Item 5. Fees and Compensation
The fee and compensation arrangements between the Adviser and the Funds are set forth
in each Fund’s Governing Documents, and generally are not negotiated, provided, however,
that if permitted in each Fund’s Governing Documents, the fees applicable to investors in a
Fund (each, an “Investor”) may be reduced at the Adviser’s discretion and documented
accordingly.
Funds
Each Fund pays the Adviser an annual investment management fee, paid quarterly in
advance, based upon a percentage of committed and/or invested capital, or as a flat fee based
on a percentage of the value of each Fund’s investments at each Fund’s inception (in each
case, as specified in the Fund’s Governing Documents). The applicable percentage is 1.5%,
as provided in the Governing Documents. Such fees will be paid out of e a c h Fund’s
distributable proceeds, operating cash flows, borrowings, or capital contributions from its
Investors. As provided in each Fund’s Governing Documents, the General Partner of
e a c h Fund may reserve the right to waive all or a portion of any future installment of an
investment management fee, and the waived portion of an investment management fee
installment can reduce the amount of capital contributions that such General Partner would
otherwise be required to contribute to each Fund after the date such waived amount would
otherwise be due. The waived investment management fee can also be effectuated through
additional income and distribution allocations to the respective investors.
In addition, as provided in each Fund’s Governing Documents, the Adviser’s management
fee may be reduced by any organizational and offering expenses paid by each Fund in
excess of any applicable cap set forth in its Governing Documents.
Both BRV1 and BRV2, are organized as limited partnerships for which an affiliate of the
Adviser serves as the general partner (each, a “General Partner”). The General Partner of
both BRV1 and BRV2 will be entitled to receive performance-based compensation (see Item
6 of this brochure) from each respective Fund.
Valuation
Real estate assets held in the Funds are primarily “fair valued.” The Adviser will value
investments on a quarterly basis in accordance with the applicable requirements set forth in
each Fund’s Governing Documents and following generally accepted valuation standards.
The Adviser’s valuation process includes the use of internal valuation models. In general,
the Adviser considers a discounted cash flow method when determining investment value.
In addition, the Adviser also considers third-party valuations, analysis of recent comparable
sales transactions, actual sale negotiations and bona fide purchase offers received from third
parties, and consideration of the amount that currently would be required to replace the
property, as adjusted for obsolescence.
The Adviser partners with Broadview to form the Adviser’s Valuation Committee. Members
of the Valuation Committee include senior personnel from both the Adviser and Broadview.
Meetings are generally held on a quarterly basis to review internal valuations for approval.
Other Fees
In addition to the compensation described above, the Funds have paid, and may pay in the
future, the Adviser or its affiliates certain other fees for services rendered in addition to
advisory services, in each case as set forth in each Fund’s Governing Documents ( subject
to applicable caps, if any). The Funds pay oversight fees to the General Partner for certain
advisory and oversight services provided to platforms or operating companies. The Funds’
Governing Documents address the limitations of oversight fees for each platform and for the
Funds in the aggregate. The General Partner determines the appropriate allocation of the
aggregate oversight fee to each Fund.
The Adviser calculates investment management fees and other fees at the Fund level based
on the invested equity of the Fund. The Investors are indirectly charged for such amounts by
corresponding reductions of their capital accounts balances in each Fund, as applicable.
The Adviser and its supervised persons do not accept any compensation for the sale of
securities or other investment products, including any interests or shares in the Funds.
Expenses
The Funds will bear directly and/or will reimburse the Adviser for each Fund’s various
operating and other expenses. Such expenses as specified in each Fund’s Governing
Documents may include, but are not limited to:
• Legal and other organizational and offering expenses incurred in connection with
each Fund’s formation (and the formation of any entities affiliated with each Fund),
subject to any related terms described in such Fund’s Governing Documents,
including any applicable cap on such expenses.
• All costs and expenses incurred in maintaining the operations of each Fund and its
investments, as further described in each Fund’s Governing Documents. Such costs
and expenses applicable to each Fund have included in the past, and may include
in the future, but are not limited to, (a) legal, auditing, consulting, third party
administration and accounting fees and expenses (including costs of reports to each
Fund’s Investors, financial statements, tax returns and K-1s), and fees of any service
providers; (b) expenses of any meetings of a Fund’s Advisory Committee, if
applicable, and of its Investors; (c) all expenses (including travel expenses), whether
the transaction is consummated or not, associated with the consideration, acquisition,
holding and disposition of each Fund’s proposed or actual investments, including,
without limitation, any and all costs associated with alternative investment vehicles
and any holding vehicles, insurance, indemnification and other unreimbursed
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