Fees and Compensation — Form ADV Part 2A (3/13/2019)
[Brochure]
ITEM 5. FEES AND COMPENSATION
The management and incentive fees of each client fund are established during the
structuring of the client fund and are set forth in the offering documents provided to fund
investors.
Management fees for client funds structured as a collateralized loan obligation are
typically determined as a percentage of a fund’s assets, billed quarterly and paid in
arrears. Such fees typically range between .25% and .50%, per annum.
Incentive fees for client funds structured as a collateralized loan obligation are contingent
on delivering client specific minimum levels of return on investment and are determined
as a percentage of client return. Upon achievement of the client specific minimum return
levels, incentive fees are billed quarterly and paid in arrears. The trustees of each client
fund perform all management and incentive fee calculations and distribute the fees to
Crestline Denali on predetermined payment dates. Crestline Denali does not deduct fees
directly from any client’s account.
Other expenses that client funds pay besides management and incentive fees include, but
are not limited to, interest expense on debt securities issued and outstanding and fees for
placement, structuring, trustee, legal, rating agency, accounting, tax, systems and loan
pricing services. Client funds at times incur brokerage and other transaction related costs.
See Item 12 of this brochure for more information on Crestline Denali’s brokerage
practices.
Client funds may only terminate advisory services in accordance with the terms of the
advisory agreement.
Account Minimums and Types of Clients — Form ADV Part 2A (3/13/2019)
[Brochure]
ITEM 7. TYPES OF CLIENTS
The typical client fund managed by Crestline Denali is an offshore, non-public, closed-
end, pooled investment fund structured as a collateralized loan obligation. While each
client fund is structured separately, they often operate very similarly to one another. A
client fund is owned by a group of investors who contribute typically 8% to 15% of the
total capital structure. Crestline Denali, or its affiliates, the Principals, and certain
knowledgeable employees will often, but not always, be members of this ownership
group. Debt investors will contribute the remaining portion of the capital structure. The
money provided by the debt and equity investors will be managed by Crestline Denali per
each client fund’s operative agreement to purchase assignments in syndicated, below
investment grade, commercial bank loans and selectively other assets. Subsequent to
initial closing, unless amended, the client funds managed by Crestline Denali are closed
to new investors.
Crestline Denali participates in a unique environment which makes it impractical to
establish a minimum client fund size requirement. Crestline Denali’s decisions to enter
into and maintain fund advisory engagements are primarily based on the amount and
likelihood of receipt of management and incentive fees.