Waterton Investment Adviser LLC

FEES AND COMPENSATION.

          In general, Waterton or an entity affiliated with Waterton receives a management fee and
(in certain circumstances), a carried interest in connection with the provision of advisory services
to its clients. Waterton or other Firm entities or affiliates may also receive additional compensation
in connection with management and other services performed for portfolio investments of Funds.
In addition, in certain circumstances, Waterton receives compensation for management and other
services performed in connection with co-investments made in portfolio investments of the Funds.
Investors in a Fund also bear certain expenses.

Management Fees and Commitments

       Waterton typically receives compensation in connection with the provision of advisory
services to its clients in the form of fees based on capital commitments, total capitalizations,
current valuations, carried interest distributions, annual fixed fees, and certain other fees or
expenses related to transactions (see below). Each Fund assesses fees and expenses in a specific
manner pursuant to its Governing Fund Documents and investors should review the Governing
Fund Documents for the respective Fund to understand all fees and expenses borne by such Fund.

        Investors participating in a closing after the initial closing date of a Fund bear the
Management Fee from the initial closing date or effective date of such Fund, as applicable. The
Management Fee will be payable until proceeds from all portfolio investments are distributed or
until Waterton’s relationship with the Fund is terminated for other reasons (as described in the
Governing Fund Documents). As a general matter, Management Fees will be payable during term
extensions unless otherwise agreed with investors. For certain Funds, investors participating in an
early closing or investing above a specified size threshold will be subject to reduced Management
Fee rates.

        The Governing Fund Documents provide that a Fund’s Management Fees will be
calculated on a basis that generally is not tied to the Fund’s then-current net asset value. As
specified in the Governing Fund Documents, from the effective date of the relevant Funds until a
date specified in the Governing Fund Documents (generally representing the end of the Fund’s
defined investment period (the “Stepdown Date”)), Management Fees generally will be charged
based on a percentage of the amount of the relevant Fund’s aggregate commitments during the
investment period. After the Stepdown Date, Management Fees generally will be charged and
calculated based on a percentage of the amount of invested capital (including, where applicable, a
Fund borrowing component and reinvestment proceeds) made by the relevant Fund relating to
investments that have not been realized or have suffered a permanent impairment in value below
cost (such investments, “Impaired Value Investments”).

       Under the Governing Fund Documents, where the fair market value of an investment
exceeds the total amount of invested capital relating to such investment, post-Stepdown Date
Management Fees will not be calculated based upon such appreciated value and will instead
continue to be calculated based on the amount of such invested capital. Conversely, the Governing
Fund Documents do not require Management Fees to be reduced or refunded following the

occurrence of a write-down, decrease (including a significant decrease) in fair value or other event
not constituting a complete realization, such as a reorganization, roll-over investment in
connection with a sale or dividend distribution, except in the case of investments meeting the
relevant Impaired Value Investment standard under the Governing Fund Documents. For the
avoidance of doubt, following the Stepdown Date, if the fair market value of an Impaired Value
Investment is less than the total amount of invested capital relating to such Impaired Value
Investment, then the amount of Management Fees otherwise payable relating to such Impaired
Value Investment will be reduced.

        As a result, the amount of Management Fees generally will not correspond with
fluctuations in a Fund’s net asset value of individual investments, aggregate investments in a
portfolio investment or of a Fund, including following the investment period, and will not be
reduced in connection with any write-downs (whether temporary or permanent), except in the case
of Impaired Value Investments that have suffered a permanent impairment in value below cost.
Except where the Governing Fund Documents expressly provide to the contrary, Management
Fees will not be reduced (in whole or in part) in the case of partial distributions or partial sales of
investments.

       In many circumstances, the Management Fee base of such post-Stepdown Date
Management Fees will include capitalized transaction-specific fees and expenses of unrealized
investments. Further, Management Fees generally will not be reimbursed or refunded under certain
of the Governing Fund Documents in the event of realizations, dispositions or write-downs or
write-offs that occur partway through the relevant calculation period.

        In the event of a partial disposition of any Impaired Value Investment, to the extent that
the acquisition cost attributable to the disposed of portion and all prior disposed of portions of such
Impaired Value Investment (as determined by the relevant General Partner) represents more than
25% of the aggregate acquisition cost attributable to all existing and disposed of portions of such
Impaired Value Investment, the relevant General Partner will generally reduce each limited
partner’s invested capital to take into account the portion of the Impaired Value Investment so
disposed (it being understood that the relevant General Partner reserves the right, in its sole
discretion, to reduce a limited partner’s invested capital to take into account any other partial
disposition).
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TYPES OF CLIENTS

         Waterton provides investment advice solely to its Fund clients, and references throughout
this Brochure to “clients” and to Waterton’s related duties to and practices on behalf of its clients
and/or investors should be construed accordingly. The Funds generally include investment
partnerships or other investment entities formed under U.S. or non-U.S. laws and operated as
exempt investment pools under the Investment Company Act of 1940, as amended. The investors
participating in the Funds generally include individuals, insurance companies, banks or thrift
institutions, other investment entities, university endowments, sovereign wealth funds, family
offices, pension and profit-sharing plans, trusts, estates or charitable organizations or other
corporations or business entities and often include, directly or indirectly, other employees of
Waterton and its affiliates and members of their families, operating partners or other service
providers retained by Waterton or a Fund.

        The relevant General Partner also generally is permitted to establish Funds that are
alternative investment vehicles in order to permit certain investors to participate in one or more
particular investment opportunities in a manner desirable for tax, regulatory or other reasons.
Alternative investment vehicle sponsors generally have limited discretion to invest the assets of

these vehicles independent of limitations or other procedures set forth in the organizational
documents of such vehicles and the Governing Fund Documents of the related Fund.

       The Funds generally have a minimum investment requirement for third-party investors,
and Fund interests are offered and sold solely to persons who are both accredited investors and,
unless waived by the relevant General Partner, qualified purchasers (or knowledgeable employee
Firm personnel). Waterton generally is permitted to waive such minimum investment amount.

             METHODS OF ANALYSIS, INVESTMENT STRATEGIES AND RISK OF LOSS

General

       Waterton is a private investment firm focused on real estate and real estate-related
investments. The Funds’ investment objectives are to acquire, renovate, manage, reposition and
dispose of existing multifamily and hospitality properties located in targeted U.S. geographic areas
and includes the purchase of underlying debt encumbering multifamily properties and equity
investments in publicly traded REITs.

       There can be no assurance that Waterton will achieve the investment objectives of any
Fund and a loss of investment is possible.

Investment and Operating Strategy

        The Funds’ investment objectives are to acquire, renovate, manage, reposition and dispose of
existing multifamily, and hospitality properties located in targeted U.S. geographic areas and includes
the purchase of underlying debt encumbering multifamily properties and equity investments in publicly
traded REITs.

Waterton also has pursued a development and single family rental strategy within its Funds.

Risks of Investment

        Each Fund and its investors bear the risk of loss that Waterton’s investment strategy entails.
The risks involved with Waterton’s investment strategy and an investment in a Fund include, but
are not limited to:

        Concentration of Investments. Each Fund will participate in a limited number of
investments (and may seek to make several investments in one industry or one sector or within a
short period of time) and, as a consequence, the aggregate return of a Fund may be materially
affected by the performance of a single investment or a single industry segment. Furthermore, to
the extent that the capital raised is less than the target amount, a Fund may invest in fewer portfolio
investments and thus be less diversified.

        Lack of Sufficient Investment Opportunities. It is possible that a Fund will never be fully
invested if enough sufficiently attractive investments are not identified. The business of
identifying, structuring and completing real estate transactions is highly competitive and involves
a high degree of uncertainty. However, regardless of the extent to which the commitments of the
limited partners are invested (or drawn down to be invested), the limited partners will be required
to bear Management Fees through such Fund during the investment period based on the entire
amount of the limited partners’ commitments to such Fund and other expenses as set forth in the
Governing Fund Documents.

        Dynamic Investment Strategy. While each General Partner generally intends to seek
attractive returns for a Fund through the investment strategy and methods described herein, the
relevant General Partner reserves the right to pursue additional investment strategies and/or modify
or depart from its initial investment strategy, investment process or investment techniques to the
extent it determines such modification or departure to be appropriate and consistent with the
Governing Fund Documents. A General Partner reserves the right to pursue investments outside
of the sectors in which Waterton has previously made investments or has internal operational
experience.

        Impact of Government Regulation, Reimbursement and Reform. Certain industry segments
in which a Fund intends to invest are (or may become) (i) highly regulated at both the federal and
state levels in the United States and internationally and (ii) subject to frequent regulatory change.
Certain segments may be highly dependent upon various government (or private) reimbursement
programs. While each Fund intends to invest in companies that seek to comply with applicable
laws and regulations, the laws and regulations relating to certain industries are complex, may be
ambiguous or may lack clear judicial or regulatory interpretive guidance. An adverse review or
determination by any applicable judicial or regulatory authority of any such law or regulation, or
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