ITEM 5 – FEES AND COMPENSATION
A. Advisory Fees and Compensation
IHP or an Affiliated Manager is generally compensated for advisory services through a
management fee (“Management Fee”) and performance-based compensation (“Carried
Interest”) (as described in Item 6).
The Management Fee payable by the Funds is generally based on a percentage of (i) committed
capital, (ii) invested capital, or (iii) total project-level revenues, as applicable, and is payable
quarterly or monthly, in advance or in arrears. Additionally, the Management Fee payable for
certain Advisory Clients are fixed amounts that are payable monthly in advance or arrears. For
certain Funds, periodic payments are made based upon pro forma gross revenues with a true-up to
actual gross revenues at the liquidation of the respective investment.
Pursuant to the terms of the applicable Fund’s Governing Documents, certain investors in the
Funds may be exempt from payment of all or a portion of Management Fee and/or Carried Interest.
Any such exemption may be made by a direct exemption, by a rebate by IHP (or an Affiliated
Manager), or through other Funds which co-invest with a Fund.
The fees and payment terms applicable to each Advisory Client are governed by the Governing
Documents.
IHP will only deliver this Brochure to qualified purchasers as defined in section 2(a)51(A) of the
Investment Company Act of 1940. Investors should refer to the Governing Documents for each
Advisory Client for a complete understanding of how fees are paid to IHP and/or the Affiliated
Managers. The information contained herein is a summary only and is qualified in its entirety by
such documents.
B. Payment of Fees
The Management Fee and other applicable fees are generally paid directly from the assets of the
relevant Advisory Client. On occasion, IHP (or an Affiliated Manager) calls capital from investors
to pay certain expenses, including fees, payable by Advisory Clients.
C. Other Advisory Client Fees and Expenses
Advisory Clients will typically be responsible for all fees, costs, expenses, liabilities and
obligations relating to such Advisory Client’s and/or its subsidiaries’ activities, investments and
business (to the extent not borne or reimbursed by a portfolio company or joint venture). The
foregoing include (i) all fees, costs, expenses, liabilities and obligations attributable to sourcing,
structuring, organizing, acquiring, entering into, managing, operating, holding, valuing, winding-
up, liquidating, dissolving and disposing of investments (including registration expenses and
brokerage, custodial and transfer fees), (ii) legal (for certain Advisory Clients, legal fees include
in-house legal time billed at rates approved by the respective Advisory Client), accounting,
printing, administration, custodian, depositary, auditing, insurance, litigation and indemnification
costs and expenses, judgments and settlements, consulting, finders’ fee, financing, refinancing,
appraisal, filing and other fees and expenses, (iii) the costs of obtaining financial assistance, or
arranging for financing or refinancing and repayment of any financing or refinancing for any
assets, (iv) all fees, costs and expenses of the applicable Management Committee (defined below),
(v) broken deal fees, costs and expenses (including expenses relating to sourcing of investment
opportunities), legal (for certain Advisory Clients, this includes in-house legal time billed at rates
approved by the respective Advisory Client), accounting, auditing, insurance, travel, consulting,
finders’ fees, financing, refinancing, appraisal, filing, printing, real estate title and survey, (vi) the
Management Fee, (vii) any taxes, fees and other governmental charges levied against the Advisory
Client (except as noted in the Governing Documents), (viii) costs and expenses that are classified
as extraordinary expenses under U.S. Generally Accepted Accounting Principles (“GAAP”), (ix)
all fees, costs and expenses incurred in connection with the organization, management, operation
and dissolution, liquidation and final winding-up of any alternative investment vehicles and (x)
certain Excess Organizational Expenses.
To the extent permitted by the Governing Documents, IHP (or an Affiliated Manager) permits
certain investors to co-invest in portfolio investments alongside one or more Advisory Clients. If
a Co-Investment Entity is formed, such entity will bear expenses related to its formation and
operation, many of which are similar in nature to those borne by the Advisory Clients. In the event
that a transaction in which a co-investment was planned (including a transaction for which a Co-
Investment Entity was believed necessary in order to consummate such transaction) ultimately is
not consummated, all or certain broken deal fees relating to such unconsummated transaction are
borne by the Fund(s), and not by any prospective co-investors that were to have participated in
such transaction. However, to the extent that such co-investors have already invested in a Co-
Investment Entity or other vehicle in connection with such transaction, such vehicle bears its share
of such broken deal fees in proportion to the cost of the investment.
As described above, certain Advisory Clients’ legal expenses include in-house legal fees. Certain
Advisory Clients have agreed to pay IHP for such in-house fees, cost and expenses, provided that
(i) the Management Committee consents to the payment of such fees (excluding when in-house
legal services billing rates are disclosed in the Advisory Clients Governing Documents and when
the joint venture is authorized to reimburse IHP or its affiliates with respect to in-house legal fees,
in which case Management Committee consent is not required), (ii) such services are rendered at
rates approved by the respective Advisory Clients (iii) the in-house legal billing rate does not
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