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 clients as an open-end, commingled real estate fund sponsored by Principal Life Insurance Company and managed by Principal Real Estate Investors. 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. The Principal U.S. Property Account is available to qualified retirement plans. The Account is an insurance company separate account sponsored by Principal Life Insurance Company and managed by Principal Real Estate Investors.

Philosophy

The Principal U.S. Property Account is a core real estate fund 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 fund-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 fund level risk is accomplished by operating with a strong focus on client diversification and limited fund-level obligations, such as forward commitments.

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 meet or exceed the open-end fund component of the National Council of Real Estate Investment Fiduciaries (NCREIF) Property Index.