Retiree Health Care Investment Board

CITY OF ROYAL OAK RETIREE HEALTH CARE INVESTMENT BOARD MINUTES OF THE REGULAR MEETING OF THE BOARD OF TRUSTEES A meeting of the Retiree Health Care Investment Board of Trustees was conducted at the City Hall building in conference room # 122 on Friday December 17, 2021, at 8:30 a.m. The meeting was called to order at 8:59 a.m. Attendance / Roll Call: PRESENT: Lee Collick - Chairperson Bret Nelson - Vice Chairperson Kyle DuBuc - Trustee Monica Hunt – Trustee Paul Brake - Trustee ALSO PRESENT: Julie Rudd - Bd Chief Administrative Officer/ Bd Secretary/Bd Treasurer Lisa Genord - Financial Analyst / Pension Technician Tom Michaud – Bd attorney with VanOverbeke Michaud and Timmony Brian Green – AndCo Investment Advisor Public Comment There were no public attendees / comments. Board approval of the agenda for the December 17, 2021, meeting Moved by Lee Collick to approve the agenda for the December 17, 2021 meeting Supported by Bret Nelson MOTION ADOPTED UNANIMOUSLY 5/0 Board approval of the draft minutes for the November 19, 2021 meeting Moved by Lee Collick to approve the draft minutes for the November 19, 2021 meeting Supported by Bret Nelson MOTION ADOPTED UNANIMOUSLY 5/0 OTHER GASB Statement Nos. 74 and 75, Accounting and Financial Reporting for Postemployment Benefits Other Than Pensions as of June 30, 2021 Moved by Lee Collick to receive and file. Supported by Bret Nelson MOTION ADOPTED UNANIMOUSLY 5/0 INVESTMENTS Investment performance review presented by Brian Green of AndCo. Market value/allocation of assets as of November 30, 2021, is $155,412,842. Current month – total portfolio underperformed the benchmark: -2.00% vs. -1.62% index. 3-month performance – total portfolio underperformed the benchmark: -1.32% vs. -0.34% index. Year-to date performance – total portfolio outperformed the benchmark: 11.27% vs. 11.22% index. 1-year performance – total portfolio outperformed the benchmark: 15.69% vs. 14.94% index. 3-year performance – total portfolio underperformed the benchmark: 12.31% vs. 13.25% index. 1 Inception – total portfolio underperformed the benchmark: 8.83% vs. 10.11% index. Brian reported that the market traded off more in November due to Federal rate hikes, inflationary concerns, and the spike in COVID-19 cases. Brian also reported that the Chinese markets, as part of the city’s total international equity portfolio, realized negative returns due to ongoing political issues there. Brian also reported that as of April 1, 2022 the Prisa II real estate fund will be shifting from quarterly to monthly reporting (pricing & liquidity). The complete AndCo Investment Performance Review report dated November 30, 2021 is on file in Finance office. Moved by Lee Collick to receive and file. Supported by Bret Nelson MOTION ADOPTED UNANIMOUSLY 5/0 AndCo Non-Core Real Estate Manager Recommendation Data as of June 30, 2021 and December 8, 2021. Brian requested review and approval of a $4.5M commitment (2.8% of assets) to private real estate manager TerraCap Partners Fund V. Brian stated that this new fund would complement the core plus allocation with Prisa II, as the TerraCap portfolio focuses on industrial, multi-family and office assets in high population growth areas of the U.S., such as Florida, Georgia, North Carolina, Texas, Colorado and Arizona. Brian reported that this fund is an illiquid real estate vehicle as it does not provide full liquidity within a 12-month time period and is a 4 to 5 year experience. Brian also reported that TerraCap acquires properties that are well-built but poorly managed and would put all of the $4.5M commitment to work by April – May 2022. Brian reported that TerraCap Partners Fund V has an incentive fee, which is 20% after return of capital and preferred return, however, the retirement system’s monthly management fee to AndCo would remain unchanged. Lee Collick stated he appreciated Brian presenting this new investment option to the board for consideration and feels that this is a good option. Monica Hunt stated she feels this is a good investment opportunity. Bret Nelson stated he feels more comfortable with this as an investment option. Moved by Lee Collick to approve a $4.5M commitment (2.8% of assets) to private real estate manager TerraCap Partners Fund V and authorize Julie Rudd to sign documentation reviewed by systems attorney. Supported by Bret Nelson MOTION ADOPTED UNANIMOUSLY 5/0 PGIM Real Estate 4Q2021 Quarterly Insights Newsletter Moved by Lee Collick to receive and file. Supported by Bret Nelson MOTION ADOPTED UNANIMOUSLY 5/0 LEGAL None NEXT MEETING AND ADJOURNMENT Next regular meeting is scheduled immediately following the retirement system board meeting at approximately 8:30 a.m. on Friday, January 21, 2022 at the City Hall Building at 203 South Troy Street, in the 1st floor conference room # 122. Moved by Lee Collick to adjourn the meeting (9:25 a.m.) and confirm the next meeting for January 21, 2022, immediately following retirement system board meeting at approximately 8:30 a.m. Supported by Bret Nelson MOTION ADOPTED UNANIMOUSLY 5/0 2