Carmel Management III LLC

Item 5 – Fees and Compensation

Adviser Compensation

A Fund pays the Adviser an annual management fee (the “Management Fee”) in accordance with
such Fund’s Partnership Agreement and Management Agreement. The Management Fee is
payable to the Adviser in quarterly installments in advance. The Management Fee is paid (a)

through a capital call requiring the fee-paying limited partners of a Fund to make capital
contributions to such Fund, (b) by deducting the amount of the Management Fee from distributable
cash otherwise payable to the fee-paying limited partners of such Fund or (c) by drawing capital
from such Fund’s credit facility which capital is expected to be repaid by the Fund with capital
contributions from the fee-paying limited partners of such Fund. Upon termination of a
Management Agreement, the Adviser is required to repay to the applicable Fund the unearned
portion (computed on the basis of the number of days elapsed), if any, of any Management Fees
previously paid to the Adviser. To the extent required by the applicable Partnership Agreement of
a Fund, each quarterly installment of the Management Fee, calculated with respect to each fee-
paying limited partner of such Fund, is reduced by an amount equal to such limited partner’s (x)
pro rata share of any Organizational Expenses (defined in “Additional Expenses” below and
excluding Placement Fees, if any, and all expenses attributable to the formation and organization
of, and sale of the interests in any REIT owned by such Fund) that exceed the threshold, if any, set
forth in the applicable Partnership Agreement, (y) pro rata share of all transaction fees, investment
banking fees, break-up fees, acquisition and disposition fees, or other similar fees received in
connection with an investment or a prospective but unconsummated investment by the Fund, as
set forth in the applicable Partnership Agreement and/or (z) capital contributions used to pay
Placement Fees (defined in “Additional Expenses” below), if any.

The General Partners, which are affiliates of the Adviser, also receive “carried interest” (a form of
performance-based compensation) from their respective Funds, as is described in Item 6.
Performance-based compensation is not earned based on internal or third-party asset valuations
reported to investors.

The Adviser does not ordinarily deal with any financial intermediary such as a broker- dealer and
commissions are not ordinarily payable in connection with a Fund’s investments as described in

Item 7 – Types of Clients

As described in Item 4 above, the Adviser’s sole clients are the Funds. Limited partners in the
Funds are generally required to make a minimum commitment of $5 million, but the General
Partners have the discretion to waive, and have previously waived, this minimum commitment in
certain circumstances. Limited partner interests in the Funds can be purchased only by investors
that are, among other criteria as specified in the Partnership Agreements, (a) “accredited

investors,” as defined in Regulation D of the U.S. Securities Act of 1933, as amended, and (b)
(other than with respect to certain Co-Investment Funds) “qualified purchasers” for purposes of
section 3(c)(7) of the Investment Company Act of 1940, as amended.