Real Estate Investing: A Private Foundation’s Approach Presented by: D. Ellen Shuman Vice President & Chief Investment Officer Carnegie Corporation of New York

2 “My desire is that the work which I hav [sic] been carrying on, or similar beneficial work, shall continue during this and future generations.” Andrew Carnegie, November 10, 1911 First Letter of Gift Carnegie Corporation of New York Perpetuity as a Mandate

3 Carnegie Grants with Impact TIAA-CREF (1915) Gunner Myrdal, An American Dilemma: The Negro Problem and American Democracy (1944) Sesame Street (1969) New York City small schools initiative (2003)

4 Carnegie Corporation of New York Actual Asset Allocation by Fiscal Year

5 Carnegie Corporation of New York Actual Real Estate Allocation by Fiscal Year

6 Carnegie Corporation of New York Annual Performance (FY ending 9/30)

7 Carnegie Corporation of New York Current Property Exposure by Type

8 Carnegie Corporation of New York Private Real Estate Portfolio Characteristics 20 private real estate managers 40 commingled funds $200M market value (out of total Carnegie portfolio value of ~$2.1B) 55% average property level leverage 230 individual properties 1/3 in Southern California

9 Carnegie Corporation of New York Top 10 Properties by Equity Exposure Three managers own these assets that represent 27% of total value of the real estate portfolio

While a Few of Our Holdings Are Landmarks…

…Much of the Portfolio Is Far Less Glamorous

12 Carnegie Corporation of New York Manager Selection Criteria “Local sharpshooter” –Focus on property type and/or geographic market Proper alignment of interests –Meaningful co-investment –Back-ended incentive compensation widely distributed among the team Principal ownership of the firm Qualitative factors –Principal mentality –Investment discipline w/ ability to assess risk as well as return