Item 5 Fees and Compensation
A. How Hudson Realty is compensated for advisory services. Hudson Realty’s fee and
compensation arrangements vary depending on the particular Fund or separate account
investor. The specific terms of such arrangements are set forth in each Fund’s operating
agreements and offering documents or separate account governing documents.
Generally, the Funds pay Hudson Realty a management fee calculated and charged to the
limited partners in the Funds based on either a percentage of the committed capital of the
limited partners or the limited partners’ invested capital. Such management fee is payable
quarterly in arrears.
In addition to the management fee, the General Partner of a Fund is entitled to receive
Carried Interest as defined and further described in Item 6 of this brochure.
B. Deduction of fees from Client assets. The Funds generally pay the management fee to
Hudson Realty quarterly in arrears. The management fee is deducted from distributable
proceeds, borrowings under credit facilities or capital contributions from each of the Fund’s
limited partners. The investors in the Funds are not separately billed for such services by
Hudson Realty.
C. Other types of fees or expenses. Pursuant to the respective Fund partnership agreements,
Funds are generally responsible for the organizational and offering expenses incurred in
the formation of such Fund. Those fees associated with the formation of a Fund’s General
Partner are sometimes subject to an expense cap. Fees exceeding this maximum amount,
if any, will be borne by the General Partner. Pursuant to the respective Fund partnership
documents, Funds are generally responsible for all Fund-related expenses, including (i) all
travel and other out-of-pocket expenses of the General Partners, Hudson Realty or either
of their affiliates incurred in connection with the evaluation, acquisition, origination,
ownership sale, hedging or financing of any potential investment, (whether or not
consummated); (ii) all litigation-related and indemnification expenses; (iii) all
administrative expenses of the Funds and all other expenses incurred by the General
Partners, Hudson Realty or any affiliate in connection with the operation of the Funds or
performing the General Partners’ or Hudson Realty’s duties, including maintaining the
Funds’ general ledgers, investment reporting, preparing the Funds’ financial statements
and tax returns and performing in-house legal services; and (iv) asset management and
servicing fees, as agreed by the investors and Hudson Realty and set forth in the respective
Funds’ governing documents. The Funds will also bear the organizational and ongoing
administrative costs of any subsidiaries of the Fund, including special purpose entities
formed to hold one or more of the Funds’ investments. To the extent Hudson Realty
requires the use of a broker to effect transactions for the Funds, such brokerage and
transaction costs are paid by the Funds. Please see Item 12 of this brochure for further
information on Hudson Realty’s brokerage activities.
Please refer to the Funds’ offering documents for further information regarding the fees
and expenses of Hudson Realty and the Funds.
D. Payment of fees in advance. As described further in Item 5.A. and B., the management
fee is paid quarterly in arrears.
E. No compensation for the sale of securities. Hudson Realty Employees do not receive
compensation for the sale of securities or other investment products. Except in connection
with Hudson Realty’s affiliate FHA/GNMA platform discussion in Item 10, Hudson Realty
does not receive compensation for the sale of securities or other investment products. The
purchasers of these securities are not Hudson Realty Clients, as such, the sale of these
investments does not create a conflict of interest.