Fees and Compensation
Management Fees
While the Apollo Real Estate Managers and their affiliates receive Management Fees from Clients,
not all of the investors in such Clients bear the burden of paying Management Fees. For example,
certain affiliates of the Apollo Real Estate Managers (including their employees) do not pay
Management Fees to the Apollo Real Estate Managers. The specific payment terms and other
conditions of the Management Fees available to the Apollo Real Estate Managers are set forth in
the applicable Governing Documents. Generally, the Management Fee is calculated as follows:
(i) during the commitment period (e.g., the period during which new portfolio investments are
permitted to be made), the Management Fee is calculated as a percentage of capital commitments
of fee-bearing investors; (ii) after the expiration of the commitment period, the Management Fee
is calculated as a percentage of the adjusted cost of all unrealized investments attributable to fee-
bearing investors; (iii) over the entire life of the Client and not just after the expiration of the
commitment period, the Management Fee is calculated as a percentage of the adjusted cost of all
unrealized investments attributable to fee-bearing investors; or (iv) on a gross purchase price of
the underlying assets. With respect to Apollo Commercial Real Estate Finance, Inc. (“ARI”), the
Management Fee is calculated based on adjusted net equity of ARI.
As set forth in the applicable Governing Documents, Management Fees are payable to the Apollo
Real Estate Managers monthly or quarterly in arrears. However, there could be instances where
Management Fees are paid monthly, quarterly, or semi-annually in advance. Management Fees
are generally paid to the Apollo Real Estate Managers by deducting such fees from the applicable
Client account or directly billing the Client.
The Management Agreement of a Client is terminated upon the winding up of the Client or in the
event a specified percentage of limited partners vote to: (i) remove the general partner after a
“cause” event as described in the Governing Documents of the applicable Client; or (ii) dissolve
the Client. Pre-paid Management Fees, net of accrued expenses for which the applicable Apollo
Real Estate Manager is entitled to reimbursement, will be returned to the Clients in the event of
termination of the Management Agreement and, upon such return to Clients, will be returned to
the fee-bearing investors in such Clients. For ARI, the Management Agreement is terminated upon
a vote of a specified percentage of independent directors that: (i) the Apollo Real Estate Manager’s
performance is materially detrimental; or (ii) the Management Fees payable to the Apollo Real
Estate Manager are unfair, subject to the Apollo Real Estate Manager’s right to prevent a
termination by accepting a reduction of Management Fees agreed to by a specified percentage of
independent directors.
As described more fully below, an Apollo Real Estate Manager or affiliate receives fees and
expense reimbursements as consideration for other services it provides.
Carried Interest
In addition, an affiliate of an Apollo Real Estate Manager serving as a general partner of each
Client is entitled to receive a carried interest allocation from the Client for which it serves as
general partner. Each carried interest distribution will generally be an amount equal to a
percentage of the profits from each portfolio investment made by such Client after the return of
allocable invested capital (including allocable Management Fees, Organizational Expenses and
Operating Expenses (as defined herein)) and a preferred return to limited partners. All carried
interest distributions payable to the general partners of Clients will be consistent with the
requirements of Section 205 of the Advisers Act and Rule 205-3 thereunder. As described more
fully below, an Apollo Real Estate Manager or affiliate also receives fees as consideration for other
services it provides. The specific payment terms and other conditions of carried interest are set
forth in the relevant Governing Documents.
Application of Governing Documents to Management Fees and Carried Interest
With respect to private Clients that the Apollo Real Estate Managers raise, investors negotiate
terms (including Management Fees payable to the Apollo Real Estate Managers and carried
interest payable to the applicable general partners) through the negotiation of the Governing
Documents.
The limited partnership agreements of Clients generally provide that the general partner allocates
capital from the capital accounts of limited partners to pay Management Fees (be it through capital
contributions or through distributions otherwise payable to such limited partners) and carried
interest distributions are caused to be made by the general partner from the Client to the applicable
Apollo Real Estate Manager and/or the general partner of the Client.
The applicable general partner and/or applicable Apollo Real Estate Manager generally have the
unilateral discretion to waive or reduce the application of certain provisions of the Governing
Documents for a Client with respect to an investor (including those related to fees, carried interest,
transparency, reporting, investment-related policies and participation and transfers of interests in
Clients) without obtaining the consent of any other investor. The applicable general partner and
Apollo Real Estate Manager generally do not receive Management Fees and performance-based
compensation from feeder funds formed for the benefit of principal officers and employees of
Apollo or its affiliates. In the case of family members and friends of such principal officers and
employees (including persons associated with portfolio investments of Clients, such as
management team members of such portfolio investments), the applicable general partner and
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