Taconic Investment Partners LLC

Item 5 – Fees and Compensation

Management Fees

Taconic receives an annual investment management fee from the limited partners in its Funds which
is generally equal to an amount up to 1.50% of either the equity committed to a Fund or the amount
remaining invested in a Fund, depending on the Fund and the life cycle of each Fund. Such fee is
generally reduced by the amount of a Fund’s organizational costs above a defined threshold, as well
as in certain cases, reduced by fees paid to placement agents, if applicable. The amount of
management fees generally will not correspond with fluctuations in a Fund’s net asset value, including
following the stepdown date, and will not be reduced in connection with any write downs, except in
the case of investments permanently written down.

We are permitted in our sole discretion to waive or reduce all or a portion of the management fee.
Specifically, to the extent permitted by the relevant Fund Governing Documents, we have permitted
certain investors who are affiliated with Taconic, generally employees and affiliates of Taconic, to
invest as limited partners or through a Fund’s General Partner without, in most cases, being subject
to the management fee or carried interest. Generally, limited partners participating in a subsequent
closing after the initial closing of a Fund are responsible for paying the management fee as of the date
of the initial closing of such Fund, plus interest, as applicable. In addition, management fees are
payable during term extensions unless otherwise agreed to with the limited partners. The description
of management fees contained herein is a summary only and specific terms of each Fund’s
management fee calculations are detailed in such Fund’s Governing Documents.

Management fees for joint venture investments are negotiated on a deal-by-deal basis and approved
by our joint venture partners as reflected in the Governing Documents of each investment.

Fees for the Funds are payable quarterly in advance and are deducted from the Funds’ assets. Fees
for joint venture investments are payable as negotiated on a deal-by-deal basis and approved by our
joint venture partners as reflected in the Governing Documents of each investment. No portion of
the fee is refundable once paid.

Carried Interest

As also described in Item 6 below, affiliates of Taconic, which act as the General Partners of the
Funds, have the ability to earn a carried interest, provided that limited partners in each Fund have
received a “preferred return” on invested capital. Pursuant to each Fund’s Governing Document,
limited partners’ preferred return for the applicable Fund is calculated on a negotiated and agreed
upon annual return rate per annum. The limited partners’ preferred return, along with repayment of
their contributed capital, represent the initial distributions of the Funds. Thereafter, distributions are
split between the relevant General Partner and limited partners pursuant to a waterfall calculation, as
defined in the applicable Fund’s Governing Documents, with the General Partner’s or other Taconic
affiliates’ receipt of any such gains being considered a carried interest distribution.

Fund Expenses

Taconic NYC Investment Fund and Taconic NYC GP Fund Expenses. The Taconic NYC Investment Fund
and Taconic NYC GP Fund are responsible for the ordinary day-to-day expenses incidental to the
administration of such Funds (and their subsidiaries and intermediate entities). Each Fund is governed
by its own Governing Documents, which detail a description of expenses for such Fund. While
differences exist among Funds, the following is a description of expenses generally charged to each
Fund. The Taconic NYC Investment Fund and Taconic NYC GP Funds are responsible for all third-
party costs and expenses of maintaining their respective operations, including but not limited to: (a)
fees and other out-of-pocket expenses directly related to the investigation of investment opportunities,
whether or not consummated; (b) the acquisition, ownership, financing, hedging or sale of its
investments (to the extent not paid for or reimbursed by such investment); (c) taxes; (d) fees and other

governmental charges levied against such Funds; (e) administrative and research fees; (f) fees for
outside services; (g) expenses of custodians, outside advisors, auditors, accountants, administrators,
counsel and other consultants and professionals; (h) expenses of the LP Advisory Committee and
Investment Committee; (i) insurance; (j) technological expenses; (k) interest on and fees, costs and
expenses arising out of all financings entered into by either the Taconic NYC Investment Fund and
Taconic NYC GP Fund; (l) travel expenses; (m) to the extent not paid by any investment, costs of any
on-site personnel at any investment; (n) litigation expenses; (o) liquidation expenses; (p) expenses
associated with the preparation and distribution of reports to limited partners; (q) indemnification and
other unreimbursed expenses; and (r) any extraordinary expenses to the extent not reimbursed or paid
by insurance (the foregoing, the “Taconic NYC Investment Fund Expenses” and “Taconic NYC GP
Fund Expenses”).

New York City Property Fund II Expenses: The New York City Property Fund II will pay or reimburse
the New York City Property Fund GP LLC, Taconic or the Sponsor for all expenses, costs and
liabilities incurred in connection with or related to the conduct of the business of the New York City
Property Fund II (“New York City Property Fund II Expenses”) and its subsidiaries and intermediate
entities, including, by way of example and not limitation: (a) the organization of any investment
structuring vehicles (e.g., special purpose vehicles such as REIT Subsidiaries (defined below)),
including documentation related thereto; (b) the management fees; (c) all legal, accounting, auditing,
insurance, appraisal, custodial, environmental, administrative, financing and consulting fees for
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Item 7 – Types of Clients

Taconic provides investment advisory services to pooled investment vehicles managed by Taconic’s
affiliates, with underlying limited partners that represent, but are not limited to, public pension funds,
institutional investors and high net worth individuals, among others. With the exception of employee
and affiliate vehicles, the Funds generally limit their respective limited partners to “accredited
investors” as defined in Rule 501(a) of Regulation D promulgated under the Securities Act of 1933,
as amended (the “Securities Act”) and “qualified clients” as defined in Rule 205-3 promulgated under
the Advisers Act and, in the case of those Funds that rely on the exemption from registration under
the Investment Company Act provided by Section 3(c)(7) thereof, “qualified purchasers” or
“knowledgeable employees” as defined in the Investment Company Act. The Funds typically require
capital commitments from each limited partner of at least $1.0 million, although a Fund’s Governing
Documents allow for exceptions under certain circumstances, and the Funds have previously, in
certain instances, permitted limited partners to make capital contributions of less than $1.0 million.

On occasion, Taconic permits certain limited partners and third parties to participate in co-investment
opportunities which invest side-by-side in certain Fund investments. These co-investments are not
managed or advised by Taconic, are not subject to custody by Taconic and are not deemed to be
clients of Taconic. Nevertheless, Taconic will perform management, advisory and other services for
the portfolio investments, generally at no cost to such investments except property level fees and
expenses.

When offered, opportunities to co-invest in an investment are made available to any person or entity,
including, without limitation, strategic investors, lenders, deal sources, co-sponsors, other investment
advisers, Fund limited partners, other persons or entities affiliated, associated or otherwise known to

Taconic or its personnel and unrelated third parties. Co-investment opportunities typically arise when
Taconic has the opportunity for an investment in an existing or prospective property or investment
and Taconic determines that all or a portion of the applicable opportunity (i) 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) Taconic believes the
Fund will benefit from the participation of the co-investor(s). Such determinations are based on the
provisions of the applicable Funds’ Governing Documents and such other factors as Taconic
considers in its sole discretion, including those specified in its policies on investment allocation and
co-investments. Certain individuals who source transactions, provide financing or provide investment
opportunities have in the past and are expected in the future to negotiate co-investment rights or co-
investment priority rights as a component of their compensation or other arrangements with the
relevant Fund(s). For the Taconic NYC GP Fund, limited partners in the Fund are entitled to have
the first opportunity to make co-investments in a Taconic NYC GP Fund investment in accordance
with the Governing Documents of the Fund.

Taconic’s exercise of discretion in allocating co-investment opportunities often will not result in
proportional allocations among such 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 Taconic’s
Fund(s) will be less than it would otherwise have been without the inclusion of such co-investors.

Co-investments typically involve investment and disposal of interests at the same time and on the
same terms as a Fund making the investment. However, from time to time, for strategic and other
reasons, a co-investor purchases a portion of an investment from a Fund after such Fund has
consummated its investment (also known as a post-closing sell-down or transfer). Any such purchase
from a Fund by a co-investor generally occurs shortly after the Fund’s completion of the investment
to avoid any changes in valuation of the investment; however, in certain instances, a post-closing sell-
down or transfer could occur well after the Fund’s initial purchase. When co-investors purchase their
interest from a Fund after the Fund has consummated the investment, the price paid by co-investors
is typically determined by the Fund’s General Partner in its sole discretion. Where appropriate, and
in Taconic’s sole discretion, Taconic reserves the right to charge interest on the purchase to the co-
investor or co-invest vehicle (or otherwise equitably to adjust the purchase price under certain
conditions), and to seek reimbursement to the relevant Fund for related costs. However, to the extent
such amounts are not so charged or reimbursed, they generally will be borne by the relevant Fund.
The price may not reflect the full cost incurred by the Fund in connection with the investment, any
interest charge on the co-investment amount, the cost of establishing the credit facility utilized to
acquire the portfolio investment (if applicable) or the risk borne by the Fund in connection with
purchasing and warehousing the investment. The Funds also will bear the risk that any co-investors
acquiring an interest in an investment after the closing of such investment may acquire such interest
on terms that do not reflect the then-current value of such investment. Potential co-investors typically

do not bear any transaction costs of investments that are not consummated and are not subject
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