Item 5: Fees and Compensation
AEW does not have a formal fee schedule for its services. Compensation for investment advisory
services, in the case of separately managed account arrangements, sub-advisory services and models, is
generally negotiated in each instance and is particular to each advisory contract. In the case of privately
offered commingled vehicles, compensation is outlined in the private placement memorandum or
organizational documents for each such vehicle.
Compensation arrangements include, among other arrangements, the following: (1) annual portfolio or
asset management fees, which could be based upon gross asset value, net asset value or net operating
income, and are generally paid quarterly in arrears; (2) performance-based fees, which could be based
upon appreciation in the value of an asset or portfolio, performance relative to a benchmark or index, or
other criteria, and as agreed are paid periodically, upon disposition of an asset or portfolio, or after a
client or investor receives a specified negotiated return set forth in an advisory contract, a private
placement memorandum or organizational documents; (3) investment acquisition and disposition fees,
which are charged upon the creation and disposition of an investment, and are generally based upon
the amount of client capital invested in the project and/or the value of the subject real property
(investment transaction fees can vary depending upon whether there are additional dimensions to the
transaction, such as the use of leverage, fractional interests, etc.); and (4) other fees specifically
negotiated for services provided, for example fees in connection with property financings or
restructurings. Disposition fees could also include a performance-based component, which provides
AEW with a percentage, negotiated on a case-by-case basis with each client, of the investment return
above a predetermined threshold.
In certain cases, investments on behalf of clients or commingled vehicles are made with third party joint
venture or operating partners who provide equity and/or services to the asset. These partners are
expected to receive compensation, typically from the partnership, joint venture, or other vehicle holding
the relevant asset, in the form of management fees or incentive allocations when such assets
outperform certain hurdles. Any such compensation would borne indirectly by clients invested in such
an asset.
Fee arrangements also vary for advisory services relating to investments in securities and investments in
real property. In addition, in certain cases advisory fees include reimbursement for start-up expenses
associated with a particular client account or commingled vehicle, as described in further detail in the
applicable governing and/or offering documents, or as agreed to with a particular client. Annual asset
management fees also depend upon the nature of the interest managed, the extent of leverage utilized,
and other factors.
AEW CAPITAL MANAGEMENT, L.P. PART 2A OF FORM ADV AS OF MARCH 31. 2026
From time to time, AEW also provides seed capital in connection with investment vehicles sponsored by
AEW. AEW and senior level employees of AEW also co-invest in commingled vehicles sponsored by AEW
and, in such event, in addition to the compensation payable to AEW described above, AEW and such
employees receive distributions from such commingled vehicles in respect of such co-investment which
permit AEW and such employees to participate in investment returns to investors above pre-determined
thresholds of return.
Fees are generally accrued and paid monthly or quarterly either in arrears or in advance. If fees are paid
in advance and the client terminates the relationship before the end of the relevant period, AEW will
provide a pro-rata refund of such fees. With regard to separately managed accounts, fees are generally
billed to the client or, at the client’s direction, to the client’s custodian and, at the client’s election, can
be paid directly by the client or be deducted from the client’s account. With regard to privately offered
commingled vehicles, fees are generally paid by the commingled vehicles (or deducted from amounts
otherwise distributable to investors) and are reflected in the commingled vehicle’s quarterly financial
statements delivered to investors.
With regard to separately managed accounts and commingled vehicles invested in direct real estate,
clients generally incur costs and expenses associated with third party services, such as accounting,
audit/tax preparation, insurance, administration, appraisal, legal, due diligence, loan origination,
property management, brokerage and leasing commissions, repairs and maintenance, and other third
party services customarily associated with the acquisition, ownership and disposition of real estate.
With regard to separately managed accounts and commingled vehicles invested in publicly traded real
estate securities, clients generally incur costs and expenses associated with third party services, such as
custody, accounting, audit/tax preparation, administration, brokerage, research, legal and any other
third party services associated with the management of the account or commingled vehicle. Please see
the section entitled Item 12, “Brokerage Practices” for a description of AEW’s brokerage practices.
While AEW does not maintain a separate expense allocation policy, when allocating expenses AEW uses
an allocation methodology consistent with its fiduciary duty, and the method used to allocate any
particular expense is intended to result in a fair and equitable allocation. Generally, allocation
methodologies could include metrics such as percentage of NAV, property count, or other reasonable
metric deemed to be most appropriate depending on the expense and the facts.
AEW can offer reduced fees based on the aggregate capital commitments of certain investors, including
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