ITEM 5 – Fees and Compensation
The Adviser has no set policy regarding the calculation of fees for its services, and it will
determine such fees on a Client-by-Client basis, as negotiated with each of the Clients as
set forth in such Client’s Advisory Agreement. As the Adviser establishes other
relationships, it may arrange to receive fixed fees or fees paid on some other negotiated
basis. While brokerage commissions will not generally be payable by the Adviser, see
Item 12 for information regarding certain trading execution costs that may be incurred by
Clients.
The Adviser
The Adviser deducts agreed-upon fees from its Clients’ assets and will deduct agreed-
upon fees from the assets of any future Clients. The following is a summary of the fees
that the Adviser receives from its Clients.
Terra REIT
The Adviser serves as the adviser of Terra REIT. Pursuant to an Advisory Agreement
between the Adviser and Terra REIT. Terra REIT pays fees to the Adviser in the form of
an origination fee, an asset management fee, an asset servicing fee, a disposition fee
and, if necessary, a break-up fee, as follows:
• Origination Fee. An origination fee in the amount of 1.0% of the amount used to
originate, acquire, fund, acquire or structure real estate-related loans, including
any third-party expenses related to such investment. In the event that the term of
any real estate-related loan is extended, the Adviser also receives an origination
fee equal to the lesser of (i) 1.0% of the principal amount of the loan being
extended or (ii) the amount of fee paid by the borrower in connection with such
extension. The origination fee is offset by the amount of any origination fee
received by Terra REIT from borrowers.
• Asset Management Fee. A monthly asset management fee at an annual rate equal
to 1.0% of the aggregate funds under management, which includes the loan
origination amount or aggregate gross acquisition cost, as applicable, for each real
estate-related investment and cash held by Terra REIT.
• Asset Servicing Fee. A monthly asset servicing fee at an annual rate equal to
0.25% of the aggregate gross origination price or aggregate gross acquisition price
for each real estate-related loan then held by Terra REIT (inclusive of closing costs
and expenses).
• Disposition Fee. A disposition fee in the amount of 1.0% of the gross sale price or
repayment amount received by Terra REIT from the disposition of each loan, but
not upon the maturity, prepayment, workout, modification or extension of a loan
unless there is a corresponding fee paid by the borrower, in which case the
disposition fee will be the lesser of (i) 1.0% of the principal amount of the loan and
(ii) the amount of the fee paid by the borrower in connection with such transaction.
If the Adviser or its affiliates takes ownership of a property as a result of a workout
or foreclosure of a loan, Terra REIT will pay a disposition fee upon the sale of such
property equal to 1.0% of the sales price.
• Transaction Breakup Fee. In the event that Terra REIT receives any “breakup
fees,” “busted deal fees,” termination fees, or similar fees or liquidated damages
from a third party in connection with the termination or non-consummation of any
investment or disposition transaction, the Adviser will be entitled to receive one-
half of such amounts, in addition to the reimbursement of all out-of-pocket fees
and expenses incurred by the Adviser with respect to its evaluation and pursuit of
such transactions.
In addition to the fees described above, Terra REIT reimburses the Adviser and its
affiliates for certain costs incurred by them in managing Terra REIT and its portfolio.
Terra 5 International and Terra International
The Adviser is the manager of Terra 5 International and Terra International. Pursuant to
an Advisory Agreement between the Adviser and Terra 5 International and an Advisory
Agreement between the Adviser and Terra International, Terra 5 International and Terra
International pay fees to the Adviser in the form on an incentive fee, as follows:
Terra 5 International
Once shareholders of Terra 5 International have collectively received cumulative
distributions equal to aggregate capital invested in shares and a 9.5% per annum,
cumulative, non-compounded pre-tax return on unrecovered capital, 15% of
amounts otherwise distributable to shareholders will be paid to the Adviser as an
incentive fee.
Terra International
Once shareholders of Terra International have collectively received cumulative
distributions equal to aggregate capital invested in shares and a 9.0% per annum,
cumulative, non-compounded pre-tax return on unrecovered capital, 15% of
amounts otherwise distributable to shareholders will be paid to the Adviser as an
incentive fee.
Terra Offshore Funds REIT, LLC
The Adviser does not earn any fees for this fund.
In addition to the fees described above, Terra 5 International, Terra International
and Terra International Fund 3 reimburse the Adviser and its affiliates for certain
costs incurred by them in managing those funds and their portfolios.
Mavik Real Estate Special Opportunities Fund, LP
The Adviser is the manager of the Special Opps Fund. Pursuant to an Advisory
Agreement between the Adviser and the Special Opps Fund, the Special Opps Fund pays
fees to the Adviser as set forth below. Any capitalized terms used in the discussion below
and not otherwise defined have the meanings given to such terms in the Limited
Partnership Agreement of the Special Opps Fund.
Management Fee: The Adviser (or an affiliate thereof) will be entitled to an annual
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