Arel Capital LP

Item 5 Fees and Compensation
Arel typically charges the Funds an annual management fee equal to 1% of a Fund's aggregate capital
contributions outstanding and deployed during the investment period. The fee is payable quarterly in
advance and is prorated for any partial year.

Management fees are billed to each Fund and paid by the Fund from its assets. To obtain cash for the
payment of management fees, the manager of the Fund may draw down investors' capital
commitments.

Arel also receives acquisition fees in connection with the evaluation and acquisition of the investment
properties. In general, the Funds pay Arel an acquisition fee of up to two percent (2.0%) of the
purchase price of the investment properties, which shall be earned at the closing of the purchase of
such properties. In some cases, an Arel affiliate may also receive construction supervision fees, which
range between $2,000 and $8,000 per month.

Please see each Fund's respective operating agreement or partnership agreement for further details
regarding the management fee and the acquisition fee.

When loans are made, loan origination fees are paid by the borrower to Arel Capital. These fees are
market based, and range from 1-3%. They are not paid by the Fund making the loan.

The Funds generally invest on a long-term basis. Accordingly, investors generally are not permitted to
withdraw or redeem interests in the Funds.

In addition, each Fund will be subject to other investment and administrative expenses such as legal,
auditing (if an audit is required), tax preparation, appraisal fees, consulting and accounting expenses,
expenses of the advisory board and meetings of the investors, taxes, fees or other governmental
charges, preparation and distribution of reports, insurance, bank service charges, other expenses
associated with the acquisition, holding and disposition of its investments and all third-party expenses
in connection with transactions not consummated and extraordinary expenses (such as litigation). The
Funds pay organizational expenses incurred in their formation.

The Funds may incur brokerage and other transaction costs. Please see Item 12 for more information
about Arel's brokerage practices.

Item 7 Types of Clients
Arel provides advice directly to the Funds, currently its only clients, and not to individual investors. The
Funds are not registered under the Investment Company Act of 1940, as amended (the "Investment
Company Act") and the securities purchased for the portfolios are not registered under the Securities
Act of 1933, as amended. The Funds are not offered through any form of general solicitation or general
advertising. Access to information about the Funds is limited to investors who meet specified minimum
investment criteria relating to their financial holdings, investment experience, etc. The Funds' investors
are typically institutions and high net worth individuals.

Details concerning minimum initial and additional subscription amounts are found in the Funds'
Documents.