American Realty Advisors LLC

ITEM 5:       FEES AND COMPENSATION

Fees – Separate Accounts
Annual fees for activities undertaken on behalf of ARA’s existing separate account clients
typically range from an annual rate of 0.20% to 1.10% of the value of the assets under
management, depending on the nature of the separate account mandate, but may fall
outside of that range depending on unique circumstances. Asset management fee rates

ARA | American Realty Advisors                                                               5

Part 2A of Form ADV: Firm Brochure

are typically based on some or all of the following criteria: the original acquisition cost of
the assets; appraised value of the assets; the current net or gross market value of the
assets; the balance of any outstanding loan investment; or the net operating income
generated from the assets. On occasion, the asset management fee charged by ARA may
be a negotiated fixed amount.
In addition to the asset management fee, separate account clients may pay other fees,
such as takeover, due diligence, real estate acquisition, incentive, workout, loan,
renovation, leasing, or disposition fees pursuant to the terms negotiated by such clients.
Asset management fees for separate account clients are typically billed either on a
monthly or a quarterly basis in arrears. These fees, along with the other fees mentioned
above, are paid by the separate account clients.

Fees – Pooled Investment Vehicles
ARA receives an asset management fee with respect to each investor’s investment in the
pooled investment vehicles it sponsors.
The governing documents of the pooled investment vehicles specify the fee schedule for
the payment of any other fees to ARA by the investors in such vehicles. They also specify
the timing of the payment of such fees to ARA which are typically charged on a quarterly
basis in arrears and deducted from amounts distributable to investors. Asset management
fees payable to ARA range from an annual rate of 0.70% to 1.25% and vary depending upon
the pooled investment vehicle sponsored by ARA and other factors. For example, except as
noted below, the amount of the asset management fee paid to ARA by investors in one of
the open-ended pooled investment vehicles sponsored by ARA is linked to the size of the
investor’s total investment commitment reduced by redemptions for investors who
acquired their interests after January 1, 2015. In another of the pooled investment vehicles
sponsored by ARA, the governing documents establish a tiered fee structure linked to the
net asset value of the investor’s investment based solely on the value of the vehicle’s
invested assets excluding cash held by the vehicle.
No asset management fee is charged on commitments made by an investor that have not
yet been contributed to the pooled investment vehicle.
In addition to the asset management fee, the governing documents for certain of the
pooled investment vehicles include provisions for other fees such as a cash management
fee, an acquisition fee, and a performance-based fee. These fees are paid in the manner
specified in the governing documents of such vehicles.
The existence of an acquisition fee may be deemed to create an incentive for ARA to cause
such vehicles to acquire assets such vehicles might not have otherwise acquired based on
the anticipated fee to be received by ARA. The performance-based fee may also be deemed
to create an incentive for ARA to allocate investment opportunities to any pooled
investment vehicles with such a fee over those without such a fee. These risks are reduced
significantly by the other components of ARA’s fee schedule, the policy for allocating

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Part 2A of Form ADV: Firm Brochure

investment opportunities and the involvement of a cross-functional Investment Committee
in the approval of each acquisition.
ARA has historically elected to waive a portion of the asset management fees that would
be payable to ARA pursuant to the governing documents for one of the pooled investment
vehicles it sponsors. Investors in this vehicle who made a capital commitment below a
breakpoint (established to determine the point where asset management fees decline)
have been granted a fee break at such time as the net asset value of their interest in the
pooled investment vehicle exceeds any of the breakpoints even though their capital
commitments were insufficient to achieve the fee break. This fee break has been provided
to such investors until such time as the net asset value of their investment in the vehicle
has declined below the breakpoint. There is no guarantee that ARA will continue to waive a
portion of the fees to which it is entitled pursuant to the governing documents of the
vehicle.
ARA has negotiated specific terms of investment for certain investors in its pooled
investment vehicles that differ from the terms applicable to other investors, such as fee
offsets, and under appropriate circumstances may do so in the future. Except as noted
above, the method for payment of ARA’s fees is fixed by the terms of the governing
documents applicable to an investment in the pooled investment vehicles. Therefore,
investors who invest in such pooled investment vehicles are not able to select which
method of payment they would prefer.

Other Types of Fees or Expenses

Hourly fees are charged for certain services provided to consulting services clients and
QPAM engagements at rates ranging from $500 to $1,500 per hour, depending on the
nature of the work, as negotiated by the client. In addition, fixed fee arrangements for
certain consulting or QPAM services are agreed upon with some clients. A portion of the
fees may be due at the time the engagement with the balance of the fees either due at pre-
determined stages or upon completion of the assignment. No refunds are available for any
...

ITEM 7:       TYPES OF CLIENTS
ARA serves primarily as a real estate investment manager for pension plans regulated by
ERISA, for government pension plans not subject to ERISA and for pooled investment
vehicles. In addition to such pension plans, various health and welfare plans, trusts,
endowments, foundations, and similar institutional entities have invested in pooled
investment vehicles where ARA serves as a real estate investment manager.
ARA may also provide advisory services to individuals should they wish to establish a real
estate separate account. In addition, individuals who meet the requirements for investment
in such vehicles may invest in the pooled investment vehicles sponsored by ARA. To date,
ARA has no clients, and the pooled investment vehicles it sponsors have no investors, who
are individuals.
ARA has not established a minimum account size for establishing a separate account. The
amount of the minimum initial investment required for investment in the pooled investment
vehicles sponsored by ARA ranges from $1 million to $2 million. ARA, in its sole discretion,
may accept investments of less than these amounts in the pooled investment vehicles.