Item 5 – Fees and Compensation
Management Fees
Each Fund or Project pays the Managing Member an annual management fee as described in the
Fund or Project’s Operating Agreement. This amount varies by Fund or Project and is typically
between 1% and 2% of called capital. Additionally, PIA receives a performance based incentive
distribution (see Item 6 of this brochure for more details on performance based fees).
These management fees are negotiable at the Fund or Project level and may include discounted
management fees for investors who make commitments above a specific dollar threshold or within
a specific timeframe. The conditions which must be met to receive discounted management fees
are disclosed in the Fund or Project’s offering documents.
Management fees are paid in arrears on a quarterly basis. Fees are deducted directly out of the
Fund or Project operating account. In the event there are insufficient funds available in the
operating account to pay management fees, they may be accrued until such time as cash is available
from investment projects to make a payment.
Structuring Fee
The Managing Member will receive for each investment made by the Fund or Project, a one-time
structuring fee (also sometimes referred to as an “origination fee”), payable by the developer-
partner from the operating company account upon the initial closing of the investment and the
establishment of an investment’s operating documents.
The practice of receiving a one-time structuring fee payable by our developer-partner in an
investment creates a conflict of interest in that the payment is made upon closing of the investment.
The structuring fee is not related to the ultimate success or failure of the investment, and the non-
refundable structuring fee is considered fully earned upon closing. This structuring fee is tied
directly to the aggregate real estate project cost. It is designed to not only help offset PIA’s project-
related overhead associated with conducting the due diligence for each specific real estate project,
but also allows PIA to reduce the total fee charged to Investor Members by charging management
fee only on called capital versus charging a fee on the investor’s total committed capital. The fee
is calculated at roughly 0.5% of the forecasted aggregate costs for the specific real estate project
and not on the equity invested in the project.
Structuring fees are paid by the developer-partner to the Managing Member and the Managing
Member retains all such structuring fees for its own account. Structuring fees are not paid by the
Fund or Project Company and such fees will not directly offset, reduce, or otherwise affect
amounts of the management fee, administration fees, or any other ongoing fees that arise in
connection with the Fund or Project.
Other Fees
The Fund or Project shall bear and be charged with all costs and expenses (and shall promptly
reimburse the Managing Member or its Affiliates to the extent that any of such costs and expenses
are paid by such entities) which are associated with the conduct of the business of the Fund or
Project, including, without limitation:
• third-party expenses incurred in connection with maintaining qualification of the Company
to do business in Virginia and any other jurisdiction in which qualification is necessary or
appropriate;
• all expenses incurred in connection with identifying, evaluating, structuring and
negotiating the Fund investments or Project and the acquisition, holding, sale, proposed
sale or other disposition or valuation of the investment(s), Project or assets of a Project;
• fees and expenses of consultants, custodians, counsel, investment bankers, accountants,
attorneys, the registered agent and other advisors incurred in connection with the business
of the Fund or Project;
• third-party expenses of holding the securities held by the Fund or Project, including record
keeping expenses and brokerage and other similar fees;
• third-party fees and expenses incurred in preparing tax and accounting reports for the
Members of the Fund or Project;
• any taxes, fees, or other governmental charges levied against the Fund or Project, or on its
income or assets or in connection with its business or operations;
• all costs and expenses of litigation and other matters as described in the Fund or Project
Operating Agreement; and
• expenses associated with the acquisition, valuation, holding, and disposition of Fund or
Project investments, including travel and extraordinary expenses (such as litigation, if any).