Safanad Inc

Item 5: Fees and Compensation

A.      Adviser Fees and Compensation

The Firm’s fee and compensation arrangements vary depending on the particular Fund. The
specific arrangement for each Fund is described in its Organizational Documents. The Firm will

generally reduce or waive the management fees and performance-based compensation payable
by personnel of the Firm or its affiliates, family members, General Partners, or managing members
to the Funds, or vehicles formed for the benefit of such persons or certain other investors as
determined by the General Partner or the managing member of the applicable Fund, as the case
may be, in the sole discretion of such General Partner or managing member, and in accordance
with the Fund’s Organizational Documents.

As discussed above, Safanad has in the past and is permitted to in the future, when provided for
in a Fund’s offering and Organizational Documents, also provide management, financial,
administrative, operational, or other non-investment advisory services to a Fund, or certain
portfolio companies held by a Fund, for a fee, which generally does not reduce or offset the Fund’s
management fee. Expenses charged at the level of a portfolio company or intermediate entity, or
capitalized into the cost of a transaction, generally will not be reflected as Fund expenses in
calculating the gross and net performance of the relevant Fund, and, as a result, Safanad expects
to be subject to potential conflicts of interest in determining whether certain expenses should be
charged to the portfolio company or intermediate entity or capitalized into transaction costs.

Management Fees

Safanad receives a base management fee for its services which, with respect to certain Funds, is
shared with such Fund’s operating partner or is in addition to the fee collected by such operating
partner, depending on the circumstances of each investment.

Private Equity Funds

Management fees for Safanad’s private equity Funds are generally based on aggregate capital
committed by an investor or on net invested capital and provide for an annual management fee
rate between 1.50% and 2.00%.

Investors should refer to the Organizational Documents for a Fund for specific terms of the
management fees for that Fund.

Performance-Based Allocations or Compensation

The terms of each Fund generally provide for the allocation of a portion of its net investment
profits in the form of performance-based allocations, incentive fees, or carried interest (“incentive
fees”) to a special purpose entity affiliated with the Firm, after Fund investors have received a
return of capital (either with respect to a particular investment or all of the Fund’s investments)
and a preferred return, in accordance with the Fund’s Organizational Documents or the
Organizational Documents of an entity in which the Fund invests. Thereafter, net investment
profits are generally allocated so that a special purpose entity affiliated with the Firm is entitled
to 15% to 20% of net investment profits and the remaining 80% to 85%, as applicable, is allocated
to the investors.

Depending on the investment, the incentive fee, if any, with respect to certain Funds is shared
with the Fund’s joint venture partner. The incentive fee is, in certain instances, determined at the
level of a subsidiary of the Fund and calculated based on the net investment profits received at
the level of such subsidiary (rather than the net investment profits to the investors in the Fund).

The terms for incentive fees for the Funds vary. Investors should refer to the Organizational
Documents for a specific Fund for specific terms of the incentive fees for that Fund.

Real Estate Funds

Management fees for Safanad’s real estate Funds are generally based either on the capital
contributions deployed by the Fund in the underlying investment vehicle, typically 1.50% to 2.00%
per annum, or on the gross investment value, typically 50 to 75 basis points per annum, of the
applicable Fund’s portfolio of underlying investments (e.g., based on the initial purchase price of
underlying investments or on the total amount paid for the Fund’s underlying assets inclusive of
the amounts acquired through leverage, closing costs, and capital expenditures incurred in the
acquisition plus any additional equity later provided to the Fund with respect to an investment or,
in certain cases, based on the fair value of the underlying real estate held by the Fund).

Management fees based on gross investment value with a fee rate of 50 to 75 basis points can
result in a management fee considerably higher than a fee based on other common valuation
methods such as net asset value, which approximates the capital an investor has in a Fund
inclusive of liabilities, even at higher fee rates.

For example, if a Fund has three dollars of leverage for each dollar of capital invested in the fund
and the management fee rate specified in the Organizational Documents for the fund is 0.50%
per annum on the gross investment value, then the equivalent fee for a Fund where the fee is
based on net asset value would be 2.00% per annum.

B.      Payment of Fees

Management fees are payable on (a) a monthly or a quarterly basis in arrears, (b) a monthly or a
quarterly basis in advance (in which case Clients could be entitled to a refund of management
fees paid in advance depending upon the facts and circumstances), or (c) upon the disposition of
an investment.

Incentive fees will generally be paid when distributions to a Fund or to investors in the Fund
(including current income, proceeds from a disposition, or proceeds from a refinancing of the
underlying Fund assets) exceed the relevant threshold stipulated in the Fund’s Organizational
Documents.

C.      Other Fees and Expenses

In addition to being subject to management fees and incentive fees, the Funds incur other
expenses, including costs relating to an individual Fund’s own operations. These include, but are
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Item 7: Types of Clients

The Firm’s clients are the Funds. The Funds are exempt from registration under the Investment
Company Act of 1940, as amended, and the interests in the Funds are offered pursuant to the
private placement exemptions provided by Section 4(a)(2) of the Securities Act of 1933, as
amended, Regulation D and/or Regulation S promulgated thereunder.

Each of the Funds imposes minimum investment requirements for admission as a limited partner
or member, as the case may be. Minimum investment requirements for the Funds are set forth
in each Fund’s Organizational Documents and are generally waived with respect to investors who
are personnel of the Firm or its affiliates, family members, managing members to the Funds, or
vehicles formed for the benefit of such persons or certain other investors as determined by the
General Partner or managing member, and in accordance with each Fund’s Organizational
Documents.