Book 1 Page 260 08-09-2021 8:30 a.m. MINUTES OF THE CITY OF SARASOTA GENERAL EMPLOYEES PENSION PLAN BOARD OF TRUSTEES REGULAR MEETING OF AUGUST 9, 2021 Present: Chair Ryan Chapdelain, Vice Chair Susan Blake, Secretary Shayla Griggs, Trustee Kari McVaugh, Trustee Robert Reardon, Trustee Mark Nicholas, and Trustee John Vincent. Others: Attorney Scott Christiansen, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Peter Gottlieb. Absent: Treasurer Kelly Strickland. 1. CALL MEETING TO ORDER: Chair Chapdelain called the meeting to order at 8:30 a.m. 2. PLEDGE OF CIVILITY: Chair Chapdelain stated for the record, "We may disagree, but we will always be respectful to one another. We will direct all comments to issues, and we will not engage in personal attacks." 3. ROLL CALL: Pension Plans Administrator Martin called roll. Treasurer Strickland was not present. Also appearing in person were Attorney Christiansen, Pension Plans Administrator Debra Martin, Senior Pension Analyst Anthony Ferrer, and Pension Specialist Gottlieb. 4. PUBLIC INPUT: None. 5. APPROVAL OF THE MINUTES: 5.1. Approval Re: Minutes of the General Employees Pension Plan Board of Trustees Regular Meeting of May 10, 2021. Presenter(s): Chair Chapdelain. Vice Chair Blake made a motion to approve the minutes of the May 10, 2021, meeting; Trustee McVaugh seconded the motion. The motion passed unanimously (6-0). 6. BOARD ELECTIONS: 6.1. Approval Re: Nomination to General Employees' Pension Plan Seat GP1. Presenter(s): Secretary Griggs. Secretary Griggs read the acceptable ballots received by Pension Administration; Pension Plans Administrator Martin stated Susan Blake received 76 votes, and John Vincent received 89 votes. Attorney Scott Christiansen and the Board expressed their gratitude to Ms. Blake for her service to the Plan. Attorney Christiansen advised she is required to complete and submit a Final Form 1F. Ms. Blake exited the meeting at 8:55am. Trustee John Vincent joined the meeting at 8:55am. Attorney Christiansen advised Trustee Vincent that he is required to complete a new Financial Disclosure form. Trustee Vincent introduced himself to the Board. 6.2. Approval Re: Nomination to General Employees' Pension Plan Seat GP4. Presenter(s): Secretary Griggs. Secretary Griggs stated she had reçeived only one nomination for GP4, which was from Trustee Nicholas. Attomey Christiansen stated a motion or vote was not needed and Trustee Nicholas retained the seat through acclamation. 7. NOMINATIONS OF BOARD OFFICERS: 7.1. Appointment Re: Selection of Chair. Presenter(s): Secretary Griggs. Trustee McVaugh made a motion to nominate Ryan Chapdelain as Chair. Trustee Nicholas seconded the motion. The motion carried unanimously (6-0). 7.2. Appointment Re: Selection of Vice Chair. Presenter(s): Secretary Griggs. Trustee McVaugh made a motion to nominate Mark Nicholas as Vice Chair. Trustee Reardon seconded the motion. The motion carried unanimously (6-0). 8. APPROVAL OF RETIREMENT REQUEST/S): 8.1. Approval Re: The Early Retirement Request of Michael Lund. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin explained Mr. Lund is 64 years old and has 25.36 years of service. Mr. Lund requests a lump sum distribution, and the amount is validated in correspondence from Gabriel Roeder Smith (GRS), Plan Actuary. She confirmed to Chair Chapdelain that, had Mr. Lund been 65 years of age at the time of distribution, the multiplier would have been 2.5% for pre-2021 service and 2.0% for post 2012 service. She confirmed to Vice Chair Nicholas that Pension Administration uses a spreadsheet provided and updated by the Plan actuary to make benefit computations. Vice Chair Nicholas made a motion to approve Mr. Lund's retirement request; Trustee McVaugh seconded the motion. The motion carried unanimously (6-0). 8.2. Approval Re: The DROP Retirement Request of Maurine Keys. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin stated Ms. Keys is 65 years old and requests to enter the DROP under a Book 1 Page 261 08-09-2021 8:30 a.m. Book 1 Page 262 08-09-2021 8:30 a.m. normal retirement after 20 years of service. She has selected the lifetime option. Trustee McVaugh made a motion to approve Ms. Key's request for retirement; Vice Chair Nicholas seconded the motion. The motion carried unanimously (6-0). 8.3. Approval Re: The Early Retirement Request of Phillip Felder. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin explained Mr. Felder is 58 years old and has 11.40 years of service. Mr. Felder requests an early, lump sum distribution, and the amount is validated in the included correspondence from GRS. Trustee McVaugh made a motion to approve Mr. Felder's request for retirement; Vice Chair Nicholas seconded the motion. The motion carried unanimously (6-0). 9. INVESTMENT PERFORMANCE REVIEW: 9.1. Presentation and Discussion Re: AEW, Investment Performance Summary as of June 30, 2021. Presenter(s): Stephen Reissfelder, Director, Finance, AEW Core Property Trust; Emily Margolis, Director, Investor Relations, AEW Core Property Trust; AEW. Emily Margolis and Stephen Reissfelder of AWE appeared before the Board telephonically and introduced themselves. Ms. Margolis introduced their presentation and gave a firm overview. Mr. Reissfelder discussed the Portfolio Overview, Performance, noting the portfolio is overweighted in the industrial sector by approximately 500 basis points as of today, and Portfolio Strategy and Positioning, pointing out that in the Retail sector, AWE has only 10 holdings and all are outdoor malls. He reviewed Recent Transaction Activity, and in response to Trustee Reardon's question, explained, "cold storage," refers to industrial properties which are equipped with the capacity for industrial refrigerator and freezer spaces necessary for pharmaceutical, food distribution, and some agricultural tenants. Mr. Reissfelder discussed Leasing, noting AEW has completed 75% of its budgeted leasing goal for 2021 with strong leasing across all 3 sectors, Operations, and Non-Core Investments; he explained non- core investments are typically ground-up development projects with the long-term goal of becoming core allocations. In response to Chair Chapdelain's question, Mr. Reissfelder explained that AEW's portfolio has multi- family projects in Seattle, Denver, and Hollywood, CA, and an industrial project in Inland Empire, CA, which his east of Los Angeles. Mr. Reissfelder discussed the Balance Sheet and asserted the redemption queue should be paid down within 2 to 3 quarters. Scott Owens of Graystone Consulting appeared before the Board telephonically and introduced himself. Mr. Owens asked Mr. Reissfelder about rent collection; Mr. Reissfelder stated that AEW holds high quality properties which provide resiliency through cycles, and that rent collections have not been concerning since March and April of this year. At Mr. Owens' request, Mr. Reissfelder reviewed the Diversified Portfolio page of their materials which shows the asset allocation. Mr. Owens asked about AEW's leverage as well as how employees' return to work with social distancing needs are affecting the real estate market. Regarding leverage, Mr. Reissfelder pointed to the Balance Sheet slide of AEW's materials and stated it is currently 26% leveraged and can go as high as 30%; AEW may soon increase its leverage to 27-28% to take advantage of rising interest rates, although it traditionally takes a conservative position on it. Regarding office space, Mr. Reissfelder stated that forecasting the office sector during the prevalence of work-from-home requires an understanding of how businesses have less people working in the office yet require more space than prior to the COVID-19 pandemic. That trend notwithstanding, AEW's weighted average lease term is approximately 6 years, meaning most of their holdings are under contract for several more years which will provide revenue stability even if business models change. 9.2. Presentation and Discussion Re: UBS, Investment Performance Review as of June 30, 2021. Presenter(s): Ronald Lanier, Managing Director, UBS. Ronald Lanier appeared before the Board telephonically and introduced himself. Mr. Lanier reviewed TPF Investment Results for the quarter ending June 30, 2021; at Chair Chapdelain's request, Mr. Lanier clarified the gross return since inception of 4.98% and the net return is 4.09%. Mr. Lanier discussed the Trumbull Property Fund highlights, Full market cycle total returns - peak to peak, TPF VS Barclays Capital Aggregate Bond Index, TPF performance VS. NFI-ODCE, TPF-fund restructure, and TPF Diversified Core & Non- Strategic performance comparison, noting UBS had fortuitously sold 4 of its 6 hotel holdings immediately prior to the COVID-19 pandemic which lessened the negative impact of the Non-strategic Portfolio. In response to Chair Chapdelain's question, Mr. Lanier discussed UBS's leased rate, stating it would ideally be above 94%; he reviewed the TPF leasing slide which shows that historically, the portfolio ranges from 91 to 95%. Secretary Griggs left the meeting at 9:39 a.m. and returned at 9:46 a.m. Mr. Lanier discussed Non-strategic ("NSA") asset disposition forecast, Non-strategic sales activity, TPF Diversified Core vs, NFI-ODCE, Capital Flows, and Positioning TPF for the future. Trustee McVaugh exited the meeting at 9:46 a.m. and retured at 9:50 a.m. Trustee Vincent exited the meeting at 9:47 a.m. and retumed at 9:50 a.m. Vice Chair Nicholas exited the meeting at 9:50 a.m. and returned at 9:55 a.m. Mr. Owens asked Mr. Lanier to discuss rent collections. Mr. Lanier stated that rent collections had become an issue during the COVID-19 pandemic, especially in the retail sector which was as low as 35%; retail is back to approximately 90%, and the remaining 3 property types were between 95 and 97%. The ODCE benchmark stopped reporting rent collections in March, and therefore UBS has no overall comparisons on the topic. In discussion with Mr. Owens, Mr. Lanier explained that UBS's leverage rate will initially go down as it sells off its non-strategic holdings however it anticipates using leverage more strategically than it had in the past, possibly between 18-20%. Mr. Owens asked Mr. Lanier about UBS's redemption queue; Mr. Lanier explained a client could anticipate a 100% redemption to take approximately 3 years, and a typical rebalancing of 5 to 10% would more likely be completed within a year. Chair Chapdelain thanked Mr. Lanier for his presentation. 9.3. Presentation and Discussion Re: Graystone Consulting, Quarterly Investment Performance. Presenter(s): Scott Owens, CFA, CIMA, Associate Vice President, Institutional Consultant; Andrew Mclivaine, Institutional Consultant; Graystone Consulting. At Attorney Christiansen's request, Mr. Owens gave a brief overview of Graystone Consulting and its role as the Plan's investment consultant. Mr. Owens gave a market and economic overview. Graystone forecasts strong Gross Domestic Product for the Book 1 Page 263 08-09-2021 8:30 a.m. Book 1 Page 264 08-09-2021 8:30 a.m. year but asserted growth has peaked and the rate of economic growth will accordingly slow as more workers re- enter the workforce and unemployment decreases, the last quarter of calendar year 2021 and first quarter of calendar year 2022 will provide a clearer picture of what to expect in terms of economic growth. Mr. Owens reviewed the Capital Markets Returns in the Performance Summary, expanding on the domestic and foreign equity market returns as well as the fixed income returns. He noted the Performance Summary now includes citations from the Investment Policy Statement and contains at timeline of investment actions since 1993. He discussed the Total Fund - Executive Summary, the Risk/Return Analysis - Since Inception, Asset Allocation & Time Weighted Performance which are the gross returns, Asset Allocation & Net Dollar Weighted Performance which are the net returns, Asset Allocation Compliance for the total portfolio as well as by investment manager. Mr. Owens reviewed the Executive Summary for each investment manager. Chair Chapdelain asked Mr. Owens to discuss his expectation for value to outperform growth. Mr. Owens noted that on average, the outperformance periods last 3 to 4 years, however most recently, growth outperformed value for 10 years which was the longest time-period where one outperformed the other, as well as the greatest disparity between the two. While Mr. Owens discussed large cap growth funds, Chair Chapdelain asked if the Plan is being well served over the long term by having 2 large cap growth managers, Clearbridge and Polen. Mr. Owens explained that, while every other asset class in the Plan's portfolio has only 1 manager, the Board determined the amount of funds in large cap growth justified 2 managers for the purpose of diversification. Mr. Owens asserted both Polen and Clearbridge are respectable managers, and each performs well during different environments, however, would not be unreasonable for the Board to contemplate combining assets into a single manager for the class. Chair Chapdelain questioned retaining 2 managers when Polen is clearly outperforming the benchmark when Clearbridge is not. Mr. Owens explained that while Polen is currently outperforming its benchmark, Polen only has approximately: 20 stocks; further, several years ago Polen had trailed thel benchmark by 400-500 basis points because it had no energy holdings at a time when energy was outperforming every other sector within the asset class. Of the 11 sectors within large cap growth, Polen has stocks in 7, making it a very concentrated fund. While it will have periods it will outperform the benchmark due to that concentration, Polen will accordingly underperform at times as well. Mr. Owens briefly discussed the rationale for investing assets with Clearbridge. Chair Chapdelain asked Mr. Owens if a small- to mid-cap fund would be appropriate for the Plan considering his assertion that value would remain in favor. Mr. Owens noted the Plan's portfolio has no mid-cap exposure and suggested an asset allocation study to add a mid-cap value fund. While he did not believe the portfolio needs more exposure to equities, he recommended more diversity within the equity space in the form of a smal/mid cap hybrid manager which can over- or under-weight between small and mid-cap depending on which is favored at the time. The Board had no objections to the asset allocation study; Attorney Christiansen noted there is no additional charge from the investment consultant for an asset allocation study. Trustee McVaugh made a motion to direct the Investment Consultant to perform an asset allocation study to add a mid-cap value and a mid-cap growth manager. Trustee Reardon seconded the motion. The Board and Mr. Owens discussed the motion, including why the portfolio hasn't included a mid-cap manager in the past, how the Investment Policy Statement would be changed, as well as whether adding a mid-cap manager would diversify the portfolio. The motion carried unanimously (6-0). Mr. Owens resumed his discussion of the fund managers' Executive Summaries. He explained Allianz issued a statement advising iti is being investigated by the Securities and Exchange Commission, but that thei investigation is regarding a hedge fund which had been marketed and advertised as low risk but did perform as such, and the SEC received complaints. The Plan's portfolio has no holdings with this hedge fund and no exposure to the losses it incurred or could incur due to litigation. He explained the Board's rationale for investing in real estate as an alternative to fixed income. Chair Chapdelain asked Mr. Owens to address the differences between AEW and UBS. Mr. Owens explained UBS has less leverage, the lowest risk in the asset class, as well as an income stream, which were important to the Board at the time it decided to invest in real estate. The Board decided to diversify into AEW, which has more leverage and therefore a higher return. Further, UBS has traditionally invested in indoor luxury shopping malls which were adversely affected by the COVID-19 pandemic; AEW has some outdoor malls which did not suffer as significantly as UBS's holdings. Mr. Owens voiced his support for remaining invested in UBS. Mr. Owens concluded his discussion of the fund managers' Executive Summaries. He reviewed the Compliance Checklist and Policy Index History and noted he had no recommendations at this time. Chair Chapdelain thanked Mr. Owens for his presentation and asked Attorney Christiansen if a change to the Investment Policy Statement would require approval from the City Commission. Attomey Christiansen stated the Investment Policy Statement would require amendment, but that it could be prepared by Mr. Owens and approved by the Board. Further, Mr. Owens could proactively prepare an amendment to bring with the asset allocation study for the Board's consideration. Mr. Owens offered to bring, with the asset allocation study, manager searches; the Board agreed by consensus. 10. UNFINISHED BUSINESS: None. 11. NEW BUSINESS: 11.1. Presentation and Discussion Re: Ordinance to Address Florida Retirement System. Presenter(s): Scott Christiansen, Christiansen & Dehner. Attorney Christiansen stated this ordinance was being presented to the Board for its information and it was drafted by the City's attorney. When adopted, new employees willj join the Florida Retirement System and current employees will have 1 opportunity to rrevocably elect to join the Florida Retirement System or remain in the Plan. No Board action is required. Pension Plans Administrator Martin explained that December 1, 2021 is the anticipated implementation date, and therefore employees would likely need to make an election by mid- November, although those dates may change. 12. ATTORNEY MATTERS: Attorney Christiansen noted all trustees have timely filed their annual financial disclosures. He confirmed with Pension Plans Administrator Martin and Secretary Griggs that they would provide the requisite documents and information to Trustee Vincent as a new trustee. Attorney Christiansen reviewed the upcoming disability cases. 13. OTHER MATTERS 13.1. Presentation and Discussion Re: Administrative Expense Budget Analysis as of March 31, 2021. Presenter(s): Debra Martin, Pension Plans Administrator. Pension Plans Administrator Martin explained this had not been presented earlier as this is the first meeting since the report's issuance. She noted that Dues & Memberships, Accounting & Auditing, and PC Software have been 100% expended for the year as intended, and no more expenses were anticipated for those items in the fiscal year. 13.2. Presentation and Discussion Re: Check Registers January 1, 2021, to March 31, 2021. Presenter(s): Debra Martin, Pension Plans Administrator. Book 1 Page 265 08-09-2021 8:30 a.m. Book 1 Page 266 08-09-2021 8:30 a.m. Pension Plans Administrator Martin advised this is presented because payments are issued by ACH and not paper checks. She noted payments to Mr. Myers and Ms. Proctor were lump sum distributions and payments to Mr. Bartlett and Ms. Cox were DROP disbursements. The Firefighters' Pension Plan was reimbursed for payments it made for items shared with the Police Officers' and General Employees' Pension Plans. Pension Plans Administrator Martin noted the meeting agenda incorrectly states the time of the next meeting; the next Regular Meeting is scheduled for September 24, 2021, at 11:00 a.m. Mr. Owens confirmed he is available to attend at that date and time. Chair Chapdelain formally welcomed Trustee Vincent to the Board and discussed educational opportunities from the Florida Public Pension Trustees Association. Attorney Christiansen pointed out that there will be a special meeting to hold an initial disability hearing immediately following today's Regular meeting. While the remaining trustees previously received copies of the applicable disability records to review prior to today's meeting, Trustee Vincent did not. Attorney Christiansen advised Trustee Vincent that if he were to attend the disability meeting, he would be required to cast a vote in any matter that came before the Board; and that as he did not have an opportunity to review the records in advance, he would not need to attend the disability meeting. Trustee Vincent stated he reviewed previous disability hearings as indicated by Pension Administration and did not foresee an issue voting in the upcoming hearing. 14. ADJOURN: Chair Chapdelain adjourned the General Employees' Pension Plan Board of Trustees regular meeting at 11:11am. - C ha Chair Ryan Chapdelain Secretary $hayla Griggs