Overview

Principal U.S. Property Account Background

Since 1982, The Principal Financial Group^® (The Principal^®)¹ U.S. Property Account (the Account) has been offered to plans as an open-end, commingled real estate fund. The Account is a diversified real estate equity fund consisting primarily of high quality, well-leased real estate properties in the multi-family, industrial, office, retail and hotel sectors.

Philosophy

The Principal U.S. Property Account is a core real estate account designed to have a low to moderate risk profile compared to other open-end real estate funds. This risk profile has two components: 1) a low to moderate real estate property risk profile; and 2) a low to moderate risk portfolio level operating profile. Low to moderate real estate property risk is accomplished by investing primarily in well-leased properties on an unleveraged basis. Low to moderate portfolio level risk is accomplished by operating with limited portfolio level obligations and a well diversified portfolio.

Objectives

The Principal U.S. Property Account has two primary objectives: 1) to invest in a well-diversified real estate portfolio that reflects the overall performance of the U.S. commercial real estate market, and 2) to provide clients with private real estate returns that, over a market cycle, meet or exceed: a) the open-end fund component of the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index at the property level, and b) the NCREIF Fund Index Open-end Diversified Core Equity (NFI-ODCE) Equal Weight at the portfolio level.