ACA II Advisors LLC

FEES AND COMPENSATION

ACRE’s fee and compensation arrangements vary depending on the particular Client. A summary
of our typical fees and compensation is provided below. The specific arrangement for each Client
is described in its offering materials and governing documents (including a private placement
memorandum, partnership agreement, articles of association and investment management
agreement, as applicable). Although the fees charged to a Fund are generally not negotiable, we
may enter into side letters with certain underlying investors that effectively modify the fees and
compensation borne by such investors. In addition, certain underlying investors, generally
including related persons and/or current or former employees or partners of ACRE or its affiliates,
are not subject to management fees or performance based compensation in connection with their
investment in the Funds (however, such persons are required to bear their pro rata share of certain
Fund expenses).

Subject to any applicable provisions in our Clients’ governing documents, we may offer certain
persons the ability to co-invest in particular investment opportunities alongside one or more Clients.
The compensation payable to us in such cases may differ from the compensation we receive from
other Clients that participate in the same investment.

The fees and compensation described below are independent of any proceeds we may receive as an
investor in a particular Client.

Management Fees

For performing investment management services, including Fund-level finance, accounting and
investor relations services, our investment advisory subsidiaries receive a management fee from
each Fund at an annualized rate not exceeding 2.0%. The management fee is paid quarterly in
advance and is generally paid by way of (i) drawdowns of the unfunded commitments of
underlying investors in the relevant Fund, (ii) deductions from investment proceeds or other
cash held by the relevant Fund or (iii) borrowings under the relevant Fund’s credit facilities, if
applicable. For separate accounts, management fees may be collected in a different manner as
agreed upon with each Client (for example, a management fee may be charged on the gross
acquisition cost or on current value of an underlying investment).

The management fee rate typically varies during the life of a Fund. During a Fund’s investment
period (i.e., the period during which we may call capital from underlying investors for new
investments), the fee is calculated based on the amount of capital commitments made to such
Fund regardless of whether such capital has been invested and without any assurance as to if or
when capital will ultimately be invested. Following the expiration of a Fund’s investment period,
the fee is typically calculated based on the capital that remains invested as of each payment
date or the fair value of remaining investments. To the extent that the fees we receive depend
upon our determination of the current market value of Client assets, there is an inherent conflict of
interest because higher values result in additional fees. To mitigate such conflict, we have
developed detailed valuation procedures that are tested as part of the annual third-party audit of the
Fund financial statements.

Carried Interest

With respect to each Fund, our related entity serving as its general partner or preferred shareholder
is typically entitled to receive a performance-based distribution (“Carried Interest”) of up to 20%
of net profits realized upon the disposition of an investment, after Fund investors have received a
return of capital with respect to such investment and an agreed-upon internal rate of return.

A Fund’s governing documents typically provide that we are required to repay any Carried
Interest we have received to the extent (i) underlying investors have not received a return of,
plus a specified return on, their capital contributions and (ii) the amount of Carried Interest we
received exceeds a specified percentage (typically 20%) of the aggregate net profits distributed
to underlying investors during the life of the relevant Fund. Additionally, a portion of any
Carried Interest distributions may be required to be placed in a reserve account and
subsequently returned to the Fund in the event Fund investors have not received the amount due to
them as of the Fund’s dissolution or another point in time.

Carried Interest distributions may occur each time an investment is realized or on a different
basis as set forth in the governing documents of each Client. As is the case with management
fees, certain underlying investors in a Client including our personnel may pay a reduced (or
no) Carried Interest. Where applicable, Carried Interest payments are made in compliance with
Rule 205-3 under the Advisers Act, which permits the payment of performance-based
compensation by certain eligible investors.

Other Fees

In addition to the compensation we receive for performing investment management services, Aetos
Japan and ACRE China are frequently retained by Clients and/or their portfolio companies to
provide asset management services such as property-level finance and accounting services and the
hiring and oversight of leasing and property management agents that would otherwise be performed
by an unaffiliated third party. Such fees are intended to be charged at customary market rates, are
subject to restrictions set forth in the governing documents of each Client and may be based on the
acquisition cost of an investment. In addition, although ACRE is responsible for its own general
operating and overhead costs, including salaries, benefits and rent, in certain instances the costs of
internal staff time is charged to a Client to the extent an employee is seconded to perform finance,
accounting or strategic functions in respect of one or more portfolio investments (but not Fund-
level services which are covered by the investment management fee).
...

TYPES OF CLIENTS

Our Clients are primarily privately offered pooled investment vehicles (commonly
characterized as private equity real estate funds) and occasionally a special purpose vehicle
established as a separate account.

Underlying investors have included, without limitation, public and corporate pension plans,
sovereign wealth funds, endowments, foundations, high net worth individuals or family offices
and other institutions.

Based on the ownership of the investment vehicles described above and the manner of offering
of their securities, such vehicles are exempt from registration under the U.S. Investment
Company Act of 1940, as amended (the “1940 Act”) and therefore generally are not subject to
its provisions other than provisions relating to such exemption.

Interests in the investment funds and other vehicles described in our Form ADV have not been,
and are not, available to the general public. Generally such interests have been available for
purchase only by investors who are “accredited investors” as defined in Regulation D of the U.S.
Securities Act of 1933, as amended, and in the case of most Clients, “qualified purchasers” for
purposes of Section 3(c)(7) of the 1940 Act.

With respect to Clients that are investment funds, there is typically a minimum capital commitment
from each underlying investor, such as $5,000,000 (or substantially less in the case of certain
affiliated co-investment vehicles). However, a Fund’s offering documents typically provide that
the Fund may accept lesser commitments in our discretion.