PREP Investment Advisers LLC

Item 5. Fees and Compensation

Management Fees

Compensation earned by Pearlmark and its affiliates for the provision of investment
advisory services to Funds are and/or will be comprised of fees based on (1) a percentage
of capital committed and contributed for Funds that are in their investment periods, and/or
(2) a percentage of capital contributed, net of distributions of capital, for Funds that are no
longer in their investment periods (“Management Fees”), plus performance-based
interests (“Performance Fees”), plus, in some cases, acquisition, origination, accounting,
exit, and/or yield maintenance fees (“Transaction Fees”).                 Management Fees,
Performance Fees and Transaction Fees will vary by Fund and as such, Pearlmark does
not have a fee schedule. Further, because Management Fees, Performance Fees and
Transaction Fees of Funds will be set and determined at the Fund level, Management
Fees, Performance Fees and Transaction Fees for Funds will generally be non-negotiable.

Management Fees to Pearlmark will generally accrue and be billed monthly in arrears and
will commonly be paid from Fund income or capital and reflected in the Fund’s quarterly
financial statements.

Performance Fees will generally be equal to a percentage of net realized profits after
restoring any loss carried forward from prior years and achieving a threshold annual return
on invested capital. Performance Fees to a Pearlmark affiliated Fund manager will be
comprised of a distribution of the investment proceeds of the Fund and are referred to as
the “Carried Interest.”

Transaction Fees to Pearlmark will generally be payable upon the closing of a given Fund
investment and will be reflected in the Fund’s quarterly financial statements, as applicable.

Compensation to Pearlmark for investment advisory services to be provided to a Fund
sponsored by Pearlmark will be outlined in the applicable Fund’s PPM and Governing
Documents.

Compensation for separate account advisory services (“Separate Account Fees”) will be
set forth in the advisory agreement between Pearlmark and the client. Separate Account

PREP Investment Advisers, L.L.C.                                           Part 2A of Form ADV

Fees may take the form of Management Fees, Performance Fees and Transaction Fees
or may be calculated in a different manner. Separate Account Fees (and any Start-up
Expenses or Operating Expenses) will be negotiated with each Separate Account client
and as such, Pearlmark does not have a fee schedule. Separate Account Fees (and any
Start-up Expenses or Operating Expenses) will be payable as set forth in the applicable
advisory agreement.

In addition to the Management Fees, Performance Fees and Transaction Fees outlined
above, Pearlmark and its affiliates will generally be reimbursed for start-up expenses
(“Start-Up Expenses”). Start-Up Expenses are typically limited and the amounts and
eligible expenses are outlined in a Fund’s PPM and Governing Documents or the
applicable advisory agreement.

Operating Expenses

Each Fund is and/or will be expected to bear all expenses related to its operations as set
forth in its Governing Documents (“Operating Expenses”), which typically include travel
costs, fees and other out-of-pocket expenses directly related to the investigation of
investment opportunities (whether or not consummated) or visits to the investors, the
Fund’s share of the acquisition, ownership, financing (including loan origination fees and
cost and debt service payments), hedging or sale of investments, taxes, fees of auditors,
administrators, custodians, due diligence providers, research, appraisers and counsel,
expenses of the Advisory Committee and the investment committee, insurance, litigation,
information technology expenses, expenses associated with the preparation and
distribution of reports to investors and any extraordinary expenses. Fund Operating
Expenses are described in a Fund’s PPM and/or Governing Documents.

Pearlmark’s clients do not pay fees in advance of their being incurred. Neither Pearlmark
nor any of its supervised persons accepts compensation for the sale of securities or other
investment products, including asset-based sales charges or service fees.

Co-Investment Vehicle Fees and Expenses

In certain cases, a co-investment or other similar vehicle established to facilitate certain
investors to invest alongside a Fund may be formed in connection with the consummation
of a transaction. In connection therewith, certain expenses relating to the co-investment
vehicle, the making of the underlying investment and/or so-called dead deal costs if the
transaction is not consummated (including some incurred solely for the benefit of the co-
investment vehicle) will be borne by the applicable Fund as permitted by its Governing
Documents. In addition, Sponsor and its affiliates have discretion to (i) receive
Management Fees, Performance Fees, Transaction Fees and/or Carried Interest or other
compensation from such co-investors, and (ii) collect customary fees in connection with
actual or contemplated investments that are the subject of co-investment arrangements.

PREP Investment Advisers, L.L.C.                                           Part 2A of Form ADV

Allocation of Expenses

From time to time the Firm will be required to decide if or whether certain fees, costs and
expenses (individually and collectively, “Allocable Costs”) should be borne by the Firm,
PRE, a Fund, co-investors and/or a third party (each, an “Allocable Party”). The Firm
allocates Allocable Costs in accordance with each Fund’s Governing Documents and if
not so addressed in the Governing Documents, the Firm will make determinations among
Allocable Parties in a fair and reasonable manner using its sole but good faith judgment.
Allocation methodologies may include pro rata allocation based capital commitments,
investment values and/or location, relative benefit received, or such other equitable
...

Item 7. Types of Clients

Pearlmark provides and/or will provide investment and real estate advice to certain
privately offered commingled real estate funds sponsored by Sponsor. Investors in such
Funds may include endowments, foundations, insurance companies, public and private
pension funds and high net worth individuals. We expect that any new Fund that we
advise will be a privately offered commingled investment vehicle and will generally require
a minimum commitment by each investor of $5,000,000. However, any such Fund’s
managing member will have the discretion to waive or reduce the minimum commitment.
Pearlmark may provide separate account advisory services related to real estate related
investments for high net worth individuals and institutional clients.