Fees and Compensation
Management Fees and Incentive Allocations
WeCap is compensated by the Funds for its advisory services through the receipt of
management fees, as well as a performance-based fee (“incentive allocation”), described
in more detail below. The specific payment terms (including whether the client is billed, or
fees are automatically deducted) are set forth in the relevant Fund Documents.
In the case of certain Funds, WeCap or the applicable GP Entity has the unilateral discretion
to waive or modify the application of certain provisions of the constituent documents of such
Fund by entering into side letters without obtaining the consent of any other investor in such
Funds. Managing directors, principals, employees and senior advisors of WeCap and its
affiliates, as well as family members, certain managers affiliated with investments, and other
persons with a current or historical relationship with WeCap or one of its affiliates, as
determined by such GP Entity, are generally not expected to pay any management fees or
incentive allocations in respect of their investments in and/or alongside the Funds.
● Incentive allocations. Unless otherwise set forth in Fund Documents of the relevant
Fund, each GP Entity of a Fund (or one or more of its affiliates) is entitled to receive an
incentive allocation from such Fund. The incentive allocation is determined with reference
to one or more annualized internal rates of return to investors and is paid to the relevant
GP Entity out of profits above a hurdle amount received by the investors generally upon
the realization of assets in the Fund. Incentive allocations in respect of certain Funds may
include customary “general partner catch-up” provisions (where the GP Entity receives a
specified priority distribution after investors have received the specified hurdle amount) or
customary tiered incentive allocation profit-shares based on increasing tiers of annualized
Form ADV Part 2A Brochure I WeWork Capital Advisors LLC
internal rates of return to investors.
● Management fees. Unless otherwise set forth in Fund Documents of the relevant
Fund, each investor will typically bear a quarterly management fee in an amount equal to
a specified percentage of such investor’s unfunded capital commitment to such Fund -
which fee may be limited to the investment period only (typically at least 1% per annum
during the commitment period) and a specified percentage of such investor’s proportionate
share of such Fund’s net asset value, invested capital, or other similar metric (typically 1%
to 1.5% per annum). Management fees are generally payable during the entire term of a
Fund, including, for the avoidance of doubt, the period of winding up such Fund. WeCap
has in the past and in future may, in its sole discretion, elect to waive all or a portion of the
management fee with respect to an investor’s interests in any of the Funds. If applicable,
investors will be refunded any prepaid management fee in accordance with the Fund
Documents.
Transaction and Property-Level Services Fees
In certain limited circumstances, WeCap (or its affiliate) has and may in the future receive
certain customary fees in connection with the Funds’ portfolio investments or other
properties or investments managed by WeCap (or an affiliate). In such cases, WeCap, the
applicable GP Entity, or an affiliate, may expect to receive a fee in connection with specified
material events including a disposition, a refinancing or general asset management at the
property or investment level, but for the avoidance of doubt, excludes any fees paid with
respect to property-level services described below (a “Transaction Fee”). If provided for in
the governing agreements of the relevant Fund, the management fee will generally be
reduced by an amount that is equal to an investors’ proportionate share of 100% of the
applicable Fund’s share (prorated with all other investors in the applicable investment) of
all Transaction Fees received with respect to an investment during the period in which the
applicable Fund holds such investment (or with respect to a proposed and unconsummated
investment) (net of out-of-pocket expenses (including broken deal expenses) incurred by
WeCap, the applicable GP Entity or any of their affiliates in connection with the transactions
out of which such Transaction Fees arose, including value-added, sales or similar taxes
applicable to such fees).
WeWork, other members of the Sponsor Group, or affiliates of WeCap may enter into
contracts with the Funds’ properties to provide certain property-level services that would
otherwise be provided to such properties by a third party. Pursuant to such contracts, the
applicable member of the Sponsor Group (or affiliate of WeCap) may receive fees for one
or more such services and such fees will not be shared with the Funds and will not offset
management fees payable by investors. The services that such parties may provide include,
without limitation: asset management, property management, management of construction
and development, leasing management, multifamily residential sales, foreclosure-related
services, special servicing, purchasing services, brokerage services, and other similar or
related property-level services. Fees for property- level services will be at rates that are no
less favorable to such property than could be obtained from an unaffiliated asset-level
service provider providing comparable services, as determined in good faith by WeCap and
in accordance with any applicable procedures set out in the governing agreements of any
Form ADV Part 2A Brochure I WeWork Capital Advisors LLC
Fund.
WeCap will provide the limited partner advisory committee or similar body with disclosure
on an annual basis of all fees for property-level services paid to an affiliate of WeCap
(including any member of the Sponsor Group) as and to the extent required by those
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