Preservation Equity Fund Advisors LLC

Item 5. Fees and Compensation

Investment Management Fees and Other Advisory Compensation

Management Fees and Carried Interest

In exchange for its advisory services, PEFA receives advisory fees that are calculated based on a
percentage of each Fund’s committed or invested capital (“Management Fees”). PEFA, in its sole discretion,
can waive or agree to reduce or grant rebates of the Management Fees charged by the Funds with respect
to certain investors or limited partners. Management Fees are charged to the Funds quarterly and are
payable in arrears, as set forth in the Governing Documents of each Fund.

PEFA and/or certain of its affiliates can also receive incentive-based compensation (“Carried Interest”)
based on realized gains from investments, subject to agreed-upon preferred return rates and claw-back
provisions applicable to the Fund’s general partner. Carried Interest is calculated and deducted from
distributions on a Fund’s realized investments in accordance with a distribution waterfall and not on a pre-
determined schedule.

PEFA reserves the right to vary the fees as to particular investors by separate agreement and to reduce or
waive any fees and carried interest at any time without entitling any other investor to a waiver or reduction.
PEFA has the authority to waive or reduce the fee for its own capital and that of its constituent partners,
affiliates, and employees, and family members of the foregoing.

Construction Management Fees

Where permitted by the applicable Fund’s Governing Documents, affiliates of PEFA will receive
compensation for managing, supervising and coordinating construction related to portfolio investments
acquired by a Fund (“Construction Management Fees”). Construction Management Fees are generally
equal to a percentage of the cost of the construction work related to one or more of a Fund’s portfolio
investments, which percentage is set forth in the applicable Fund’s Governing Documents. Construction
Management Fees will typically be assessed on all costs of construction, which include “hard” costs, such
as any land, materials and labor, and “soft” costs, such as insurance, legal work related to development
transactions, planning, permitting and other preparatory and transaction costs related to the construction.
Any Construction Management Fees will not be offset against Management Fees or other fees and
compensation payable to PEFA or its affiliates.

Development Fees

Community Preservation Partners, Inc. (“CPP”), an affiliate of PEFPLLC provides property rehabilitation

and redevelopment services with respect to properties and portfolio investments in need of significant
capital improvements. CPP services third party property owners and, in limited cases, portfolio investments
of PEFA Clients and acts as a fee-based developer, co-developer and sole developer. While generally not
a focus of the investment strategy of the Funds, since the Funds intend to invest in properties and assets that
are functional at the time of acquisition and require only minimal capital investment, from time to time, CPP
has been, and could be in the future, engaged to act as an entity-level general partner or co-general partner
(alongside a third party managing general partner). In such circumstances, a Fund portfolio will be entitled
to asset-level promote (incentives based on the success of a specific property) with respect to its services,
similar to compensation arrangements that would be entered into with other third-party service providers to
the applicable Fund’s portfolio investments. CPP can also, from time to time, receive fixed or variable fees
from portfolio investments, which may be in addition to or in lieu of asset-level promote, depending on the
nature of the engagement. In these cases, CPP seeks to establish pricing with Clients or with Fund portfolio
investments at terms that are commercially reasonable and competitive with the fees that would otherwise
be paid to third parties providing the same services in the same real estate market. Further, certain states
or municipalities set limits on the amount of development fees that may be paid with respect to a property,
which will generally limit amounts payable to CPP.

PEFA and its affiliates have financial incentives to recommend or cause one or more Funds or its portfolio
investments to enter into engagements with CPP. Any promote, other performance-based compensation
or fees received by CPP, will not be offset against or reduce any Carried Interest distributions, other
performance-based compensation or fees that may be payable to or received by the General Partner or its
affiliates in relation to the applicable Fund. Any asset-level promote, other performance-based
compensation or fees received by CPP will be indirectly borne by the applicable Fund through its investment
in the portfolio investment where CPP is engaged and will reduce cash distributable to the Fund related to
such investments.

Other Fees Payable to PEFA Affiliates

WNC Capital Corporation (“WNC Capital”), a subsidiary of WNC & Associates, Inc. (“WNCA”), which is an
affiliate of PEFA, is an SEC-registered broker-dealer and a member of the Financial Industrial Regulatory
Authority, Inc. (FINRA). It is not anticipated that WNC Capital will be engaged as a broker or dealer by the
Funds with respect to their investments (and given the nature of each Fund’s assets, as discussed below,
PEFA-managed Funds generally do not anticipate making use of an executing broker or dealer with respect
to the Fund’s assets). WNC Capital does not currently, and does not anticipate, charging broker-dealer
commissions or other fees directly to the PEFA-managed Funds for any services it may provide. WNC
Capital, and its registered representatives, can receive compensation from PEFA or its affiliates, however,
with respect to certain services provided in connection with the offering of one or more Funds. The Funds
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Item 7. Types of Clients

PEFA provides investment advisory services to the Funds, each of which is a pooled investment vehicle as
described in Item 4 above.

Where provided for under the relevant Fund’s Governing Documents, PEFA can sponsor additional Funds
formed to make co-investments alongside an existing Fund (each, a “Co-investment Fund”). Such Co-
investment Funds will also be Clients of PEFA. The terms of any Co-investment Fund, including the terms
of any Management Fees or other compensation arrangements, are described in the offering documents
for each Co-investment Fund, and any constraints thereon generally are set forth in the Governing
Documents of the applicable Fund alongside which the Co-investment Fund invests.

Each Fund advised by PEFA primarily accepts subscriptions for limited partnership or other interests only
by individuals and entities that are “accredited investors” as defined in Regulation D under the Securities
Act of 1933, as amended (“Securities Act”), and “qualified purchasers” as defined under the Investment
Company Act of 1940, as amended (“Investment Company Act”). In addition, each Fund will only accept
limited partners or other investors that are “qualified clients” as defined in the Investment Advisers Act of
1940, as amended (“Advisers Act”), where PEFA or its affiliates will receive performance-based
compensation as described in Item 6 above.

PEFA or its affiliates reserve the right to impose additional requirements for subscription by particular types
of investors and can decline to accept any prospective investor’s subscription. Each Fund has a minimum
investment amount for investors, which amounts are set forth in the applicable Fund’s Governing

Documents; however, the Governing Documents for each Fund provide that such minimum amounts may
be lowered or waived by PEFA or its affiliates in its or their sole discretion.