Sterling Investment Management LLC

Item 5 – Fees and Compensation

SIM and its affiliated General Partners receive fees and compensation in exchange for advisory
services provided to the Funds, including asset management fees, carried interest, additional
compensation in connection with affiliated services performed for the portfolio investments of the
Funds and reimbursements from portfolio investments for certain expenses advanced on their behalf.
The Funds are also responsible for bearing certain expenses as detailed below and in each Fund’s
Governing Documents. Differences in fees and expenses exist from Fund to Fund, and certain Funds
do not charge certain fees, compensation or expenses that other Funds charge or charge them in
different amounts. The following is a general description of fees, compensation and expenses of the
Funds. Investors should refer to the Governing Documents of the applicable Fund for a complete
understanding of how SIM is compensated for its advisory services; the information contained herein
is a summary only and is qualified in its entirety by such documents.

Asset Management Fees

SIM charges each Fund an asset management fee (the “Asset Management Fee”), generally 1.125-
1.5% per annum of non-affiliated investor’s commitments. Specifically, Asset Management Fees are
initially charged at 1.125-1.5% of each non-affiliated investor’s committed capital for the period of
time during which each Fund is making investments (the “investment period”); thereafter, after the
termination or expiration of the investment period, the Asset Management Fee is equal to 1.125-1.5%
of each non-affiliated investor’s invested capital. The amount of Asset Management Fees generally
will not correspond with fluctuations in the net asset value of individual investments, aggregate
investments or of a Fund, including following the stepdown date (i.e., after the end of a Fund’s
investment period), and will not be reduced in connection with any write-downs, except in the case of
investments that have been permanently written down. Permanent write-down determinations are
made in the discretion of the valuation committee in accordance with the relevant Governing
Documents and SIM’s valuation policy.

Further, the Asset Management Fee base includes capitalized transaction-specific fees and expenses
of unrealized investments, including supplemental fees charged by SIM in connection with the
investment, which creates a conflict of interest in that the inclusion of such fees and expenses results
in a higher Asset Management Fee than if such transaction fees and expenses were not capitalized into
the asset base. The determination of which fees and expenses are capitalized versus expensed is made
in accordance with U.S. Generally Accepted Accounting Principles (GAAP) and not at the discretion
of SIM, thereby limiting SIM’s ability to arbitrarily increase the Asset Management Fee base.

Assessed quarterly in advance, Asset Management Fees are collected through a capital call, through a
draw-down on the line of credit or offset against a distribution to investors or primarily, paid from
cash flow received from the underlying investments. All Asset Management Fees were negotiated
with investors during the fundraising period of the applicable Fund and are not subject to negotiation
thereafter. Generally, investors participating in a subsequent closing after the initial closing of a Fund
are responsible for paying the Asset Management Fee as of the date of the initial closing of such Fund,

plus interest, as applicable. In addition, Asset Management Fees are payable during term extensions
unless otherwise noticed to investors. Asset Management Fees are prorated for any partial calendar
quarters.

The General Partners are permitted, in their sole discretion, to reduce or waive all or a portion of the
Asset Management Fee. Asset Management Fees can differ from one Fund to another as well as
among investors in the same Fund. Such differences can arise from the size of an investor’s
commitment to a Fund, provisions of side letter agreements or other negotiated terms. Asset
Management Fees are generally waived for SIM employees investing in a Fund (either as direct
investors or through a General Partner), affiliates and their respective families investing in a Fund
(although in each case, these investors generally pay their pro rata share of certain Fund expenses).

Affiliated Service Provider Fees and Expenses

Affiliates of SIM (namely employees of SRS) are hired to provide property management, leasing and
lease administration and development and construction services and other services in connection with
real estate investments made by the Funds (the “Affiliate Services”). The properties owned by the
Funds enter into agreements with SRS for Affiliate Services and in connection therewith, SRS or its
affiliates are entitled to receive fees for such Affiliate Services. Any such fees and reimbursements
paid by a portfolio investment or a Fund to SRS are in addition to the Asset Management Fee and
Carried Interest received by SIM or its affiliates. A conflict of interest exists in that SIM is negotiating
on both sides of the transaction in connection with the negotiations for Affiliate Services.

Transaction Fees

In the event SIM or its affiliates receive any breakup fees, transaction fees, monitoring fees, director’s
fees or similar fees from third parties arising out of an investment (but excluding, for the avoidance
of doubt, any Asset Management Fees and any Affiliate Services fees) such fees will be offset against
the Asset Management Fee, net of all expenses incurred in generating such fees.

Carried Interest

Each Fund’s General Partner is entitled to be allocated carried interest (“Carried Interest”) with
respect to the Funds, which is generally equal to 1 5 -20% of certain realized profits net of all expenses
in excess of a 6.5-9.0% preferred return, depending on the Fund. Each Fund’s Carried Interest
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Item 7 – Types of Clients

SIM provides investment advice to its Funds, which are exempt from registration under the
Investment Company Act of 1940, as amended, and the rules and regulations promulgated thereunder
(the “Investment Company Act”). The Funds limit their respective investors to: (i) “accredited
investors” as defined in the Securities Act of 1933, and (ii) “qualified purchasers” or “knowledgeable
employees,” each as defined in the Investment Company Act, or (iii) if applicable, “qualified clients,”
as defined in the Advisers Act. Investors in the Funds must also meet certain other suitability
qualifications prior to making an investment in a Fund. The Funds are not registered or required
to be registered under the Investment Company Act, are not made available to the general public,
their securities are not registered or required to be registered under the Securities Act of 1933 and
Fund interests are privately placed to qualified investors. Qualified investors include individuals or
entities to which Fund interests are permitted to be sold, which generally includes (i) in the United
States, people or organizations who meet certain net worth, income and/or financial sophistication
requirements as described above or (ii) in other countries, as permitted by the relevant securities laws

in such jurisdiction and in compliance with any foreign offering provisions applicable to SIM and/or
the Funds. The Funds typically require capital commitments from each investor of at least $5 million,
depending on the Fund, although the applicable Fund’s General Partner has, in its sole discretion,
accepted lesser amounts.

The investors participating in the Funds include high net worth individuals, other investment entities,
university endowments, family offices, pension and profit-sharing plans, trusts, estates or charitable
organizations, fund of funds, corporations, limited partnerships, limited liability companies or other
business entities or other service providers retained by SIM, and typically include, directly or indirectly,
principals or other employees of SIM and its affiliates and members of their families.

On occasion, SIM offers co-investment opportunities for certain investors to invest alongside a Fund
in certain Fund portfolio investments. Opportunities to participate in co-investment transactions arise
when SIM has the opportunity for an investment in an existing or prospective portfolio investment
and SIM determines that (i) an investment requires additional capital, (ii) all or a portion of the
applicable opportunity is not required to be offered to a Fund, (iii) the full investment opportunity is
not appropriate for a Fund, whether due to concentration restrictions contained in the Fund’s
Governing Documents or otherwise or (iv) SIM believes the Fund will benefit from the participation
of the co-investor(s). Such determinations are based on the provisions of the applicable Governing
Documents, side letter agreements, agreements with lenders and such other factors as SIM will
consider in its sole discretion, including those specified in its policies on investment allocation and co-
investments. Subject to any restrictions contained in the Governing Documents of the relevant Fund
or any side letter or other terms negotiated with respect to such Fund, in general no investor has a
right to participate in any co-investment opportunity. SIM’s exercise of discretion in allocating co-
investment opportunities will not always result in proportional allocations among co-investors and
such allocations can be more or less advantageous to some co-investors relative to other co-investors.
When co-investment opportunities are permitted, it is possible that the size of the investment
opportunity otherwise available to the Fund will be less than it would otherwise have been without
the inclusion of such co-investors.

SIM will select the investors that are permitted to co-invest in a particular portfolio investment in its
sole discretion based on various factors, including those detailed in its Governing Documents and as
outlined in its internal policies and procedures. While one or more investors in the Funds are on
occasion invited to co-invest in a Fund’s portfolio investments, SIM is authorized in its sole discretion
to offer any or all of a co-investment opportunity to investors that are not investors in the Funds.
Certain service providers, including lenders and individuals who source transactions, may negotiate
co-investment rights or co-investment priority rights as a component of their compensation in
connection with the services provided. In certain cases, determinations to allocate such amounts or
investment opportunities to vendors or service providers will be made prior to the determination of
the availability of opportunity for other co-investors, and as such generally will decrease the amount
of co-investment opportunities available.

SIM can cause some co-investors in a Co-Investment Fund to bear an Asset Management Fee and/or
Carried Interest while not imposing an Asset Management Fee, Carried Interest or other fees (or
imposing different fees) on other co-investors. In certain cases, co-investment opportunities can
include opportunities to invest in Fund portfolio investments at a time when there is not a
corresponding Fund investment or on different terms than a Fund investment.

Although co-investments typically involve investment and disposal of interests in the applicable
portfolio investment at substantially the same time and on substantially the same terms as the Fund
making the investment, co-investors are generally subject to different economic terms than the Fund.
From time to time, for strategic and other reasons, a co-investor or Co-Investment Fund purchases a
portion of an investment from a Fund after such Fund has consummated its investment in the
portfolio investment (also known as a post-closing sell-down or transfer). Post-closing sell-downs are
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