Item 5. Fees and Compensation
Asset-Based Compensation
With respect to the Funds and Managed Accounts, Gramercy typically receives a management fee
based upon a percentage of assets under management. For the Private Funds and Managed
Accounts that employ alternative strategies, the management fee is generally between 1.0% to
2.0% per annum of the value of the client’s assets under management, payable either monthly or
quarterly as set forth in the applicable governing documents. With respect to the Sub-Advised
Funds, the management fee is generally between 0.40% to 0.50% per annum of the value of the
client’s assets under management, payable monthly, and subject to negotiation between the
primary investment adviser and Gramercy as the sub-adviser. For certain clients holding index-
benchmarked long-only assets, management fees generally range from 0.30% to 1.25% per annum,
payable monthly or quarterly.
Investment management fees are generally charged each month or quarter in arrears based on the
total market value of the assets in the client account (including net unrealized appreciation or
depreciation of investments and cash, cash-equivalents and accrued interest) on the last day of the
month or quarter, as applicable. If a new client account is established during a month or quarter,
or a client makes a contribution to its account during a month or quarter, the investment
management fee is prorated based on the number of days remaining in the month or quarter, as
applicable. If a client’s investment management agreement is terminated or a withdrawal or
redemption is made from a client account during a month or quarter, the investment management
fee payable to Gramercy is calculated based on the value of the assets on the termination date or
withdrawal or redemption date, as applicable, and prorated based on the number of days during
the quarter or month in which the investment management arrangement was in effect or such
amount was in the account, as applicable.
Managed Accounts and Private Fund investors can and have, under limited circumstances based
on the size of the account, negotiated management fees.
Investment-Related Fees
Gramercy (or an affiliate of Gramercy) will, in certain circumstances, receive fees in connection
with a Private Fund’s investment activity, including, but not limited to, structuring fees, monitoring
fees, advisory fees, loan origination fees, break-up fees or other similar fees (such fees,
“Investment-Related Fees”). To the extent that Gramercy (or an affiliate) receives such
Investment-Related Fees in connection with a Private Fund or Managed Account’s investment
activity, an amount equal to 100% of such client’s pro rata portion of such Investment-Related
Fees, net of any unreimbursed expenses incurred by Gramercy (or an affiliate) in connection with
unconsummated transactions, will generally be applied to reduce the management fees payable to
Gramercy (the “Management Fee-Offset”), subject to the specific terms set forth in the governing
agreement(s) for such client. Notwithstanding the foregoing, certain compensation paid to
Gramercy (or an affiliate) in consideration for bona fide loan servicing activities performed by
Gramercy (or an affiliate), which are on terms that are comparable to rates customarily charged
for similar services by third parties engaged in the same or substantially similar activities, as
determined in Gramercy’s (or an affiliate’s) good faith discretion, will generally not be applied to
any Management Fee-Offset. Any such Management Fee-Offset will be allocated among clients
on the basis of capital committed by each client to the relevant investment. The management fee
will not be reduced below zero for any calendar quarter, but any Management Fee-Offset
reductions will be carried forward and applied to any future quarterly management fees, if
necessary. Please also refer to the discussion of Credit Platforms and Other Ventures in Item 8.
Performance-Based Compensation
With respect to the Private Funds and Managed Accounts that employ alternative strategies,
Gramercy (or an affiliate of Gramercy) is typically paid a performance-based fee or allocation.
Such performance-based fee or allocation typically ranges from 10% to 20% of the annual capital
appreciation of the client’s account, calculated after management fees and expenses are applied.
For certain Private Funds that employ illiquid investment strategies (e.g., private credit and special
situations), Gramercy (or an affiliate) is typically paid such performance-based fee or allocation
based upon the proceeds (i.e. income) realized upon the disposition of the investments of such
Funds; subject to the return of capital contributions to investors and, often, subject to a preferred
return to investors (as set forth in the Fund’s governing documents), catch-up distributions and/or
other performance hurdles. Gramercy generally is not paid a performance-based fee or allocation
in respect of the Private Funds and Managed Accounts that employ index-benchmarked, long-only
strategies and is not paid a performance-based fee or allocation in respect of the Sub-Advised
Funds.
Performance-based fees or allocations are, under limited circumstances, negotiated based on the
size of the account.
The independent administrator for each of the Private Funds calculates and deducts the investment
management fee and, if applicable, the performance-based compensation from client accounts by
instructing the client’s custodian.
Fund Expenses
In addition to paying investment management fees and, if applicable, performance-based fees or
other compensation, Private Fund clients are typically subject to other expenses, as more fully
discussed and set forth in the applicable offering memorandum and governing documents for
Private Fund clients, which may include, without limitation:
• legal, compliance, audit, tax preparation and internal and external accounting expenses
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