Item 5 – Fees and Compensation
Management Fee
With regard to Hotel Fund I and Hotel Fund I A, Silverwest Hotels will receive an annual
management fee equal to 1.5% per annum of the aggregate commitments of all investors in each
Fund or, in some cases after the expiration of the Fund’s commitment period, 1.5% of the aggregate
net equity invested. These management fees will be due and payable monthly in advance with the
first payment being due at the Fund’s initial closing (regardless of when an investor is admitted as
a member of such Fund) and each monthly payment thereafter being due on the first business day
of each month for the duration of the Fund. In regards to Inverness, Silverwest Hotels will receive
a monthly asset management fee equal to the amount accruing on the aggregate amount of capital
contributions at a rate of 0.75% per annum. This management fee shall be paid no later than the
fifth day of each month.
In the case of Waikoloa, Silverwest Hotels receives a monthly asset management fee equal to the
amount accruing on the aggregate amount of Capital Contributions at a rate of 1.5% per annum.
This management fee for each month shall be paid no later than the fifth day of each month and if
not so paid, the unpaid portion of said management fee shall accrue interest.
In certain circumstances, the Fund offering documents of certain Funds allow for the Manager to
reduce, waive, and/or modify fees. For additional information regarding management fees or
expenses of a Fund, please refer to the applicable Fund offering documents (i.e. Private Placement
Memorandum and/or Limited Liability Company Agreement).
Additional Fees
The Manager of Hotel Fund I, Hotel Fund I-A, and Waikoloa will also receive an acquisition fee
equal to 1.0% of the gross purchase price of each investment purchased by said Funds, which
amount will be paid as and when capital is invested by said Funds in such investment. In the case
of Inverness, the Manager will be paid an acquisition fee in connection with the purchase of the
Project pursuant to the Purchase Agreement and Purchase Transactions (all terms as defined in the
applicable Fund offering document(s)).
As indicated in certain Fund offering documents, Silverwest Hotels and/or its affiliates are
sometimes engaged to manage and operate hotels pursuant to hotel operating agreements.
Generally, when Silverwest Hotels or an affiliate is engaged, it is paid an annual hotel management
fee from the hotel based on a fixed percentage of that hotel’s total revenue. In certain
circumstances, the hotel manager entity is also entitled to receive and incentive management fee.
Currently, Silverwest Hotels and its affiliates are not entitled to receive an incentive fee with
respect to any of the hotels that they manage and operate.. It is important to note the Funds may
utilize an affiliate to perform the hotel management services contemplated herein and all such
compensation payable to an affiliate constitutes additional indirect income to Silverwest Hotels in
addition to the management fees, with no deduction or offset. However, unaffiliated third parties
are also utilized, depending on each particular hotel asset. For additional information, please refer
to the applicable Fund offering documents.
Other Expenses
Other expenses are described in full in the Fund offering documents. Please review the applicable
Fund offering documents for disclosure pertaining to these fees and expenses. As detailed in each
Fund’s full Fund offering documents, all Funds are responsible for at least a portion, if not all, of
the organizational, formation and/or other expenses. These expenses include all reasonable out-of-
pocket expenses incurred in connection with accounting, legal, and audit expenses (i.e. expenses
associated with the preparation of financial statements, tax returns and/or Form K-1), costs and
expenses attributable to acquiring, holding, insuring and/or disposing of investments, among other
things (however, with regard to all Funds except Waikoloa and Inverness, the Management Fee
may be reduced to the extent certain Funds incur organizational expenses in excess of a specified
amount).
In addition, Silverwest Hotels employees and/or affiliates provide services to the Funds or to
investment entities held by the Funds or their subsidiaries (which include, without limitation, due
diligence, asset management, legal, and accounting) and are entitled to retain all related
compensation received by them for performing said services. Such employee and/or affiliate
compensation do not reduce or offset the management fees or other compensation payable to
Silverwest Hotels or the Manager. All such employee and/or affiliate services are provided at rates
generally available in arm’s-length transactions with independent third party providers of
comparable services (as reasonably determined by the Manager) or, in the case of Hotel Fund I,
Hotel Fund I A, and Hotel Feeder, as described above or at other rates approved by the related
Funds’ advisory board.
Additional information regarding management fees and expenses of the Funds are included in the
applicable Fund offering documents for each Fund.