Principal Real Estate Investors LLC

Item 5 – Fees and Compensation
Principal Real Estate generally negotiates fees on an individualized basis with each client for
individually managed accounts. Fees are stipulated in the offering documents for the
commingled funds and are not negotiable unless stipulated otherwise. Compensation is
generally of the following varieties: (i) investment (acquisition and/or origination) and
disposition fees, which are charged upon the creation and disposition of an investment; (ii)
asset management or servicing fees; (iii) portfolio management fees; and (iv) other fees
specifically negotiated for services provided, including full or limited services associated with
managing privately held real estate enterprises/operating company investments.

Principal Real Estate’s fees generally depend on the services being provided. Principal Real
Estate will offer its portfolio management services for compensation based primarily on a
percentage of the value of assets under management, on a percentage of income generated
by real estate assets under management, on a percentage of returns generated in excess of a
benchmark, or on a fixed fee basis. Principal Real Estate also structures fees based on a
percentage of invested capital, primarily in closed-end Private Funds. With the possible
exception of commitment or acquisition fees, no compensation will generally be payable prior
to the provision of a service for which the compensation is due. Proportional fees could be due
in the event of early termination of the contract with any client. If a client pays fees in advance
and terminates early, pre-paid termination fees may be rebated based on remaining days in the
billing period, if set forth in the governing documents.

Principal Real Estate may negotiate and charge different fees for different accounts. For
example, Principal Real Estate may consider a variety of factors when offering discounted fee
schedules to certain clients, including but not limited to the totality of the client’s (and/or their
affiliates) relationship with Principal Real Estate or its affiliates; the number of accounts
managed; the size or asset level of the account(s); the nature of services rendered; the country
of domicile; and any special requirements of the account(s) managed. For clients with whom

Principal Real Estate has agreed to provide the lowest fee rate charged compared to any other
similarly situated client, all these factors, including the totality of Principal Real Estate’s
relationship with a client and/or its affiliates, may be taken into consideration in determining
whether a client is similarly situated to another. Principal Real Estate may also consider the
impact such arrangements could have on agreements that have previously been entered into
with other clients.

When deciding whether to negotiate a particular fee, Principal Real Estate may also consider
its capacity to manage assets in a particular strategy. In addition, Principal Real Estate may
offer or make available to certain clients a specified asset level or capacity maximum that
Principal Real Estate will allow them to invest in each strategy. The amount of capacity offered
may impact fee negotiations. The negotiation of fees may result in similarly situated clients
paying different fees for comparable advisory services. In addition, fees can be structured as
fixed, fixed plus performance, or performance only. Certain fixed fees are required to be paid
up front. For an additional discussion of performance-based fees and allocations, please refer
to Item 6 (“Performance-Based Compensation and Side-by-Side Management”) of this
Brochure.

Principal Real Estate provides investment advice to Private Funds it sponsors and organizes. It
also provides investment advice to Private Funds organized by non-affiliated fund sponsors.
Please refer to the section below for a detailed description of the types of fees charged in
connection with Principal Real Estate’s Private Real Estate Debt and Equity management
services, which may be charged in the management of Private Funds.

In addition, Private Funds incur certain fees and expenses, such as organizational and start-up
expenses, general partner/management expenses, and expenses, fees and costs connected
with the Private Fund’s operations. All of these fees and expenses incurred by Private Funds
are in addition to the fees charged to the Private Fund by Principal Real Estate for providing
investment advisory services. These fees and expenses are paid by the Private Fund and can be
substantial. If specified in the governing documents, investors in the Private Funds indirectly
bear these expenses as these are paid out of the profits of the Private Fund. Fees from Private
Funds deducted from fund assets may reduce investor returns. Principal Real Estate and the
General Partners/Managers of the Private Funds generally have complete control and
discretion over the organizational and start-up expenses, general partner and management
expenses, and expenses, fees and costs connected with the Private Funds they sponsor and
organize as well as their payment.

For Private Funds organized and sponsored by non-affiliated Private Fund sponsors that hire
Principal Real Estate for investment advisory services, Principal Real Estate does not have
control or discretion over the Private Fund’s general partner/management expenses or
operation.

Private Fund organizational and start-up expenses, general partner/management expenses,
and expenses, fees and costs connected with the Private Fund’s operations vary widely across
the Private Funds sponsored and organized by Principal Real Estate.
Some of the more common types of organizational and start-up expenses include legal,
accounting, tax, regulatory filing and compliance, initial capital raising, printing, and other
similar fees, costs, and expenses connected to the Private Fund’s formation and launch of
operations.
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Item 7- Types of Clients
Principal Real Estate provides portfolio management services to individuals, high net worth
individuals, corporate pension and profit-sharing plans, Taft-Hartley plans, charitable
institutions, foundations, endowments, municipalities, registered mutual funds, private
investment funds, trusts, sovereign funds, foreign funds, supranationals, central banks,
collective investment trusts, wrap programs, insurance separate accounts, life insurance
general account, and other U.S. and international institutions. Some of Principal Real Estate’s
clients are affiliates.

Generally, the minimum account size for opening and maintaining an individually managed
account is $25-250 million for a portfolio and is based on the type of strategy used for the
client’s portfolio. Principal Real Estate reserves the right in its sole discretion to accept client
accounts with fewer initial assets.

The minimum account size for the SMA programs in which Principal Real Estate participates is
generally $100,000. Although the investment minimums differ from program to program and
are determined by the Program Sponsor, Principal Ral Estate may elect to waive or negotiate
other minimum account sizes.