Item 5. - Fees and Compensation
Because this Brochure is being delivered only to “qualified purchasers” under the 1940
Act, the Advisers are not required to provide a fee schedule for the Funds.
Each Feeder Fund and the Single Investor Fund pay a monthly management fee and an
annual performance-based fee (subject to a loss-carryforward or “high water mark” and, with
respect to certain Funds, a “hurdle rate”). The fees paid by an investor in a Feeder Fund are set
forth in the private placement memorandum and related organization documents for that Fund
(“Memorandum”), or, in the case of the Single Investor Fund, in its applicable limited liability
company agreement.
Each Feeder Fund and the Single Investor Fund pay fees to the Adviser that advises that
Fund directly. The third-party administrator of the applicable Fund calculates the monthly or
annual fee. Generally, asset-based management fees are deducted monthly, in arrears, while
performance-based fees, when applicable, are deducted annually at the end of each fiscal year.
With respect to the management fees, each month after the closing of SPM’s books, the
Administrator’s Fund Accountant (“FA”) in collaboration with Administrator’s Investor
As noted on Part 1A of Form ADV, the Advisers have calculated regulatory assets under management, consistent
with the instructions to Form ADV, as the sum of the gross asset values of each of the Funds, without any exclusion
for the assets of any Funds that are invested in other Funds. As a result, regulatory assets under management for
SPM Products include some assets that have already been included in the calculation for SPM and SPM III. If SPM
Products were to exclude such assets from the calculation, regulatory assets under management for SPM Products as
of December 31, 2017 would be $1,626,218,258. Regulatory assets under management for SPM and SPM III would
be the same under either calculation.
Relations Team, prepares the management fee payable schedule (the “Schedule”). The Schedule
details by Fund: (i) the investors’ capital balances; (ii) management fee rate for investors; and
(iii) all the calculations associated with obtaining the management fee payable for that period.
The FA completes the Schedule and sends it to his/her manager for review and approval. Once
approved, the FA sends the Schedule to SPM. SPM reviews the Schedule independently based
upon its records. If there are any discrepancies, SPM and the Administrator will resolve them
prior to SPM’s final approval. Once approved by SPM, the Administrator’s Investor Relations
team in collaboration with the Administrator’s Treasury Team wires the approved amount from
each feeder to the respective SPM operating companies. The Administrator’s Investor Relations
Team then sends SPM an e-mail, confirming that the funds were released.
The performance fee is accrued each month during the fiscal year and is paid to the
appropriate Adviser once the external auditor has verbally confirmed that the calculation of the
performance fee is correct. After such verbal confirmation, the custodian is authorized to release
the fee to the administrator, who reviews and sends the fee to the appropriate Adviser. If an
investor redeems or withdraws all or part of its investment at any time other than the last
Business Day of a fiscal year, the investor will pay a pro-rated performance fee to the
appropriate Adviser. None of the Funds charge investors any fees in advance.
Management and performance fees may be waived in full or in part by the general partner
and/or the Adviser, as applicable, with respect to any investor in any Fund.
Structured Servicing Transactions Group, L.L.C., a Delaware limited liability company
and an affiliate of each Adviser (“SSTG”), is the general partner of each Onshore Feeder and
each Master Fund (other than SSH Master Fund, of which SPM serves as general partner without
a fee).
Each Feeder Fund and the Single Investor Fund bear their ongoing transaction,
administrative, custody, legal (including blue sky compliance, side letter negotiation and costs
relating to offering in foreign jurisdictions and/or to particular types of investors), tax
preparation, investor reporting, valuation agent and appraisal fees and expenses, insurance and
accounting and audit expenses and any other expenses that are reasonably incurred in connection
with the business or maintenance of that Fund. Each Feeder Fund and the Single Investor Fund
also pay the fees and expenses of any prime brokers and any administrator. Each Feeder Fund
also pays its pro rata share of the expenses of the Master Fund(s), if any, in which it invests.
As noted above, the Opportunity Funds may invest in the Core Funds and in the RERT
Funds. In such cases, the Opportunity Funds will not pay an asset-based or performance-based
fee in connection with their investment in the Core Funds or in the RERT Funds. The
Opportunity Funds will, however, be responsible for their pro rata share of each of these
underlying Funds’ expenses as an investor therein.
The Core Funds may invest in the SSH Funds and the MBS Agency Funds, as discussed
in Item 4 above. The Core Funds will not pay an asset-based or performance-based fee to an
Adviser of one of these Funds in connection with the investment by the Core Funds. The Core
Funds will, however, be responsible for their pro rata share of each of these underlying Funds’
expenses as an investor therein.
An investor in certain Funds may also be subject to a redemption fee if an investor
withdraws or redeems all or part of its interests or shares prior to any applicable lock-up periods,
as specified in the offering documents for that Fund.
No Adviser or its supervised persons accept compensation for the sale of securities or
other investment products. See Item 12 for a discussion of the brokerage practices of the
Advisers.