Paladin Realty Partners LLC

ITEM 5 - FEES AND COMPENSATION

       A.      Fees

The applicable fees for each Paladin Fund are disclosed to investors in the private offering
materials and/or governing agreements for the relevant private offering of each Paladin Fund.
These fees may vary for future Paladin Realty investment vehicles. In all cases investors in the
applicable Paladin Realty investment vehicle agree to such fees in writing.

In general, fees earned by Paladin Realty or its affiliates for Paladin Funds that are “qualified
persons” consist of the following:

•   A management fee, typically between 1.5% and 2.0%, generally calculated on the capital
    committed by an investor in such a fund during such fund’s investment period and, after the
    end of such fund’s investment period, calculated on the amount of unreturned capital
    contributed by such investor to such fund.

•   A performance fee (or “carried interest”) typically of up to 20% of any amounts distributed
    to such investor subject to the investor first receiving a “preferred return” on its contributed
    capital plus the return of such capital. The preferred return (which typically ranges between
    8% and 10%) is typically calculated at a compounding rate similar to interest. These fees
    only are paid if and when earned.

•   In certain special situations, Paladin Realty or an affiliate may receive an asset management
    fee, a development fee, a fee upon acquisition or disposition of an investment and/or other
    project-level fees for services provided to directly-managed investments. Such project-level
    fees are always disclosed to investors and typically are subject to periodic review by the
    advisory committee of the applicable Paladin Fund.

•   Paladin Realty may negotiate with certain investors in a fund for lower fees, usually based on
    the size of an investor’s capital commitment.

       B.      How Fees are Charged

If applicable, management fees are generally payable quarterly in advance by a Paladin Fund.
Project-level fees are typically paid by the applicable project or investment vehicle when earned.
Management fees may be paid by capital contributions from Paladin Fund investors to each
Paladin Fund made pursuant to capital call notices delivered by each Paladin Fund’s general
partner or managing member, or may be paid out of cash otherwise available to the Paladin
Fund, for example, following a Paladin Fund’s receipt of proceeds from the sale of an underlying
investment.

As noted above, in certain of the Paladin Funds, Paladin Realty or an affiliate is entitled to
“carried interest,” or performance fees, to the extent provided in the applicable Paladin Fund
governing agreement. Performance fees are typically measured as a percentage of the profits of a
Paladin Fund and are negotiated separately for each Paladin Fund at a rate consistent with
industry standards. Such fees are typically paid out of cash otherwise distributable by the Paladin
Fund, such as the receipt by such Paladin Fund of proceeds from the disposition of a portfolio

investment. Any such performance fees are specifically disclosed to investors prior to investment
in the governing agreements of the applicable Paladin Fund.

       C.      Other Fees and Expenses

Fees unrelated to securities management functions may be paid to Paladin Realty or to a Paladin
Fund’s general partner, managing member, or affiliates. For example, Paladin Realty or its
affiliates may receive certain project-level fees for services rendered to a particular real estate
project in which a Paladin Fund invests (e.g., the “project-level fees” described in Item 5.A
above). These potential fee arrangements are disclosed in the private offering materials and/or
governing agreements for each particular Paladin Fund offering. To the extent Paladin Realty or
any affiliate receives such other fees for services provided to a particular project, such fees will
be paid by the Paladin Fund’s individual projects and credited as provided in the Paladin Fund’s
private offering materials and/or governing agreements.

Paladin Funds are also subject to customary expenses, including fees, costs and expenses related
to the purchase, holding and sale of investments, expenses of any administrators, custodians,
counsel and accountants (including audit fees), any insurance, indemnity or litigation expenses,
and any taxes, fees or other governmental charges levied against a Paladin Fund, and expenses
arising in connection with the formation, launch and closings of a Paladin Fund (as described in,
and subject to limits on such organizational expenses as set forth in, the applicable Paladin Fund
governing agreements).

Given the nature of the Paladin Funds’ investment program, Paladin Realty does not usually
transact through broker-dealers. Therefore, investors in Paladin Funds do not generally incur
brokerage costs. A discussion of Paladin Realty’s brokerage practices may be found at Item 12 of
this brochure.

       D.      Refunds for Fees Charged in Advance

Management fees are generally paid by Paladin Funds in advance of any management functions
performed by Paladin Realty. Fees assessed against the Paladin Funds are typically paid from
amounts contributed to each such Paladin Fund by its investors in accordance with the
commitments of capital such investors make to the Paladin Fund, or are paid out of cash
otherwise available to the Paladin Fund. Should Paladin Realty’s services be terminated before
services are provided for the period, fees assessed in advance will be returned under a method
that is reasonably determined to be fair. In general, such returned fees would be pro-rated from
the date of Paladin Realty’s termination to the end of the period to which the advance fee
covered. Paladin Realty’s advisory engagements for the Paladin Funds will be subject to
termination upon advance notice by either the general partner or managing member of the
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ITEM 7 - TYPES OF CLIENTS

Paladin Realty generally provides investment advice solely to the Paladin Funds. The Paladin
Funds are private equity real estate investment funds and related investment vehicles and
accounts. Interests in the Paladin Funds are offered privately only to qualified investors, typically
institutional investors (for example, public and private pension funds) and individuals who
qualify to invest in the Paladin Funds because they have a sufficiently high income or net worth.
Paladin Realty typically imposes a minimum investment in connection with investing in a
Paladin Fund, often in the range of $5 million to $10 million, although such minimums may be
waived in the discretion of Paladin Realty. On occasion, Paladin Realty also may offer
investment opportunities to its qualified professional personnel, as well as other qualified
institutions or individuals who have a pre-existing relationship with Paladin Realty or offer
expertise or other assistance with respect to a particular investment area or portfolio investment.
In addition, Paladin Realty and/or its affiliates make capital commitments to the Paladin Funds
for investment at the same time and on the same terms (at the level of the portfolio investment)
as other commitments to the Paladin Funds.