Item 5 - Fees and Compensation
Fees are determined and assessed in a manner specific to each Fund. For the specific fees charged by
the Funds, please refer to the Offering Documents and Limited Partnership Agreements for the Funds.
The fees paid by the Funds are typically not negotiable. Certain fees may be deferred or waived from
time to time at the discretion of SRI. Fees are paid quarterly in arrears. There are no minimum fees.
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Fund I Fees
The Fund I pays the General Partner a monthly Management Fee, in advance, in an amount equal to
1.0% x 1/12 or 0.0833% of gross assets under management, determined as of the date such Units are
issued and the beginning of each subsequent calendar month (approximately 1.0% annually). The Fund I
pays the General Partner an annual Performance Fee equal to 30% of the Fund I’s Net New Income. The
Performance Fee is discussed further under Item 6 below.
The Fund I’s organizational costs and expenses, together with offering costs and expenses incurred
in connection with the offer and sale of Units at the Initial Closing, are expected to be
approximately $60,000. The Fund I may reimburse the General Partner for certain organizational
expenses incurred on the Fund I’s behalf up to $60,000. These organizational expenses will be paid
to the General Partner in equal monthly installment over twelve (12) months after the Initial
Closing. Any organizational and offering expenses in excess of the $60,000 will be borne by the
General Partner.
The Fund I’s direct operational costs and expenses consist primarily of: (i) Management Fee and
Performance Fee as discussed below; (ii) due diligence costs and expenses incurred in connection with
the investment and reinvestment of the Fund I’s assets; (iii) borrowing charges and other costs and
expenses associated with debt finance; (iv) administrative, legal, accounting, record-keeping, and
compliance costs and expenses; and (v) governmental licensing, filing and exemption fees. The General
Partner is responsible for all salaries, bonuses and employee benefit expenses of its principals and
employees who are involved in the management and conduct of the business and affairs of the Fund I
(as well as related overhead, including office space and equipment, utilities, telephone and IT related
costs, and other similar items).
Fund II Fees
The Fund II pays Saratoga a monthly Management Fee, in advance, in an amount equal to 1.0% x 1/12 or
0.0833% of gross assets under management, determined as of the date such Shares and Units are issued
and the beginning of each subsequent calendar month (approximately 1.0% annually). The Management
Fee charged against Shares and Units on the date such Shares and Units are issued is appropriately pro-
rated if such Shares and Units are issued on a date other than the beginning of a calendar month. The
Acquisition Fee is paid by the Fund II and is equal to 3% of each of the purchase prices of the properties
acquired by the Fund II. The Fund II pays Saratoga an exit fee of 30% of net capital gains computed in
dollars, if any, when each of the acquired properties are sold. This exit fee is a performance fee, and is
discussed in further detail under Item 6 below.
The Fund II generally bears certain costs and expenses associated with its organization, the offering of
the Securities and its ongoing investment operations, except as otherwise described in this
Memorandum. The Fund II’s organizational costs and expenses, together with offering costs and
expenses incurred in connection with establishing the Fund II, and the offer and sale of the Securities
during the offering period, are expected to be approximately $50,000. The Fund II may reimburse
Saratoga for certain organizational expenses incurred on the Fund II’s behalf up to $50,000. These
organizational expenses will be paid to Saratoga in equal monthly installment over twelve (12) months
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after the Initial Closing. Any organizational and offering expenses in excess of the $50,000 will be borne
by Saratoga.
The Fund II’s direct operational costs and expenses consist primarily of: (i) Management Fees,
Acquisition Fees, Placement Fees, Investor Relations Fees and Exit Fees, as discussed below; (ii) ordinary
and necessary due diligence costs and expenses incurred in connection with the investment of the Fund
II’s assets; (iii) borrowing charges and other costs and expenses associated with debt finance; (iv)
administrative, legal, accounting, record-keeping, and compliance costs and expenses; and (v)
governmental licensing, filing and exemption fees. Saratoga is responsible for all salaries, bonuses, and
employee benefit expenses of its principals and employees who are involved in the management and
conduct of the business and affairs of the Fund II (as well as related overhead, including office space and
equipment, utilities, telephone and IT related costs, and other similar items).
Fees for Advisory Services Provided to SPA
SPA’s fee arrangements vary widely from client to client. SPA pays fees for the real estate and advisory
services it receives from SRI. Normally these fees are based on an hourly per diem for the time actually
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