Item 5 Fees and Compensation
A. Describe how you are compensated for your advisory services. Provide your fee
schedule. Disclose whether the fees are negotiable.
Fund I
Pingora does not receive a traditional asset management fee, carried interest allocation or other
incentive compensation from Fund I. Instead, Fund I pays or reimburses Pingora and its affiliates for
a portion of their administrative and overhead expenses (collectively, “Manager Expenses”) including,
without limitation, Pingora employee compensation, rent, administrative costs and general office
overhead, and costs and expenses (including internal and external legal expenses) related to Pingora’s
registration as an investment adviser under the Investment Advisers Act of 1940, as amended (the
“Advisers Act”) and related ongoing compliance and filings. Manager Expenses are subject to a cap,
specified in the Fund I Governing Documents, of 1.5% of Fund I’s capital commitments (during the
Fund I investment period) or a sliding percentage of Fund I’s asset historical cost (after the investment
period), measured each quarter. If the limit causes any portion of Manager Expenses to not be paid
in any quarter, such unpaid expenses are carried forward and reimbursed in the subsequent period(s)
(assuming the limit for the subsequent period has not been reached). If the limit is not reached in any
particular quarter, the difference between the computed maximum Manager Expenses and the actual
Manager Expenses is carried forward into, and thus raises the limit for, the subsequent period. Pingora
may waive a portion of the Manager Expense payment proportionate to capital commitments made
by Pingora employees or related persons.
JV I Fund
As basic compensation for services rendered to JV I Fund, JV I Fund pays to Pingora a management
fee (the “Management Fee”) at the annual rate of 0.75% of the net asset value of JV I Fund, payable
quarterly in advance and prorated for any partial quarterly periods. The manner and calculation of the
net asset value of JV I Fund is set forth in such Fund’s Governing Documents.
In addition, Pingora is entitled to receive “carried interest” based on the profits distributions to JV I
Fund’s investors in accordance with the provisions of such Fund’s Governing Documents (“Carried
Interest”). Pingora’s Carried Interest is subject to the obligation to return certain distributions
pursuant to “clawback” arrangements upon liquidation of JV I Fund as provided in such Fund’s
Governing Documents, and is described more fully below in Item 6.
For further details regarding fees and compensation payable with respect to the Funds, please refer to
the Governing Documents of each applicable Fund.
SMA
As basic compensation for services rendered to the SMA, the SMA pays to Pingora a Management
Fee at the annual rate of 1.00% of the net asset value of the SMA, payable quarterly in advance and
prorated for any partial quarterly periods. The manner and calculation of the net asset value of the
SMA is set forth in the SMA’s Portfolio Management Agreement.
In addition, Pingora is entitled to receive a performance fee with respect to the net proceeds from the
disposition of the SMA’s investments (the “Performance Fee”). The manner and calculation of the
Performance Fee is set forth in the SMA’s Portfolio Management Agreement, and is described more
fully below in Item 6.
For further details regarding fees and compensation payable with respect to the SMA, please refer to
the Portfolio Management Agreement.
B. Describe whether you deduct fees from clients’ assets or bill clients for fees incurred.
If clients may select either method, disclose this fact. Explain how often you bill clients or
deduct your fees.
Fund I
Pingora deducts Manager Expenses directly from Fund I’s assets on a quarterly basis based on Fund
I’s Governing Documents.
JV I Fund
Pingora will either call capital for Management Fees and other expenses or pay such fees and expenses
out of current income and disposition proceeds of JV I Fund.
SMA
Pingora does not deduct fees from the SMA’s assets. Pingora issues invoices to the SMA’s investor
for Management Fees, Performance Fees and expenses.
C. Describe any other types of fees or expenses clients may pay in connection with your
advisory services, such as custodian fees or mutual fund expenses. Disclose that clients will
incur brokerage and other transaction costs, and direct clients to the section(s) of your
brochure that discuss brokerage.
Except as set forth in Item 5.A above with respect to Fund I, Pingora will generally pay all of its own
ordinary administrative and overhead expenses, including the compensation of employees and payroll
taxes relating thereto or the rent and general office overhead, including clerical, bookkeeping and
administrative costs, information technology expenses, office supplies and office equipment expenses.
Fund Expenses
Each Fund will generally pay, or will generally reimburse Pingora for, such Fund’s own operating and
other expenses and expenses attributable to such Fund’s activities and investments, which generally
include but are not limited to expenses associated with: the acquisition, holding, modification and
disposition of investments (including prospective investments that are not consummated); organizing
and operating any other entities related to the Fund (including, without limitation, any alternative
investment vehicles); any borrowings or guarantees by the Fund; taxes or governmental charges or
levies; legal, custodial, auditing, accounting, due diligence, appraisal, valuation, brokerage and
consulting services; certain fees and expenses of the sub-servicers per applicable sub-servicing
agreements; fees and expenses of any administrator; organizational expenses; any Management Fees;
preparing reports to investors; preparing tax returns; FATCA compliance costs; each Fund’s
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