PRIVATE INCOME – INFRASTRUCTURE, PRIVATE CREDIT, INCOME OPPORTUNITIES

The Private Income strategy aims to provide the Fund with a high level of income and limited volatility, through investments in infrastructure, private credit and other income opportunities. Across the portfolio, investments should offer a significant level of downside protection.

KEY PORTFOLIO FIGURES

$3.2B

as of June 30, 2017

$800M

Targeted Annual Investment Pace

6%

Target Allocation (Growing to 9%)

MANDATE



Strategy

The Private Income strategy invests in a broad range of strategies covering infrastructure, other private real asset investments (such as timber and hard asset leasing), private credit, opportunistic / distressed credit and other private market investments that provided income generation to the Fund. We target assets and strategies that provide a combination of principal protection, current income (e.g. interest payments or dividends), inflation mitigation and equity upside. We target an absolute return in excess of CPI + 4%, but evaluate each opportunity on the expected return, relative to the risks we are taking.



Infrastructure

Infrastructure investments are often long-lived, with inflation protection characteristics. APFC invests through funds, direct investment and coinvestment into a portfolio of assets that is diversified by geography and sector. These assets include: power generation, timber, electric utility, midstream energy, transportation, water and waste, telecommunications, and other infrastructure.



Private Credit

Private Credit investments are often assetbacked and generate high current income.
The APFC invests through funds into a portfolio of assets that is diversified by strategy, industry and geography. These strategies include: direct lending, mezzanine lending, distressed/opportunistic credit, asset-based lending, and other strategies. While the portfolio is currently focused primarily in the U.S., we evaluate opportunities globally.



Special Income Opportunities

Special Income investments are made to capture attractive, sometimes fleeting, opportunities that do not fit into the Private Credit or Infrastructure portfolios. The portfolio primarily consists of a jointventure with American Homes 4 Rent, but we continue to evaluate opportunities that are created due to economic, regulatory, and relative value anomalies.

Select Investments

In May 2013, APFC co-invested with Global Infrastructure Partners to acquire a significant minority stake of TIL from Mediterranean Shipping Company. TIL was founded in 2000 and is now the world’s sixth largest container terminal operator with 30 terminals operating or under construction in major hubs and gateways worldwide.
In September 2015, APFC joined with several institutional investors to form a joint venture with the goal to own and sustainably manage a portfolio of U.S. timberlands. The portfolio consists of properties in the Southern U.S., which are primarily pine plantations that serve a variety of customers and forest product markets.
In June 2014, APFC formed American Homes 4 Rent II, LLC with American Homes 4 Rent (NYSE: AMH), a leader in the single-family home rental industry, to acquire, renovate and lease residential properties.

In September 2017, the APFC led an equity investment in Generate Capital Inc., a specialty finance company that invests in renewable-energy, energy-efficiency, waste, agriculture and water projects.

PERFORMANCE

The performance target for the Private Income portfolio is a real return of CPI + 4.0%. The life-cycle of Private Infrastructure and Special Income investing, which can be similar in structure to private equity, will in many circumstances contribute to an uneven return profile or J-Curve phenomena for investments early in their respective life-cycle.

Performance reports for the portfolio can be found in the monthly performance reports and in the board meeting packets.