264,607.27 270,910.38 1.0 5.7 Apartments 7,351 AMERICAN CAMPUS COMMUNITIES 49.96 367,252.30 44.15 324,546.65 1.2 4.0 8,935 APARTMENT INVT AND MGMT CO 42.86 382,980.07 43.86 391,889.10 1.5 3.3 5,035 CAMDEN PPTY TR SH BEN INT 86.55 435,800.07 91.45 460,450.75 1.7 3.3 4,412 EDUCATION REALTY TRUST INC 38.03 167,785.71 35.93 158,523.16 0.6 4.3 2,936 ESSEX PPTY TR INC COM 197.38 579,496.71 254.03 745,832.08 2.8 2.8 5,692 MID AMER APT COMM 85.55 486,968.03 106.88 608,360.96 2.3 3.3 13,247 UDR INC COM 38.37 508,230.63 38.03 503,783.41 1.9 3.3 2,928,513.52 3,193,386.11 11.9 3.3 Manufactured Homes 4,445 EQUITY LIFESTYLE PPTYS COM 85.39 379,553.56 85.08 378,180.60 1.4 2.3 4,132 SUN COMMUNITIES 87.39 361,092.88 85.68 354,029.76 1.3 3.1 740,646.43 732,210.36 2.7 2.7 Single Family Homes 11,690 AMERICAN HOMES 4 RENT CL A 22.54 263,499.61 21.71 253,789.90 0.9 0.9 6,574 INVITATION HOMES INC 21.47 141,149.04 22.65 148,901.10 0.6 1.4 5,914 STARWOOD WAYPOINT HOMES 33.97 200,908.05 36.37 215,092.18 0.8 2.4 605,556.71 617,783.18 2.3 1.6 Freestanding 4,827 FOUR CORNERS PROPERTY TRUST 25.27 121,990.36 24.92 120,288.84 0.4 3.9 6,883 NATIONAL RETAIL PPTYS INC COM 42.40 291,809.13 41.66 286,745.78 1.1 4.6 20,552 SPIRIT REALTY CAPITAL INC 10.97 225,412.18 8.57 176,130.64 0.7 8.4 639,211.66 583,165.26 2.2 5.6 EII Capital Management, Inc. 1
Portfolio Appraisal Unit Total Market % Curr. Quantity Security Cost Cost Price Value Assets Yield Data Centers 9,111 DIGITAL REALTY TRUST INC 99.85 909,731.76 118.33 1,078,104.63 4.0 3.1 3,695 QTS REALTY TRUST INC-CL A 52.08 192,422.36 52.36 193,470.20 0.7 3.0 1,102,154.12 1,271,574.83 4.8 3.1 Regional Malls 8,159 CBL & ASSOC PPTYS INC COM 8.30 67,728.68 8.39 68,454.01 0.3 12.6 32,305 GGP INC COM 25.29 817,001.13 20.77 670,974.85 2.5 4.2 6,197 MACERICH CO COM 57.33 355,246.12 54.97 340,649.09 1.3 5.2 10,620 SIMON PPTY GROUP INC NEW COM 137.53 1,460,557.23 161.01 1,709,926.20 6.4 4.3 2,814 TAUBMAN CTRS INC 74.62 209,983.35 49.70 139,855.80 0.5 5.0 9,041 WASHINGTON PRIME GROUP INC 8.41 76,079.11 8.33 75,311.53 0.3 12.0 2,986,595.62 3,005,171.48 11.2 4.8 Shopping Centers 3,445 FEDERAL REALTY INVT TR 138.37 476,680.68 124.21 427,903.45 1.6 3.2 16,828 KIMCO RLTY CORP COM 18.39 309,471.97 19.55 328,987.40 1.2 5.5 4,603 KITE REALTY GROUP TRUST 18.71 86,121.21 20.25 93,210.75 0.3 6.0 6,323 REGENCY CTRS CORP COM 61.14 386,585.42 62.04 392,278.92 1.5 3.4 5,862 RETAIL OPPORTUNITY INVTS CORP COM 19.32 113,238.01 19.01 111,436.62 0.4 3.9 12,741 RETAIL PPTYS AMER INC CL A 15.31 195,013.64 13.13 167,289.33 0.6 5.0 4,780 TANGER FACTORY OUTLET 25.94 123,986.51 24.42 116,727.60 0.4 5.6 5,969 WEINGARTEN RLTY INVS SH BEN INT 29.81 177,964.54 31.74 189,456.06 0.7 4.9 1,869,061.97 1,827,290.13 6.8 4.4 Office Mixed 4,442 SELECT INCOME REIT COM SH BEN INT 23.67 105,130.15 23.42 104,031.64 0.4 8.7 105,130.15 104,031.64 0.4 8.7 Industrial Mixed 10,173 DUKE REALTY CORP 27.67 281,513.36 28.82 293,185.86 1.1 2.6 281,513.36 293,185.86 1.1 2.6 EII Capital Management, Inc. 2
Portfolio Appraisal Office Unit Total Market % Curr. Quantity Security Cost Cost Price Value Assets Yield 4,645 BOSTON PROPERTIES INC COM 121.01 562,079.91 122.88 570,777.60 2.1 2.4 8,368 BRANDYWINE RLTY TR 15.94 133,387.71 17.49 146,356.32 0.5 3.7 6,377 COLUMBIA PROPERTY TRUST INC 22.16 141,323.25 21.77 138,827.29 0.5 3.7 4,178 CORPORATE OFFICE PROPERTY 34.95 146,040.73 32.83 137,163.74 0.5 3.4 18,999 COUSINS PPTYS INC COM 8.77 166,644.03 9.34 177,450.66 0.7 2.6 6,181 DOUGLAS EMMETT INC 38.01 234,965.15 39.42 243,655.02 0.9 2.3 6,809 EMPIRE STATE REALTY TRUST-A 20.39 138,853.22 20.54 139,856.86 0.5 2.0 7,849 EQUITY COMWLTH COM SH BEN INT 31.41 246,571.63 30.40 238,609.60 0.9 0.0 4,325 HIGHWOODS PPTYS INC COM 50.08 216,581.30 52.09 225,289.25 0.8 3.4 6,455 HUDSON PACIFIC PROPERTIES 32.73 211,243.75 33.53 216,436.15 0.8 3.0 3,585 KILROY RLTY CORP 69.85 250,423.97 71.12 254,965.20 1.0 2.4 5,196 MACK CALI RLTY CORP COM 26.74 138,961.83 23.71 123,197.16 0.5 3.4 10,950 PARAMOUNT GROUP INC COM 16.39 179,416.71 16.00 175,200.00 0.7 2.4 7,697 PIEDMONT OFFICE REALTY TR IN 20.60 158,580.52 20.16 155,171.52 0.6 4.2 3,269 SL GREEN RLTY CORP COM 100.80 329,509.40 101.32 331,215.08 1.2 3.1 3,254,583.12 3,274,171.45 12.2 2.7 Industrial 7,888 DCT INDUSTRIAL TRUST INC COM 53.93 425,396.30 57.92 456,872.96 1.7 2.1 3,687 EASTGROUP PPTY INC COM 82.69 304,868.00 88.12 324,898.44 1.2 2.9 11,457 FIRST INDUSTRIAL RLTY 28.11 322,022.42 30.09 344,741.13 1.3 2.8 2,191 PS BUSINESS PKS INC CALIF COM 129.53 283,790.07 133.50 292,498.50 1.1 2.5 7,426 REXFORD INDL RLTY INC COM 27.71 205,760.15 28.62 212,532.12 0.8 2.0 9,643 STAG INDL INC COM 27.47 264,860.22 27.47 264,893.21 1.0 5.1 5,122 TERRENO REALTY CORP 33.56 171,882.74 36.18 185,313.96 0.7 2.4 1,978,579.90 2,081,750.32 7.8 2.8 Self-Storage 7,920 CUBESMART COM 23.46 185,830.92 25.96 205,603.20 0.8 4.2 4,376 EXTRA SPACE STORAGE INC 86.83 379,955.67 79.92 349,729.92 1.3 3.9 2,388 LIFE STORAGE INC COM 82.90 197,967.68 81.81 195,362.28 0.7 4.9 EII Capital Management, Inc. 3
Portfolio Appraisal Unit Total Market % Curr. Quantity Security Cost Cost Price Value Assets Yield 4,924 PUBLIC STORAGE COM 206.99 1,019,201.04 213.99 1,053,686.76 3.9 3.7 1,782,955.30 1,804,382.16 6.7 3.9 Diversified 315 ALEXANDERS INC COM 423.29 133,337.11 424.09 133,588.35 0.5 4.0 4,794 AMERICAN ASSETS TRUST INC 39.62 189,945.08 39.77 190,657.38 0.7 2.6 16,587 FOREST CITY REALTY TRUST-CL A 22.16 367,516.93 25.51 423,134.37 1.6 2.2 8,838 GLOBAL NET LEASE INC 21.87 193,329.12 21.89 193,463.82 0.7 9.7 8,677 WASHINGTON REAL ESTATE INVT 31.69 275,007.07 32.76 284,258.52 1.1 3.7 1,159,135.31 1,225,102.44 4.6 4.0 Lodging 10,266 APPLE HOSPITALITY REIT INC 18.65 191,436.26 18.91 194,130.06 0.7 6.3 4,350 CHESAPEAKE LODGING TRUST 24.87 108,166.66 26.97 117,319.50 0.4 5.9 8,227 DIAMONDROCK HOSPITALITY CO 10.98 90,313.16 10.95 90,085.65 0.3 4.6 6,402 HOSPITALITY PROPERTIES TRUST 29.02 185,771.95 28.49 182,392.98 0.7 7.3 22,404 HOST HOTELS & RESORTS INC COM 16.86 377,673.92 18.49 414,249.96 1.5 4.3 4,234 LASALLE HOTEL PROPERTY 30.12 127,509.03 29.02 122,870.68 0.5 6.2 4,614 PARK HOTELS & RESORTS INC 26.87 123,959.26 27.56 127,161.84 0.5 6.2 4,999 RLJ LODGING TR COM 19.69 98,424.31 22.00 109,978.00 0.4 6.0 1,822 RYMAN HOSPITALITY PROPERTIES 63.93 116,475.91 62.49 113,856.78 0.4 5.1 6,286 SUMMIT HOTEL PPTYS INC COM 18.53 116,490.27 15.99 100,513.14 0.4 4.3 7,979 SUNSTONE HOTEL INVESTORS INC 16.09 128,344.61 16.07 128,222.53 0.5 4.2 4,983 XENIA HOTELS & RESORTS INC 19.61 97,698.19 21.05 104,892.15 0.4 5.2 1,762,263.54 1,805,673.27 6.7 5.4 Health Care 16,390 HCP INC COM 30.25 495,877.66 27.83 456,133.70 1.7 5.3 5,852 HEALTHCARE RLTY TR COM 33.27 194,674.98 32.34 189,253.68 0.7 3.7 8,373 HEALTHCARE TRUST OF AME-CL A 30.15 252,425.86 29.80 249,515.40 0.9 4.1 3,340 LTC PROPERTIES INC 50.37 168,223.45 46.98 156,913.20 0.6 4.9 EII Capital Management, Inc. 4
Portfolio Appraisal Unit Total Market % Curr. Quantity Security Cost Cost Price Value Assets Yield 7,693 OMEGA HEALTHCARE INVS 32.57 250,536.39 31.91 245,483.63 0.9 8.0 9,768 PHYSICIANS REALTY TRUST 19.03 185,921.18 17.73 173,186.64 0.6 5.2 5,146 QUALITY CARE PROPERTIES 17.41 89,604.72 15.50 79,763.00 0.3 8,540 SABRA HEALTH CARE REIT INC 22.96 196,065.70 21.94 187,367.60 0.7 6.6 10,938 SENIOR HOUSING PROP TRUST 19.69 215,323.28 19.55 213,837.90 0.8 8.0 12,056 VENTAS INC COM 59.64 719,056.24 65.13 785,207.28 2.9 4.8 12,557 WELLTOWER INC 70.37 883,593.16 70.28 882,505.96 3.3 5.0 3,651,302.61 3,619,167.99 13.5 5.2 Specialty 5,737 EPR PROPERTIES 72.25 414,510.77 69.74 400,098.38 1.5 5.9 414,510.77 400,098.38 1.5 5.9 North America Total 25,526,321.37 26,109,055.24 97.6 4.0 Cash & Equiv. ACCRUED INT ON CASH 352.71 352.71 0.0 0.0 TRADE DATE CASH BALANCE 571,415.14 571,415.14 2.1 0.0 USD DIVIDENDS EX NOT PAID 71,534.43 71,534.43 0.3 0.0 Cash & Equiv. Total 643,302.28 643,302.28 2.4 0.0 Total Portfolio 26,169,623.65 26,752,357.52 100.0 3.9 EII Capital Management, Inc. 5