January 24-25, 2018 Investment Committee and Board ...

NEW YORK STATE TEACHERS' RETIREMENT SYSTEM REAL ESTATE INVESTMENT PORTFOLIO

January 24-25, 2018 Investment Committee and Board Meetings Public Information

CONTENTS

? NYSTRS' Real Estate Investment Portfolio ? Investment Performance by Strategy ? Geographic Distribution of Equity Real Estate and Debt Real Estate Portfolios ? Equity Real Estate Portfolio Summary, Performance and Direct

Equity Occupancy by Property Type

? Equity Diversification by Property Type and Geographic Region ? Equity Real Estate Leverage Summary ? Direct Equity Investment Performance ? Debt Portfolio Summary, Performance and Distribution by Property Type ? Direct Mortgage Portfolio Summary

PAGE

2 3 4 5

6 7 8 9 10

NYSTRS' Real Estate Investment Portfolio

Quarter Ended September 30, 2017

Market Value Summary

(in millions)

Equity Real Estate Investments Direct Equity Office Retail Industrial Multi-family Timber

Total Direct Equity Commingled Funds Core Value-Added Opportunistic Public Real Estate Securities

Total Current Equity Real Estate Holdings Outstanding Commitments

Direct Equity Core Funds

Value-Added Funds Opportunistic Funds Total Equity Real Estate Portfolio Real Estate Debt Investments

Direct Mortgage Portfolio Debt Funds/Separate Accounts CMBS Total Current Real Estate Debt Holdings Outstanding Commitments

Direct Mortgage Debt Funds/Separate Accounts CMBS Total Real Estate Debt Portfolio

Total Real Estate Investment Portfolio

$1,367 $2,373

$330 $858 $308 $5,236

$1,604 $878

$1,496 $1,992 $11,206

$945 $58 $524 $1,340 $14,073

$3,280 $785

$1,079 $5,144

$0 $1,253

$0 $6,397 $20,477

Real Estate Asset Allocation

Equity Portfolio Debt Portfolio

Target

11% 7%

Range

6% - 16% 3% - 11%

Actual

9.7% 4.4%

Equity Portfolio Performance

Current Quarter 1 Year 3 Year 5 Year 10 Year Inception

NYSTRS

1.8% 6.8% 10.9% 12.0% 5.8% 8.5%

Blended NCREIF/ Wilshire

Index

1.4% 5.7% 9.7% 10.3% 4.4% 6.6%

Debt Portfolio Performance

Current Quarter 1 Year 3 Year 5 Year 10 Year Inception

NYSTRS

1.3% 3.3% 4.5% 4.8% 5.0% 8.5%

Blended GLCMPI/ Barclays

Index

0.9% 2.6% 3.8% 4.1% 5.4% 8.7%

2

NYSTRS' Real Estate Investment Portfolio

Performance by Strategy

Quarter Ended September 30, 2017

NYSTRS' Real Estate Equity Portfolio Performance

Strategy (Inception Date)

Net Asset Value

Direct Properties (2/90)

Core Funds (7/85) Value-Add Funds (12/89) Opportunistic Funds (3/99) U.S. Real Estate Securities (7/95) Ex-U.S. Real Estate Securities (12/06)

Global Real Estate Securities (09/17) Timber (12/98) Total Equity Real Estate Portfolio (7/85) Blended NCREIF/Wilshire Benchmark

$4,928 $1,604 $878 $1,496 $1,576

$1

$415 $308 $11,206

-

Current Quarter

2.3% 1.0% 3.1% 1.8% 1.1%

3.1%

-0.3%. 1.8%

1.4%

1 Year 8.7% 2.9% 13.4% 9.9% 2.2% 4.5%

-3.0% 6.8%

5.7%

3 Years 12.8% 7.3% 17.9% 9.8% 9.8% 3.9%

4.4% 10.9%

9.7%

5 Years 14.2% 9.5% 17.1% 11.5% 9.7% 5.4%

6.1% 12.0%

10.3%

10 Years 7.7% 5.1% 4.2% 2.6% 6.5% -0.2%

5.1% 5.8%

4.4%

Since Inception*

10.0% 7.2% 11.2% 11.4% 12.3%

0.7%

4.1% 8.5%

6.6%

NYSTRS' Real Estate Debt Portfolio Performance

Strategy (Inception Date)

Direct Mortgages (7/85) Commercial Mortgage Backed Securities (4/01) Bridge Mortgage/Mezzanine Funds (9/01) Total Real Estate Debt Investments (7/85) Blended GLCMPI/Barclays Benchmark

Net Asset Value $3,280 $1,079 $785 $5,144 -

Current Quarter

1.1% 1.2%

2.9%

1.3%

0.9%

1 Year 2.5% 1.8% 10.1% 3.3% 2.6%

3 Years 4.1% 3.8% 9.1% 4.5% 3.8%

5 Years 4.6% 3.6% 10.4% 4.8% 4.1%

10 Years 5.6% 4.8% -4.3% 5.0% 5.4%

Since Inception*

8.6% 5.3%

0.7%

8.5%

8.7%

* Due to the nature of the cash flows, since inception returns for development and closed-end commingled fund investments are reported on a dollar-weighted (IRR) basis. All other strategies and timeframes are reported on a time-weighted basis. 3

NYSTRS' Real Estate Investment Portfolio

Quarter Ended September 30, 2017

Geographic Distribution of the Equity Real Estate Portfolio

(Excluding Public Real Estate Securities)

Mountain 5.4%

West North Central 0.2%

East North Central 2.6%

Pacific l

31.0%

Non-US

Asia

3.1%

Europe

5.4%

Americas

1.1%

l

l

l l

l

l

Southwest 5.1%

l

Southeast 12.9%

Northeast 18.9%

Mideast 14.3%

Geographic Distribution of the Debt Real Estate Portfolio

(Excluding CMBS)

Mountain 6.7%

West North Central 0.1%

East North Central 0.1%

Pacific l

42.0%

Non-US

Europe

1.0%

Americas

1.8%

l

l

l l

l

l

Southwest 1.4%

l

Southeast 1.7%

Northeast 28.3%

Mideast 16.9%

4

NYSTRS' Real Estate Investment Portfolio

Quarter Ended September 30, 2017

Equity Portfolio Summary

(in millions)

Equity Real Estate Investments Direct Equity Office Retail Industrial Multi-family Timber

Total Direct Equity Commingled Funds Core Value-Added Opportunistic Public Real Estate Securities

Total Current Equity Real Estate Holdings Outstanding Commitments:

Direct Equity Core Funds

Value-Added Funds Opportunistic Funds Total Equity Real Estate Portfolio

$1,367 $2,373

$330 $858 $308 $5.236

$1,604 $878

$1.496 $1,992 $11,206

$945 $58 $524 $1,340 $14,073

Equity Portfolio Performance

Current Quarter 1 Year 3 Year 5 Year 10 Year Inception

NYSTRS

1.8% 6.8% 10.9% 12.0% 5.8% 8.5%

Blended NCREIF/ Wilshire

Index

1.4% 5.7% 9.7% 10.3% 4.4% 6.6%

Strategic Plan Targets

Core Private Public Real Estate Securities Total Core Non-Core

Range 40% - 70%

5% - 25%

20% - 40%

Actual

57.2% 17.8% 75.0% 25.0%

Direct Equity Portfolio

Occupancy By Property Type - September 30, 2017

100

98

95

95 93

90

91 92

95 93

85

87

80

75

Retail

Office

Industrial

Residential

NYSTRS' Direct Portfolio CBRE Econometric Advisors National Average

5

NYSTRS' Real Estate Investment Portfolio

Equity Portfolio Composition

(Excluding Timber and Public Real Estate Securities)

Quarter Ended September 30, 2017

Diversification By Property Type

NYSTRS' Current Portfolio

NYSTRS' Strategic Plan

Residential 17.7%

l

Residential 22.5%

l

Retail 22.5%

Retail

l

31.6%

l

l

Office 32.3%

l l

Industrial 11.2%

Hotel/Other 7.2%

l

Office 30.0%

l l

Hotel/Other 10.0%

Industrial 15.0%

Diversification By Geographic Region

NYSTRS' Current Portfolio

Southeast 9.6%

Pacific

30.9%

l

Southwest 5.1%

West North Central 0.2%

l l

l

l

l

East North Central 2.6%

Mideast 14.4%

l

Northeast 22.0%

l

Mountain

5.5%

l

Non-US 9.7%

Asia Europe Americas

3.2% 5.5% 1.0%

NYSTRS' Strategic Plan

Pacific 25.0%

Northeast 25.0%

Southeast 10.0%

l l

Southwest 7.5%

West North

Central

l

l

l

2.0%

East North Central

4.0%

l

l

l

Mideast

12.5%

l

Mountain 4.0%

Non-US 10.0%

6

NYSTRS' Real Estate Investment Portfolio

Real Estate Market Overview

Quarter Ended September 30, 2017

Equity Real Estate Leverage Summary

Direct Equity Portfolio:

GAV (100%) Debt (100%) GAV (NYSTRS %)

$16.4 B $ 6.2 B $ 8.0 B

% Fixed % Floating

83.2% 16.8%

Stabilized Development

Total

LTV% 37.9% 50.4% 38.2%

Weighted

Weighted

Avg. Rate Avg. Maturity

4.13%

4.8 years

3.36%

1.4 years

4.11%

Direct Equity Portfolio - Debt Maturities by Year

As of 9/30/17 (excludes DSRG and EDENS)

Amount

$1,000,000,000 $900,000,000 $800,000,000 $700,000,000 $600,000,000 $500,000,000 $400,000,000 $300,000,000 $200,000,000 $100,000,000 $0

2.63% 2017

3.71% 2018

3.80% 2019

3.69%

2.98% 2020 2021

Year

3.34% 2022

4.84% 2023

0.00% 2024

3.82% 2025

Note: Percentages reflect weighted average interest rate of debt maturing in that year.

Commingled Funds:

Core Value-Add Opportunistic

7

LTV%

39.8% 50.3% 55.4%

16.0%

NEW YORK STATE TEACHERS' RETIREMENT SYSTEM DIRECT INVESTMENT PERFORMANCE AS COMPARED TO THE NFI-ODCE September 30, 2017

14.0%

12.0%

10.0%

8.0%

6.0%

4.0%

2.0%

0.0%

Quarter

1 Year

3 Year

5 Year

Inception

NYSTRS Appreciation

NFI-ODCE Appreciation

NYSTRS Income

NFI-ODCE Income

Income Appreciation Total Net Returns

NYSTRS NFI-ODCE

NYSTRS NFI-ODCE

NYSTRS NFI-ODCE

Current Quarter

1.2% 0.8%

1.1% 0.8%

2.3% 1.6%

1 Year

4.8% 3.4%

3.7% 3.2%

8.7% 6.7%

3 Year

4.8% 3.6%

7.8% 6.0%

12.8% 9.8%

5 Years

Since Inception*

5.0% 3.9%

6.6% 5.9%

8.9% 6.5%

3.2% 0.5%

14.2% 10.6%

10.0% 6.4%

* Inception 2/1/90

Investment Operations Department January 24, 2018

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