Morgan Properties Special Situations II LLC

Item 5: Fees and Compensation

A.   MPSS II is compensated for advisory services to the Clients based on a negotiated acquisition fee
     (the “Acquisition Fee”) and a negotiated management fee (the “Management Fee”). The Firm is
     also compensated with a performance-based allocation (commonly known as “Carried Interest”),
     as described under Item 6 below. The Carried Interest is received by the Firm’s Clients’ General
     Partners, which are affiliates of the Firm, or under the terms of the applicable investment
     management agreement. Both the Management Fee and the Carried Interest are negotiated
     separately with each of the Investors. Each of the Firm’s Investors is a “qualified purchaser” as
     defined in Section 2(a)(51)(A) of the Investment Company Act of 1940, as amended, and therefore,
     is not required to disclose its Clients’ fee schedules. The specific manner in which MPSS II charges
     fees is described in each Client’s governing documents or investment management agreement.
     All Investors should review the governing documents of the relevant Client in conjunction with
     this Brochure for complete information on the fees and compensation payable with respect to
     that particular Client.
     Acquisition Fees are negotiated with each Investor and are calculated as a percentage of either
     invested capital or purchase price paid for the assets and are paid on the closing of the acquisition.
     Management Fees are negotiated with each Investor and are calculated as a percentage of either
     invested capital or assets under management and are primarily paid quarterly in arrears but
     sometimes the Investors have agreed to pay such fees quarterly in advance.
     Carried Interest is calculated as a percentage of profits after Investors have received an agreed
     return on investment.

B.   Management Fees are paid directly to MPSS II (or its wholly owned subsidiary) and are calculated
     and paid as set forth in the governing documents of the relevant Client.

C.   The Clients generally bear certain organizational costs associated with the Firm’s investment
     program as negotiated with the Investors. The Clients will also bear all of their other expenses,
     which include (but are not necessarily limited to):
        i.   Out-of-pocket expenses incurred in connection with the evaluation, acquisition or
             disposition of investments, including travel expenses associated with due diligence,
             private placement fees, sales commissions and discounts and investment banking fees;
       ii.   Expenses incurred in connection with the carrying or management of investments,
             including custodial, trustee, record keeping and other administration fees;
      iii.   Expenses incurred in connection with the Clients’ audited financial statements, tax returns
             and K-1’s;
      iv.    Attorneys’ fees and disbursements;
       v.    Taxes and other governmental charges levied against the Clients;
      vi.    Insurance, regulatory or litigation expenses (and damages) related to the Clients;
     vii.    Expenses incurred in connection with the winding up or liquidation of the Client;
     viii.   Expenses for transactions not consummated;
      ix.    Expenses incurred in connection with any restructuring or amendments to the constituent
             documents of the Clients and related entities; and
       x.    Expenses incurred in connection with the formation of special purpose vehicles and
             alternative investment vehicles.

     Unless agreed to by a specific Investor, an Investor generally will not share the costs of broken
     deal expenses for unconsummated transactions.
     The Clients incur brokerage and other transaction costs. Please see Item 12 of this Brochure for a
     further description of such brokerage costs.
     The Firm or an affiliate receive certain fees and payments in connection with the underlying
     securities that represents pooled multifamily mortgages. Without limitation, these may be
     referred to as monitoring fees, financial advisory fees or other similar fees. Subject to the
     specifications of the Client’s governing documents, such fees are generally shared with the
     applicable Client, do not offset the management fee and are not retained in whole or in part by
     the Firm or a related party.

D.   Management Fees are calculated and paid as set forth in the governing documents of the relevant
     Client. In the event that a Client pays Management Fees in advance and an advisory contract is
     terminated before the end of a Management Fee period, the Firm will refund the overpayment of
     the Management Fee (computed on the basis of the number of days elapsed). The Firm deducts
     its performance-based allocation directly from Client assets.

E.   Neither the Firm, nor any of its supervised persons, accepts compensation for the sale of securities
     or other investment products.

Item 7: Types of Clients

     The Firm’s Clients are (i) separately managed accounts in which the Firm serves as investment
     manager (the “IMA Accounts”), or (ii) separately managed joint ventures, which are organized as
     separate Delaware limited liability companies of which an affiliate of the Firm serves as the
     General Partner (the “JVs”). Investment opportunities or interests in these vehicles are offered
     only to Investors who meet certain standards of net worth. Interests in the JVs are not registered
     as securities under certain exemptions in the U.S. securities laws.
     The Firm only accepts Investors in the Clients who meet certain high standards for net worth
     and/or income. Generally, the Firm’s Investors are institutions, which may include pension funds,
     other high net worth institutions, and high net worth families.