Item 5 Fees and Compensation
Broadstone Net Lease: Broadstone Asset Management charges Broadstone Net Lease an annual
asset management fee of 1%, paid in quarterly increments in advance. The asset management fee is
equal to one percent (1%) of the aggregate weighted average Determined Share Value multiplied by
the number of shares of common stock outstanding on a fully diluted basis (including the membership
interests in Broadstone Net Lease's Operating Company convertible into shares). The asset
management fee is subject to certain deferrals when cumulative annual distributions to the
shareholders are below $3.50.
In addition to the asset management fee, Broadstone Asset Management is paid an acquisition fee
equal to 1% of the gross purchase price paid for each acquired property (including properties
contributed in exchange for Operating Company interests at their agreed upon market value). In the
event that the acquisition of a property by Broadstone Net Lease requires a new lease (as opposed to
taking an assignment of an existing lease), such as in the case of a sale-leaseback transaction,
Broadstone Asset Management is entitled to an acquisition fee equal to 2% of the purchase price as a
result of the additional leasing services required. Upon disposition of any property, Broadstone Asset
Management is entitled to a disposition fee equal to 1% of the gross sale price for each disposed of
property, whether or not a broker is engaged to buy or sell the property on behalf of the Operating
Company.
Broadstone Asset Management will be paid a disposition event fee equal to 1.0% of the Aggregate
Consideration (as defined below) received in connection with the (i) acquisition by any person of direct
or indirect beneficial ownership of all or substantially all of Broadstone Net Lease's outstanding
common stock or outstanding ownership interests in the Operating Company; (ii) any merger,
consolidation or other similar transaction in which Broadstone Net Lease is merged with or into, or
otherwise acquired by, another entity; or (iii) the direct or indirect sale of all or substantially all of the
assets of Broadstone Net Lease or the Operating Company (a "Disposition Event"). A disposition event
fee will not, however, be paid in connection with a listing of Broadstone Net Lease's common stock or
other equity securities on a securities market or exchange, and Broadstone Asset Management will not
be entitled to receive both property sale disposition fees and a disposition event fee in connection with
a Disposition Event. The Asset Management Agreement defines "Aggregate Consideration" as, with
respect to a Disposition Event, the aggregate consideration, including cash, assumed debt, and the
value (as determined by the Independent Directors Committee) of any securities paid or issued to
Broadstone Net Lease or its stockholders in connection with such Disposition Event, net of (i) all fees
and transaction expenses and (ii) the value of all cash held by Broadstone Net Lease (and the
Operating Company) as of the time of the Disposition Event.
As compensation and reimbursement for internal and third party offering and out-of-pocket marketing
expenses incurred in marketing Broadstone Net Lease, Broadstone Asset Management receives a fee
equal to 0.5% of the proceeds of all newly contributed capital from Broadstone Net Lease.
Broadstone Real Estate receives a property management fee from Broadstone Net Lease equal to 3%
of gross rental income. A fee is also earned on re-leasing services equal to one or two months' rent
when required.
Broadtree Residential: Broadstone Asset Management charges Broadtree Residential an annual
asset management fee of 1%, paid in quarterly increments in advance. The asset management fee is
equal to 1% of the Total Equity Value of both Broadtree Residential and Broadtree Residential's
Operating Company. The quarterly asset management fee paid to Broadstone Asset Management is
subject to adjustment based on sales of additional shares of common stock during the quarter. Total
Equity Value will equal the sum of (a) the equity value based on the number of shares and
membership units outstanding, multiplied by (b) the Determined Share Value established by the
Independent Directors Committee. The asset management fee is subject to certain deferrals when
cumulative annual distributions to shareholders are below $0.50 per share.
Broadstone Asset Management also receives acquisition fees equal to 2% of the gross purchase price
for the property, including assumed debt and receives a disposition fee equal to 1.5% of the gross sale
price for each disposed of multifamily property, whether or not Broadstone Asset Management also
engages an outside broker to sell the property on behalf of Broadtree Residential, provided that total
selling commissions will not exceed 6%.
Broadstone Real Estate's wholly-owned subsidiary, Broadtree Home Rentals, LLC ("Broadtree Home
Rentals"), is compensated for its property management services by receiving, as of the end of each
month, a property management fee equal to 3% of gross rentals, fees and reimbursements collected
from all multifamily properties in the Broadtree Residential portfolio. If Broadtree Residential contracts
directly with a third-party property manager with respect to a specific property, then Broadtree Home
Rentals receives a 1% oversight fee based on the gross rentals, fees, and reimbursements collected
from the property. In addition, Broadtree Home Rentals is reimbursed for (i) salary and benefits
expense for on-site employees who handle the on-site management, operations and maintenance of
properties and (ii) marketing costs related to leasing, including advertising, leasing and referral fees
paid to third parties.
As compensation and reimbursement for internal and third party offering and out-of-pocket marketing
expenses incurred in marketing Broadtree Residential, Broadstone Asset Management receives a fee
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